As the Playoffs Heat Up, the NBA Looks to Profit From Gambling

Bargaining chip: The NBA is using access to its data stream as leverage for a piece of the sports betting action.

The big picture: Both the NBA and MLB believe they should directly benefit from sports betting through “integrity” or “royalty” fees. The leagues are pushing state legislators for ≈ 0.25% of total bets placed.

Share of Nevada sports betting by sport:
1)
Football — 35%
2)
Basketball — 31%
3)
Baseball — 21%
4)
Other — 13%


Wow: An estimated 18M people wagered $3.9B on March Madness games.

March Madness betters by source according to Morning Consult:
1)
Online (mostly illegal) — 44%
2)
Casino (legal) — 35%
3)
Bookie (illegal) — 21%

Flashback #1: The high-stakes game for sports betting dollars

Estimated sports betting wagers according to Activate (YoY growth):
1)
2018 — $6B
2) 2019P — $10B (↑ 67%)
3) 2020P — $44B (↑ 340%)
4) 2021P — $70B (↑ 59%)
5) 2022P — $119B (↑ 70%)


Where you can currently place sports bets according to Legal Sports Report:
1)
DE
2) MS
3) NM (limited)
4) NJ
5) NV
6) PA
7) RI
8) WV

Where you will be able to place sports bets soon:
1)
AR
2) CT
3) DC
4) IA
5) IN
6) MT
7) NY
8) OR
9) TN


Flashback #2: Nielsen projects NFL could make billions annually from gambling market

A recent study projects that legalized sports betting could add $2.3B per year in revenue to the NFL’s bottom line.


Estimated % increase in revenue according to Nielsen:
1) Media rights — ↑ 18%
2) Sponsorship — ↑ 8%
3) Ticket sales — ↑ 7%

Video #1: How legalized gambling will transform pro sports


Video #2: Washington Capitals and Wizards owner Ted Leonsis envisions sports venues partnering with casinos to open sportsbooks in their facilities


More #1: Media companies’ newest wager: Their commitment to sports betting

More #2: 3 Key Takeaways on Fox Sports Gambling App

More #3: Gambling Will Take Over TV Sports

What’s An Eight Team College Football Playoff Worth?

The big question: Fans want to expand the college football playoff from 4 teams to 8, but how much more revenue would it generate?

Quick math #1:
1)
ESPN pays $608M per year
2) 3 games are currently played 
3)
ESPN pays ≈ $200M per game
4) 7 games would be played in the expanded field
5) If $200M/game held, then an additional round of 8 would generate $800M in additional revenue

Quick math #2:
1) ESPN subscribers — 86M
2) Annual cost to air college football playoff — $608M
3) ESPN is paying $7.15 per year for each subscriber to watch the college football playoff
4) That breaks down to $2.38 per game

Interesting thought: If ESPN chose to keep the rights for the entire playoff, then would they move one of the games to ESPN+ to drive subscriber growth?

Flashback #1: Return to New Year’s Day, Classic Rose Bowl, Boost CFP Overnights

Flashback #2: Big Ten TV revenue distribution reaches an insane $51 million per school

PwC: At the gate and beyond

Sports are becoming more reliant on media rights fees even as traditional TV faces challenges.

Share of sports revenue for media rights according to PwC:
1)
2013–22%
2)
2014–24%
3)
2015–26%
4)
2016–27%
5)
2017–28%
6)
2018–28%
7)
2019–29%
8)
2020–29%
9)
2021–29%
10)
2022–30%

Projected growth between 2013–22:
1)
Media rights — ↑ 94%
2)
Non-media rights — ↑ 42%


More growth? PwC projects that legalized sports gambling could increase media rights fees by 18%!

Subscribers by year for ESPN:
1)
2017–88M
2)
2018–86M (↓ 2%)

Flashback #1: Can a New President and Streaming Service Help ESPN Win Again?


How ESPN makes money (% of total):
1) Subscriber fees — $9.5B (79%)
2) Advertising — $2.6B (21%)

Flashback #2: What The ESPN Critics Are Missing

An excellent counter-argument to the ESPN is dead theme w/ quarterly profit estimates @ various subscriber levels and monthly pricing ($7.21 + 25% price increase):
1) 80m subs — $1.4B — $2.0B
2) 70m subs — $800M — $1.5B
3) 60m subs — $500M — $1.1B
4) 50 subs — $200M — $750M

More: Tiger Woods Signs Deal With Golf Streaming Service

Why Amazon Wants to Buy 22 Regional Sports Networks

D’oh! Last week we wrote about the potential bidders and left out potentially the most disruptive in Amazon.

Flashback: The bids are in for RSN sale

Key questions from TV[R]EV’s Mike Shields:
1)
Does Amazon think owning these RSNs will drive Prime subs? If so, that suggests it will only carry them on Prime. I can’t imagine leagues would allow that?

2) If not, that means Amazon plans to keep RSNs on cable systems. If so, how does that help them?

Amazon paid $130M for 2-years of streaming rights for NFL Thursday Night Football, but this bet would be 150X larger if the estimated $20B+ price tag is real.

Watch: BTIG’s Rich Greenfield — Regional Sports Would Solve a Problem for Amazon


More #1: Amazon Among Bidders for Fox Regional Sports Networks

More #2: Amazon Prime Is Muscling Its Way Into Live Sports Coverage

More #3: Amazon’s bid for Disney’s regional sports networks is ‘a big deal’ for sports broadcasting

The bids are in for RSN sale

The final bids were due last week for the 22 regional sports networks (RSNs) that are being sold as a part of the Disney/Fox deal.

All 22 RSNs could fetch up to $22B according to some estimates.

Potential buyers include:
1) Private equity companies
2) Sinclair Broadcast Group
3) Ice Cube


Those currently on the sideline include:
1) Fox Sports
2) Comcast/NBC Sports
3) Disney

The New York Yankees currently own 20% of the YES Network and may buy the remaining 80%.

Monthly subscriber fees for Fox’s priciest RSNs:
1)
YES Network — $6.37
2)
Fox Sports Detroit — $5.84
3)
Fox Sports Arizona — $4.84
4)
Fox Sports Ohio — $4.07
5)
Fox Sports Wisconsin — $3.22


Flashback #1: Big Ten TV revenue distribution reaches an insane $51 million per school

Each school in the Big Ten is projected to receive $51M from the Big Ten Network this year.

Revenue distribution per school:
1)
2013 — $25M
2)
2017 — $36M
3)
2018 — $51M (↑ 42% YoY)


Flashback #2: Sources: Cubs To Go Own Way In TV Venture

Current deal: The Cubs will get paid $750K per game next year for broadcast rights.

How much more could they make? How about 3X more! The Dodgers make ≈$2M per game in local broadcast rights through SportsNet LA.

Flashback #3: The Dodgers Are on a Roll but Fans Remain in the Dark Amid Cable-TV Dispute

The Dodgers are guaranteed $8.35B over 25 years from Time Warner (now Charter Communications).

That breaks down to an average of $334M/year!

In order to break even, the Network needs to make $1,988 from every pay-TV subscriber in the region or an average of $80/year.

More #1: 2018 MLB Regional TV Ratings In Prime Time Shows Continued Strong Popularity

More #2: Big decisions due on Fox RSNs, Cubs’ media rights

More #3: NFL certainly has its issues, but Major League Baseball is the one that’s truly suffering

Here’s how much it costs to advertise in tv’s biggest shows


66 different prime-time shows are returning to broadcast this year.

YoY change in advertising cost:
1)
Decreased — 41 (62%)
2) Flat — 13 (20%)
3) Increased — 12 (18%)

No surprise: National TV ad spend is declining YoY so it is expected that more shows are decreasing in price versus those that are increasing.

National TV spend according to Magna Global:
1) 2017 — $43B
2) 2018 — $42B (↓ 2%)

Higher CPMs: The other side of the coin is that ratings are declining faster than total spend leading to higher CPMs.

YoY change for This is Us (NBC):
1) Ratings — ↓ 20%
2)
$/spot — ↓ 10%
3)
CPM $ — ≈ ↑ 13%

Flashback: Analyst: TV Upfront Revenues Rise 5.2%; CPMs Are 10% Higher

Quick math:
1)
Ratings — ↓ 8–9%
2)
Total upfront ad spend — ↑ 5%
3)
Average CPMs — ↑ 10–15%

The most expensive show remains Sunday Night Football (NBC) at $666K per spot.

$/Spot for Sunday Night Football (NBC) (% change):
1)
2017–18 — $700K
2)
2018–19 — $666K (↓ 5%)

Top 10 most expensive prime-time shows:
1)
Sunday Night Football (NBC) — $666K
2) Thursday Night Football (Fox) — $434K
3)
This is Us (NBC) — $434K
4) The Big Bang Theory (CBS) — $286K
5)
Empire (Fox) — $228K
6)
Young Sheldon (CBS) — $214K
7)
The Voice — Monday (NBC) — $213K
8)
Grey’s Anatomy (ABC) — $205K
9)
The Conners (ABC) — $201K
10)
The Voice — Tuesday (NBC) — $193K

YouTubers Logan Paul And KSI Just Beat Each Other Up While Roughly 2 Million People Watched


WTF #1: 800K people paid $10 for a pay-per-view boxing match between two YouTube celebrities.

WTF #2: At least another 1M people watched a pirated stream on Twitch.

FYI: The Mayweather-McGregor fight was a huge success with 500K PPV purchases. A big caveat is that it cost $100, but still…

More #1: YouTube’s new strategy for premium content is all about global scale

More #2: The Flourishing Business of Fake YouTube Views


More #3: Amazon Has YouTube Envy

World Cup TV Ad Sales Could Hit $600 Million

Estimated World Cup advertising:
1)
Global — $2.4B
2) U.S — $600M (25% of total)

Quick math:
1)
7.6B is the global population
2) 3.5B will watch World Cup from 200 different countries
3) 1 out of every 2.2 people on earth will watch part of World Cup

1B+ watched the 2014 finale between Germany and Argentina.

U.S. ad spend in 2014 (% of total):
1) Total — $523M
2) Univision — $336M (64%)
3) ABC/ESPN — $187M (36%)

Top advertisers on Univision in 2014:
1) McDonalds — $29M
2) Anheuser-Busch InBev — $27M
3) Verizon — $24M

Top advertisers on ABC/ESPN in 2014:
1) Microsoft — $18M
2) PepsiCo — $16M
3) Adidas — $12M

Comparable sports events for ad spend:
1) NCAA March Madness (2017) — $1.3B
2) Winter Olympcs (2018) — $900M
3) World Cup (2018) — $600M

More #1: Squad goals: Advertisers clamor for World Cup inventory

More #2: The World Cup Offers Some Respite From Netflix

More #3: Amazon breaks Premier League hold of Sky and BT with Prime streaming deal

Madison Avenue Predicts Football Viewership Will Drop Again This Year (EXCLUSIVE)

Variety surveyed ad buyers to get their take on where NFL TV ratings would land compared to last season.

Ratings last season were down 8% or roughly 1.4m people per game.

The chart below shows the survey estimates for 2016–17 and 2017–18 with the actual for 2017–18.


More on this topic. Here’s How the NFL Plans to Bounce Back From Last Year’s Ratings Drop

Disney Unveils New Streaming Services, to End Netflix Deal

Big news. Disney announced two new streaming services:
1) ESPN — Direct to consumer offering launching in 2018
2) Disney — Focused on Disney content and set to launch in 2019

Disney also announced plans to start pulling content from Netflix.

Great graphic posted by Terence Kawaja‏ from the infamous Lumascape.


Another big announcement was Disney acquiring an additional 42% of BAMTech for $1.58b bringing their total ownership stake to 75%.

What is BAMTech? BAMTech is a spinoff from MLBAM (Major League Baseball Advanced Media) that powers the video streaming for several major sports leagues.

BAMTech has only been a separate company since August 2015 and is already valued at $3.75b!

A few of the leagues that BAMTech powers streaming for:
1) Major League Baseball
2) National Hockey League
3) Major League Soccer
4) Grand Slam Tennis