Rewriting the Playbook: Inside Sports' Commercial Reinvention with Chris Bevilacqua & Chris Marinak

0:00This is Why We Like It, a quick dive into the industries capturing our attention in the lower middle market in the United States. We're asking the questions that unlock why and where we see value in the lower middle market. I'm Sam, and each episode I'll share why a sector stands out. We're going to bring in the voices who know it best, and we'll point to where we think the future's moving.

0:25Welcome to Why We Like It. The sports industry is in the middle of the biggest structural shift it's ever seen. Conference realignment, the transfer portal, a 20 plus million dollar per school revenue sharing model for name image likeness that didn't exist two years ago. Streaming platforms are spending north of 14 billion dollars on rights this year alone. the NBA signed a 76 billion dollar media deal this space is going nuts and underneath all of it the entire commercial infrastructure of sports is changing how teams make money how brands spend money how fans experience the product it's all being rebuilt and it's being rebuilt in real time I don't think I've ever had two guests on this show whose careers combined touch as many of the defining moments in modern sports as these guys.

1:25Two Chrises, Chris Bevilacqua and Chris Maranek. Welcome, Chris and Chris. Thanks, Sam. Thanks for having us. It's all my pleasure. And maybe a little bit of an intro on each of you. I'm not going to spare your blushes. Chris Bevilacqua built the Mountain Network. For those that don't know, that was the proof of concept that became every conference media network you know today. Prior to that, he launched something called CSTV before the market existed. He started SimpleBet before sports betting was even legal. That's a whole other story that we should probably get into. And his career, it's a masterclass in seeing the next inflection point before anyone else did.

2:09Chris Maranek's experience, his career is equally special. He spent nearly two decades inside Major League Baseball, rising to chief operations and chief strategy officer, overseeing a whole load of digital products, ticketing in global events related things that changed the way the sport operated. the pitch clock, the ABS challenge system. He helped reshape and modernize how an antiquated 150-year-old sport presented itself to the world. And that change is still ongoing. But today, Chris and Chris, they're both at Playfly Sports. Playfly is an access portfolio company. It's a company I have a huge amount of admiration and love for.

2:56It plays an integral role connecting two and a half thousand-ish top brands around the world with over 250 property rights holders across the world. That includes over 95 professional teams. It includes nearly 100 college teams. And it includes youth and high school associations. And it connects them with the most valuable marketing asset in sports, local sports fans. And they're not just participating in the moment, they're defining it. And I think we're about to hear from them. That's why they joined Playfly Sports. So with no further ado, Chris and Chris, we're going to jump straight into it.

3:39Chris Bevelacqua, you spent, well, both you did, but you spent your career at moments where sports were being redefined. You've been ahead of the cusp on a lot of these moments. Why was Playfly the platform you wanted to be a part of at this moment in your career? Great question. And I suppose I'm a little older than young Chris Maranek on this call. So I go back a little bit further on in this MMR business, multimedia rights holder business. And, you know, I've spent a lot of time around college sports in my career. And in fact, there was actually a time where I think I was telling Chris earlier that I tried to actually get together an investment group in buying what used to be called ISP and Learfield, which eventually then got merged into IMG College.

4:31This goes back like 20 years ago. So when I started spending time around the space again, and I knew Michael Schreiber, Craig Sloan from years and endeavors past, I knew Playfly had essentially started less than five years ago. And the business itself has undertaken radical change, especially over the last five or 10 years, just in the media and technology marketplace in general. And I saw a huge opportunity in some of the, what I didn't really appreciate until I learned a little more was this current version of Playflies, just the breadth of it and the size of it and the scale of And the 2 ,200 advertisers and sponsors combined with the 250 plus properties, it is a sizable business that's kind of operating in an incredibly valuable intersection between IP and IP rights holders and major brands in a rapidly changing world.

5:40And it's very, very uniquely situated. So I was excited when I got the opportunity to join as a board member. And, you know, I've been involved now for a couple of months and getting to know the team and the future is bright. Awesome. Thank you. Young Chris? I'm fine with that, but, you know, we can go Chris M, Chris B. Thanks for having me, Sam. It's great to be on. You know, I'll answer similar to Chris, but I have a separate answer as well. I think certainly the reach of Playfly is really impressive. I think, you know, when you work at a sports league, there's, you have 30 teams, you're, you know, all across the United States globally.

6:19But the reach that Playfly has, I think, is really unparalleled. I mean, we work with every single Major League Baseball, NHL, NBA, WNBA team. We have 60 plus colleges that we work with. I mean, the reach of this organization is just really impressive. And when you think about the ability to impact the sports world, I think it's really an unprecedented opportunity to touch the world of sports through Playfly. So that was what was really exciting to me. I think more broadly than that, though, you know, we've talked a lot about disruption. We've talked a lot about change. And to me, when you're going through disruption and change, the number one vehicle to help you get to the other side is data and technology.

6:57And I think there's a ton of opportunity here for us at Playfly to help our partners use data and technology to create a better fan experience, to create a better experience in the venue. And I've spent a lot of time in my career doing that all the way from the time I started at Major League Baseball, just really thinking about how the game sport can use technology to just make the product better. And that's everything from instant replay, something, you know, an on-field type of technology to something like a venue app or a digital app that a fan might use to get scores and stats and standings.

7:31And so I think to me, that's the next frontier of what we have coming is the use of data and technology to really enhance the fan experience. And I think you're going to see a tremendous amount of activity in that space over the next couple of years. Awesome. Thank you. Well, let's start the conversation, Chris B., with the media landscape. You built the mountain and it became the model for the Big Ten Network, the SEC Network, every major conference network that followed. How did that experience inform how you see Playfly's opportunity in today's media landscape? I mean, there are two slightly different eras, obviously.

8:10That all happened back in the early 2000s. And, you know, the distribution landscape was much different than it is now. You know, there was obviously a lot of emphasis around mass and big broadcast network and cable television back then. And now it's moved to much more to direct-to-consumer and streaming. And, you know, obviously there's still broadcast and cable around. But in those days, we had the first ever 24-hour college sports network. That was CSTV. And we did our first big major rights deal with a football product. And that was the Mountain West Network. And one of the reasons that we were able to do that was ESPN wasn't treating the property the way that property wanted to be treated.

8:59So we were able to not only give them national exposure on our national cable network, but we really kind of doubled down around the more local regional content. And that's what the mountain was. It was named an RSN back then, like a regional sports network, which had heavy presence. I think it was across five or six states in the mountain region, some of the big markets, obviously, like Denver and Salt Lake, where we were able to take what essentially is must-carry programming and create its own distribution in those markets. It was a heavy Comcast market. So that was all launched around distribution with Comcast on their expanded basic channel, which was unusual.

9:43that's the value of having you know must carry live local sports like that that people in that region really wanted to see and you know like you said the big 10 and others took took notice of that and you know eventually went and did their deal with fox and then you know sec eventually did their deal with disney and espn but they got more national distribution because they have bigger national brands than say like a Mountain West did, but it was the structure and the construct that worked quite well for about 20 years until people started cutting cable and the universe of cable was shrinking. And now you see it kind of more of like a hybrid approach to the market, but a bit heavier emphasis on streaming.

10:32So that all sort of changed. And that's why I think Playfly and their role now is in a pretty unique spot in that transition because advertising is still a huge piece of driving live sports distribution. And like I said earlier, Playfly sits on one side with 25 or 2200 brands that are connected to IP. And that transition is all happening in real time. And I think that the advertising piece is going to continue to be not only valuable, but even more valuable over time. So it's a great, I mean, I think that's sort of how it started back in the early 2000s, but it's actually changed quite a bit since then.

11:14Let's keep pulling that college thread then. So for those that don't know, direct revenue sharing was introduced through the House versus NCAA settlement. And it means that revenue sharing up to$20.5 million per school can occur. And that fundamentally reshaped how athletic departments thought about their business. It became a business. How is Playfly supporting their partners through that shift? I'll give you my view on that. I mean, think, like even going back to the early days of MMR, right? The basic business model was you buy rights from a school and then you take a small team. It's usually five or six people and you embed them on campus.

11:58because as a, you know, writ large, college sports are really, most of the people on campus come out of the admin side of the world. They don't come out of business. They're not in the world of professional, like, you know, like Chris and I, I used to work at Major League Baseball years ago. You know, it's a different skill set, right? If even then embedding those, that resource on campus was hugely valuable. Fast forward to today, the$20.5 million, right, that now is an unfunded mandate. Like that$20.5 million wasn't in the budget a year ago. And most universities, athletic departments are operating at a significant deficit.

12:40And if you think of it at the top level, college sports runs at about$4.5,$5 billion a year deficit today. Like now you got to add$20 million dollars per school on top of that. So the revenue piece becomes more and more important, but these campuses aren't set up and they're not professionalized business operations. So Playfly, right, is in a unique position to fill that need more and more and help universities create the structure on campus that is necessary to drive the revenue that they don't currently have. The other thing I would say about that is that you can even just think about it geographically.

13:20Like, so for example, I went to University of Virginia, Charlottesville, Virginia, right? To Chris's point, now they need to come up with$20.5 million, you know, revenue share with athletes. How realistically, how quickly can you scale a business operation in Charlottesville, Virginia? It's a great town. I'd love to live there, but it's not New York City. And so Playfly has a national network of offices, New York, Chicago, LA. We're talking to the biggest brands, as we've said, 2 ,200 plus brands we're in conversations with every day. you can't build that overnight and i think a lot of the colleges are are coming to us and saying how can we use the relationships that playfly has the national network that you've built to tap in in a really quick and aggressive way so that we can tackle this problem head on rather than spend five years to start something up and miss the boat in terms of having a competitive athletic department i was in charlottesville just a couple weeks ago seeing our friends annie and jerry it's Beautiful.

14:14Great place. But I get the point. Chris B., maybe one final question specifically on college. We've had so many different tectonic movements. We've had the NIL collectives, the new College Sports Commission, conference realignment. There's all these moving parts. It's confusing, especially for someone who's not an American citizen. There's just so much going on. Where do you think it settles? And what does the college sports business model look like in five years? Wow. That's a, that's a, uh, you know, I got to look the crystal ball here. I would say that, you know, all of what's happening right now, like as we're having this conversation, there's a lot of emphasis around trying to come up with federal legislation.

15:05And, you know, that's being driven by obviously by Congress. Um, so you've heard things like the score act and the safe act and the SBA, the sports broadcasting act that Senator Kent Roland Schmidt a couple of weeks ago introduced. So there's all these efforts, you know, on a national federal level, you have Trump and his executive order, and you have all these, uh, the round table and the committees. You got a lot of, a lot of people, a lot of smart people trying to figure out how to bring order around college sports that are kind of in three areas, right? The first area is, I would describe it broadly as the cost side.

15:44So costs are going up. There's no caps like leagues have collective bargaining and they have relationships with players and they have work conditions and work rules. And so things like transfers and eligibility, so there's all these issues around the cost. Then you have a separate bucket of issues that's around government. How are we going to govern this? What entity? Is it the NCA? Is it some other entity? We need liability protection from lawsuits. We need any trust protection if we're going to collect the rights. So you have a whole bunch of governance-related issues. Then the third piece is the revenue issue.

16:23And the revenue issue is, okay, well, we're running at a$5 billion a year deficit. it, how do we get the revenue to make up for that loss? Even if we capped losses at$5 billion, a whole bunch of athletic departments are going to go out of business in time because you can't afford it. So you got to come up with the revenue fix. And that's what legislation right now, my sense is that if legislation gets passed sometime in the next year that puts some stability back in the system, that will then allow for more professionalization around the revenue side and then around how you operate athletic departments so that you can control cost.

17:03And then the governance piece is obviously the governance piece. So I think if that happens five years from now, I think college sports will be in a much healthier place and you will see athletes getting paid as they should be where they're providing value. You'll see more sensible cost structures, and you'll see hopefully women's sports and Olympic sports continue to grow and thrive. That's where I see it in five years. It's a beautiful picture you've painted. Chris, where do you see the business model evolving? Yeah, to me, I think from a commercialization standpoint, a fan standpoint, I think what you're going to see is just a dramatic increase in terms of opportunities and personalization for the fan.

17:49I think that's the flip side of all of this, you know, work with the athlete is that schools are now going to have to be more deliberate about how they reach fans and create a more professionalized experience for college sports fans. And I think ultimately that's a good thing. I think what you hear from college sports fans most often is there's just not as much choice as compared to pro sports fans. I mean, you go to a pro football game, a pro baseball game, you can literally pay anywhere from 50 to, you know,$5 ,000 and everything in between for whatever experience you want to go to that venue.

18:24And I think you're going to see more and more of that in the college sports world. And then on top of that, I think you're going to see more integration of other platforms along with the in-venue experience. You're going to see more content, more digital platforms, more integration across streaming and media. I mean, it's just going to be a much more integrated voice to the fan. And I think ultimately, fans are going to be more engaged. I mean, college has got this tremendous tailwind, which is the passion and the energy that the players play the games with and they compete with. And so I think if you start to layer on some of the things that are happening at the pro sports level that really help with fan engagement, I think you're going to see college sports engagement really take off in the next couple of years.

19:06Chris, you joined us from Major League Baseball, you'd spent 17 years there and you oversaw a ton of innovation. One of the innovations that I loved and you and I have spoken about before was the pitch clock, reduced game times and drove a significant measurable increase in attendance and viewership and ultimately made the game more digestible. How are you thinking about taking those innovation experiences and bringing them into your role at Playfly? Yeah, a lot of those experiences working in baseball were really fun. Being a part of the process on the pitch clock was just really fun to watch that from start to finish.

19:47It took almost 10 years, so I got to see the whole journey. But I guess I would say I learned a couple of things. One is always start by speaking to your fan. Always start by talking to your fan and understanding what your fan wants, and then try to come up with solutions that meet fan needs. And so I think there was a lot of that in baseball, a lot of talking to the fans, a lot of doing surveys. And I think that's a really important starting point. I think the follow-up is that you really have to test things and you have to try multiple solutions. And people now looking back say the pitch clock was a great innovation.

20:22How could baseball have ever lived without it? But the reality was the approval rates in the first year that we were experimenting with it were very low and fans were not very approving of it at the beginning. And we were also testing a lot of other different things that were going to address pace a game and action in the game. And so I think the takeaway, particularly for colleges, is you have to experiment. You have to really think about how to best engage with your fan, try multiple things, figure out what's working and double down on those things, and then peel away the things that are not having success.

20:52And once you find something that is working, then you really lean in on it and push it forward. And then I think the last thing is that once you come up with something that you think is a good idea, really spend the time to educate the fan about the benefits. The pitch clock could sound to a fan like, hey, baseball is the only sport with no clock. Why in the world would a clock be beneficial to baseball? And the obvious answer would be, you know, I don't want a clock in baseball. But I think the flip side of that is to say, hey, fans have been talking about you want faster game times, you want to see more action, you want to see more things happening during the game.

21:27This is a way to do that without being disruptive to the pace and the rhythm of baseball that makes it so special. And when you explain it to fans that way, they're like, sign me up. You know, it's a great innovation. So I think that's a lot of what we need to think about when it comes particularly to working with colleges, even some of our pro partners. We do consulting across a whole host of other sports properties as well. And that's one of the key themes that we have around innovation is just thinking creatively, not being afraid to fail, experimenting as much as you can, and then really leaning in when you think you found the right answer.

21:58Sam, I want to give Chris props because I am a long time baseball guy. And, you know, I could be, I could arguably be one of those, like the old farts that say, don't change the game, leave it the way it is. But what you did with the pitch clock and the pace of game changes was amazing. But my favorite of all time is this year with what was done with the ABS and the replay. I mean, I went to the first game of spring training, I think it was the Nationals earlier, early in March. And I saw them do it for the first time. I sat in the state and I'm like, holy, this is going to be amazing. Like where they do the replay and it all happens like doesn't even change.

22:43I mean, it's added a new dimension to the game for the fan. I mean, to watch what's going to happen on whether the call is going to get overturned or not. And it happens just like, I mean, it's changed the game. I love it. You've done it. It was amazing. Look, that's a key point is that you really have to think about not only what's best for the play on the field, but what's creates engagement for the fan and try to link the two together. I think that's one of the big changes that's happened in sports over the last decade is this migration to understanding the fan and really trying to do things that are synergistic between the game on the field and the fan.

23:16And there's solutions that can satisfy both. It's not one or the other. And I think that was the real thing that baseball fell into over the last couple innovations that they've been continuing to push forward. I mean, kudos. Unbelievable. Well done. Fans, by definition, are fanatics. They're fanatical about what they're watching, but they're not always watching it in person. And streaming platforms are projected to spend over$14 billion on sports rights this year. The new NBA deal, it's just mind-blowing numbers. Chris, how are we thinking about the long-term economics and revenue opportunity with media rights in sports?

23:57It's all good. I mean, the good news is that there's never been more live sports content, are more sports content in general consumed than ever in the history of the world than there is right now. So sports is incredibly valuable in a media ecosystem that we're living in. And we're moving from what used to be wholesale and mass media into personalization, like Chris said earlier, like hyper-personalization and technology. Like the tip of the spear is live sports, especially like premium live sports, like Major League Baseball and NFL and college sports. So I think as we move into the world of personalization, I mean, I'll give you an example.

24:44Like I'm a, you know, give a plug for my school. I'm a Penn State alum, big play fly property, right? We're the biggest, largest living alumni base in the world, 750, 800 ,000 living alumni, right? There's 800 ,000 people that have direct relationship with Penn State. And to be able to use Penn State athletics and football, and I'm a wrestler at Penn State. We just won our 13th NCAA wrestling championship in the last 15 years. The way you could use the Penn State IP and sports to connect to me as an individual and have a relationship with me, whether you're a brand or the property itself, that's hugely valuable in a world of hyper-personalization.

25:28So I think that sports rights, especially the premium ones, are going to continue to go up in value as consumption continues to go up in value. And it's not just I sit down and watch a two and a half hour live baseball game or a three hour football game. It's what happens around that and after that and during that on other platforms other than in the live broadcast that really unlock the value of the IP. And that I believe will continue to be the case for live sports. Yeah, I think you're seeing also that the live sport is becoming the tent pole of other engagement that the consumer has. So take Amazon, for example, you mentioned.

26:09You know, they put NBA games right in the middle of the Amazon app. If you go in to try to buy something and there's a basketball game on, they put that in front of your face and they want you to go watch that. And then they not only do that, but they'll track what you've bought before and they'll serve you ads that are relevant for you based on your purchase history. And so you can just see how this world is becoming much more integrated. And I think when sports are at the centerpiece of that, it just creates more value for the property holders that, you know, sports is the anchor tenant of the mall and all the other things around it are built on that property.

26:43And I think when you see that to be the case, especially as the example I just gave, malls are sort of disintegrating. I think that's only elevating the position of live sports in particular. And maybe a couple final questions, guys. I don't want to keep you from running one of our most exciting businesses, but as the sports ecosystem becomes increasingly complex and increasingly commercial, we're commercializing every component of it all the time and always optimizing. Where do you think Playfly can create the most measurable value for our partners that we serve, that they couldn't do on their own.

27:22Yeah, I mean, one of the big things that we offer at Playfly is extensive analytics, research, and valuation services. And so that is a huge part of what we offer. And to the point earlier around what colleges might need in some of these upstart college athletic departments, we have a massive department of people that do just that, do research and valuation that understand what you're getting when you spend a dollar in sports. And so that's, I think, the biggest value add. We can explain to you what you're getting with a jersey patch versus a field sign versus a typical advertisement on a broadcast.