Sports leagues are largely a product of the postwar television and advertising ecosystem.
As advertising morphs with the internet into an amalgamation of small verticals, professional sports also will have to (get to) change. What’s popular and what’s profitable will change.
I approach this topic as a longtime female athlete trying to understand why some leagues fail and others succeed…and how this might change in the future.
What mass-market media has obfuscated is that sports are about people — people that we grow to care about — and their stories, playing out in real time.
In the past, the success of leagues was an uphill battle against legacy distribution (see “when the product is not the product”). Going forward, it will simply be that whichever players/teams/leagues can build up and showcase those stories best will win.
Mass market
The current keystone of pro sports is cable television.
I'm going to use the NFL as a case study. The Green Bay Packers are a community-owned nonprofit, so their finances are public:
National revenues are essential; most (NFL) teams are locally unprofitable. In 2018, for example, the Packers earned just $192 million in local revenue (ticket sales and sponsorships) compared to ~$255 million in national revenue from the league. This broke even against $420 million in expenses, which are 50% player salaries and 50% admin costs. (source)
National revenue is mainly TV revenue. Of the $8.1 billion dollars in national revenue, 74% comes from tv deals. The NFL gets $3 billion/year from major networks, plus $1.9 billion from ESPN for the fancy games and $1 billion from NFL Network and Direct TV. (source)
TV revenues are the reason that the glitz and glam of the NFL/NBA/MLB can look the way it does. They transform pro sports from a world of slim-to-none operating margins to a universe where Aaron Rogers signs a $130 million contract.
What’s particularly interesting, and what will change the most going forward, is that the mass-market media favors incumbent leagues where popularity is well-established.
A little hype yields a little media, which yields more hype, and more media. For the main professional sports in the US (ex., NFL, NBA, MLB), this process has inched along since the 1930s. The leagues grew up as TV grew up.
It’s hard to break into this ecosystem now that its matured and secured massive broadcasting contracts — So you can’t build hype without media, but you can’t get media without hype. Much has been said about how women’s sports have been gatekept from ESPN et als, but the same is basically true for any sport outside the top 3. They don’t have the hype to compete, and they’re locked out of the means to produce it.
Niche media
While some leagues are more diversified than the NFL in their revenues, the major predicament faced by traditional sports leagues is the same: big media pays for big sports because of big advertising.
Big advertising in 2020 has more places to put it's money than ever before, and American consumers are increasingly spending their entertainment time with streaming services. That’s reason #1.
Reason #2 is that media, like many other industries, is undergoing an unbundling: “the decline of the firm as a principle agent of change” as Nadia Eghbal puts it. In other words, more power to the players, who can now produce independent revenue streams via social media and live streaming services like Twitch.
Players also have a stronger role in hype creation for teams and leagues than ever before.
Rooting for Ovie
The future of sports will follow the future of sports media. The main role of sports media is to provide a narrative.
The entertainment we get from watching a game doesn’t come from the speed of a slapshot or the power of a pitcher: it comes from the stories we know about teams, athletes, and cities. Or how incredible we know that slapshot is because of the announcer who contextualizes it.
I don’t now anything about gymnastics, but I hold my breath every time I watch Kerri Strug’s final vault. I don’t know anyone who wasn’t, on some level, rooting for Ovie in 2018 and the city of Boston in 2013. Nike, with a million tear-jerking sports commercials, understands this: sports need media coverage because sports need stories.
Thus, as the cable-tv-dominated status quo crumbles, pro sports will develop a new playbook, centered around better telling player stories. Players will also have more opportunities to tell and sell these stories themselves, direct-to-consumer.
As media disintermediates, players will form their own brands (ex., TB12) and produce their own content through social media and services like Twitch. This relationship could end up being symbiotic—player brands build league hype—or competitive.
Meanwhile, media is already trying a million new ways to package and present live team sports (ex., Buzzr, Second Spectrum), and teams will try to enhance the in-person experience as much as possible to drive up local revenues (ex., innovations like Mixhalo). Lastly, new tech will drive down event production costs and lower barriers to entry (ex., Pixellot) for new leagues.
Second Spectrum is bringing advanced computer vision to sports watching and analysis. “We have taught a machine to see with the eyes of a coach" says CEO Rajiv Maheswaran. Second Spectrum is hiring software, machine learning, network, and intern engineers.
Overtime is building a "new style of sports network that young people will actually watch." There is some crisis occuring in the world about whether young people like to watch sports, and Overtime CEO Dan Porter realized people were "connected to these young kids who might be professionals in 12 to 24 months." Overtime is hiring for a ton of roles in sales, design, engineering, ops, and more.
Pixellot is reducing barriers to entry for sports video. Pixellot is making broadcast-quality sports video at about 10% of the cost of the equipment and labor for a traditional film team. Pixellot is hiring across the world in engineering, finance, support, and ops.
The Pivot is an endorsement conduit for women's athletes. While women's sports have often had a few thousand turns less than the men's game on the hype>media flywheel, The Pivot has a theory about how they can catch up. They pair companies looking for meaningful endorsements/partnerships with female athletes looking for additional revenue streams. The Pivot is not currently hiring, but they are looking for companies and athletes to join their community.