Doing a Two Circles; The £220billion Charterhouse bet; Fun with supply side consolidation; What the 3pm slot says about you; Same or Different; Women's Lions; Probably not an all boats rise scenario

Overthinking the sports business, for money

Jan 18, 2024

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Mistakes made with good intentions

I’m glad someone so knowledgeable and experienced in the women’s game made this point. It articulates my basic starting point and gets to the central strategic question of ‘Same or Different’. The same feels lower risk and comes with the hope of migration of audience from the men’s game, and a sort of halo effect from the established brands, in this case the Lions. But it ignores the other big data point, which is that it’s a different audience. And creating new brands and new worlds is the long term, sustainable play. My - and by extension, Ali Donnelly’s position (I’ve not spoken to her about it yet) - has to answer the ‘Arsenal Question’, with its full stadia and Leah Williamson cult following that seems to sit perfectly happily alongside the bloke’s team. This latter model is the route of the WSL NewCo, which is predicated on the assumption that new audiences - younger, diverse, non-traditional fans - can be cultivated and serviced by what remain male focused team brands. That’s all at the consumer end. The other issue is on the supply side, where focus and bandwidth are directed so heavily on to the existing cash cows of the men’s game.

Mistakes made with bad intentions

This is Matt Hughes’ story in the Mail from 5th December 2023, and captures something that’s a build on the rugby story above. At this week’s DCMS Select Committee on football governance, Messrs Richard Masters and Rick Parry disagreed on a host of issues. But one thing united them: They didn’t want women to take the 3pm slot on Saturday. The Karen Carney report said 3pm Saturday would be a great regular platform for televised WSL games. This is the FA’s position. But the men’s game - Premier League and EFL - are fighting it. Why? A few reasons are offered up but the most plausible is that they want it as leverage for future domestic media rights negotiations. Unattributed quotes in the above piece suggest some anti-WSL lobbying has taken place: “*One Premier League source pointed out that no other sport has a protected broadcast slot and questioned why an exception should be made for women's football*”.

Sky’s position is fascinating and probably revealing as to their confidence in the WSL as a subscription driver (Same or Different).

“Sky have a similar view and would have little interest in showing WSL games at 3pm on Saturday's due to the clash with their flagship result and reports programme, Soccer Saturday. TNT Sport however would be interested in buying Saturday afternoon fixtures”

Using Sky’s lens for a moment.

Their Saturday currently looks like this -

12.30pm Early Premier League Game

3pm Soccer Saturday - Us watching old footballers watching live games and telling us about them, because we’re not allowed.

5.30pm Another Premier League Game

What happens if Sky put WSL in the 3pm Soccer Saturday slot, or more likely ran it against Soccer Saturday?

Does more sport lead to more subscribers, or do they turn off out of fatigue?

This feels a bit binary. And might be avoiding harder questions.

What if, Sky Sports is the problem?

What if, Sky, TNT and by extension, the traditional sport media vertical (built by men, for men) is entirely the wrong place to attract the people who want to watch WSL (Same or Different).

What if, the WSL is closer to a niche music/entertainment product than it is to men’s football?

Rather than benefitting from the Sky Sports brand halo, it’s actually an impediment to building the WSL tribe, the very last place the cool kids want to be seen?

Feels like we need data, and quick.

The road to £220billion

This week’s podcast with Gareth Balch was about Two Circles, but also about the sports industry more broadly.

Charterhouse is an old school private equity house, with no other sports investments. They’ve just paid £250million for Bruin Sports Capital’s 80% of Balch’s company.

Why?

There’s a long answer, for which you’ll need to listen to the pod.

The short answer is that they think the value of the sports business is going to grow over the next decade.

As part of his investor roadshow, Balch did a version of the keynote he gave at the Two Circles Client Summit, in October.

This contained a number that’s worth dwelling on.

Two Circles values the total sports rights pot today at £150billion.

This is everything - media rights, sponsorship, events, the lot.

They predict that in 2032, the total figure will be £220billion.

So a 50% rise in ten years. (See previous)

This is what Charterhouse has bought: Two Circles as a gateway to that number.

Two reactions:

Optimistic: Growth is good. And this framing feels like it runs against the current mood - the bundle is broken; GenZ are revolting; subscription fatigue etc etc. If there’s a gravy train, I’d rather be on it than not.
Pessimistic: Big get bigger. Below the headline number, there lurks winners and losers. Wealth generation is rarely spread evenly. So is it ‘sport’ going up by 50% or a very small number of already rich and powerful rights holders becoming mega sport entertainment leviathans? And ‘sport’ is left to fight for scraps, with more losers than winners?

As Balch put it: all boats won’t rise. (HT to the UP TikTok account’s crunching visual metaphor below. Have you any idea how long it took to find that clip?)

@unofficialpartner #munger #buffett #unofficialpartner #podcast #businessofsport #sports #business #pe #privateequity #marketing

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Who’s buying who?

One final point on Two Circles and it’s to do with consolidation on the service side of the sports industry.

The company went from £40m (WPP to Bruin, December 2019) to £250m (Bruin to Charterhouse, January 2024).

Between those two moments, they bought TRM (rights sales), SportsInk (tickets), Codeware (tech) and LiveWire Sport (content).

Charterhouse’s job is to oversee a similar trajectory of growth.

So from £250million to _ in _ years.

Two ways: Organic growth and further acquisition.

But what is an agency today? And what will it be in 2032?

A couple of quotes that may talk to the answer:

‘75 percent of the people we hired never worked in sport before. So we inherently believe most of the answers lie outside of sport”
‘We will buy businesses that aren't in sports, I think at some point as well, but we’ll also buy stuff in sports”.

Since its inaugural position as ‘the data agency’ in 2011, Two Circles has felt like a directional company in the sports sector.

I was on the Sport Industry Awards agency of the year judging panel during this period and saw first hand the reaction.

They felt a bit ‘out of category’ when set against the Saatchis, Octagons and other sports marketing agencies, who were focused more on sponsorship activations and creative work.

Gareth and co-founder Matt Rogan talked a different game. And it challenged the status quo.

Many have since tried to ‘do a Two Circles’, to differing degrees of success.

Keeping tabs on what happens next will be instructive as to who will win in the race to £250billion.

Personal Best

Sportsbiz people list their favourite things

This week: Ben Goldhagen, The Space Between

The Bundle - Out tomorrow

WTF is the NFL doing with ESPN and can you do it too?

Spoiler: Probably not, and you may go bust trying.

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