'Ooh, someone's had a Meat Feast'...Oli Slipper and the early days of OTT

The conversation below is taken from this week's Unofficial Partner podcast with Oli Slipper, chairman of Pitch International and one of sport's dot com pioneers, from his days at Premium TV and later as co-CEO of Perform. We talked the expensive mistakes that await sports rights holders in the OTT era, the secret of that Maradona documentary and commercial appeal of long form sports films, and the challenges of selling football club websites in the days of dial up internet connections.

For the full interview, get the Unofficial Partner podcast from Apple, Spotify, Stitcher and everywhere else that does podcasts.

@Unofficial Partner: What should we make of the media rights market around sport currently?

@Oli Slipper: The market is definitely in a state of flux. The last three or four years we’ve seen the competition dynamic in most markets reverse, with two main pay-TV incumbents working out that beating themselves up is not ultimately the most profitable thing to do, and so they’re picking the sports they want to focus on. Meanwhile, the emergence of OTT has started to create viable alternatives for rights holders. DAZN is leading the charge but there are other players around the world.

@Unofficial Partner: DAZN is the story of the moment. You’re linked to that personally as you were co-CEO of Perform. How did the transition from Perform to DAZN take place?

@Oli Slipper: We had the start of an idea around OTT and thought the market was ripe for disruption, and we thought internet delivery was going to be a very interesting way of distributing sports content and ultimately monetising it. But we didn’t think being a public company was the best vehicle to do that for a whole lot or reasons, because we were going to need to take what was a very nice profitable business and require a whole load of investment to get the critical mass of rights.

Perform effectively became DAZN over a period of time. The core Perform business was still existing but it wasn’t the core focus of the management. Ultimately that business was sold earlier this year to STATS, a US sports data business. DAZN maintains some form of shareholding, but it’s a separate business.

@Unofficial Partner: It seems a bit odd to get out of betting when there's about to be a betting data gold rush in the US. Was the sale of Perform just a way of getting more money for rights?

@Oli Slipper: It’s more about focus. When you’re trying to build a world class business, you want to focus on having a unique, single aim to build the product. The management found that running all the separate brands - Watch and Bet, Opta and various other things - was a distraction away from the big investment and number one goal to build DAZN’s OTT platform in to the biggest sports broadcaster in the world.

The Perform STATS business is in a very interesting place but it’s better housed in a company whose management’s core focus is the delivery of data and video streaming to the betting sector. I’m not entirely sure how that deal ended up but I’m pretty sure that DAZN retained some of the economics. They are naturally hedged, or schmuck equity, where you sell and if it turns in to a 10billion dollar business then you have a hedge against selling out too early.

@Unofficial Partner: Len Blavatnik is now the owner and there’s talk of a DAZN IPO. What’s the intersection of sport and the private equity market like? It’s often said that sports investment is a bit irrational, that there’s a glow around it and that it has the ability to seduce rich people. You’ve been in those rooms, is it a cliche or is it true? When you get in to a room with bankers and full time private equity investors, does sport still carry that cache?

@Oli Slipper: I think so. It’s such an emotive subject. Everyone has a view on sport. When we met just now we talked about Spurs and Poch and it’s not like other business sectors in that way, it’s not like buying a health business, where unless you’re in it you don’t really have a strong view. It captures interest and the VC market is still quite a male dominated industry. There’s never been more interest in it in the last ten years, if you look at the investment activity, from buying clubs and events, selling sports streaming assets, there’s a huge amount of activity. One of the things VCs and private equity struggle to get their heads around is that sport is often not a straight line business, it has very cyclical elements, such as a football season that lasts 9 months not 12, or a World Cup every four years, so in many cases sport isn’t actually suited to being a public market product because public markets don’t like lumpiness, they like straight lines. That’s one thing we found, our ad business was definitely the lumpiest bit, because it would have a great year in a World Cup or Euros year but have a flat time afterwards, or have a flat three months from September to November because so much of the sports related ad spend had been focused on the previous three months. The reasons sport is interesting is that it’s sexy but there are anomalies that make it more difficult for financial institutions to get their heads around.

@Unofficial Partner: What was your read of the Endeavour non-IPO? You must have followed that closely.

@Oli Slipper: There was a valuation they wanted to go to market with, and the public market wasn’t willing to get to that number. Ultimately you take stock and make some changes to the business, whether improving profitability or reducing debt or something else and go again, that’s what i think they’ll do.

@Unofficial Partner: So it was more about the market than the company, or a bit of both?

@Oli Slipper: Probably a bit of both. They had the WeWork disaster as the backdrop to their IPO. Endeavour would have been a highly rated stock and they’d have been trying to drive a high multiple of EBITDA. WeWork was one of the darlings of the tech boom had had a massive public disaster. Wanda Sports IPO obviously didn’t go exactly to plan, probably trading at 50% lower than where they anticipated floating. So that’s an unhelpful backdrop for Endeavour, but they’ll be back.

@Unofficial Partner: Now everyone's talking OTT, let's go back. What was Premium TV? Was that your entry in to the sports market?

@Oli Slipper: I started at Accenture on the graduate programme and was working for NTL on the launch of Digital TV and at that time NTL was competing with Sky for sports pay per view rights. Their big foray was a deal with the Football League that guaranteed £45million over five years for the right to run the websites of every football club, which was quite a punchy number back then, given that broadband hadn’t been rolled out.

@Unofficial Partner: When was this? What year?

@Oli Slipper: The term for that deal was 1999 to 2004. At the same time NTL had bought stakes in five Premier League clubs plus Rangers, 10% stakes in return for perpetual internet rights, or electronic device rights as they were known then. I ended up going from Accenture as a consultant, because I liked sport and they thought we’ll chuck this kid in to sort out the Middlesbrough website and I ended up being the commercial manager trying to source a few revenue streams to pay for the £9million a year we were paying out. We did one deal with Bet365 which accounted for about 98% of our revenue and I remember sitting in board meetings with Richard Masters who at the time was the commercial director of the Football League, and we’d look down our P&L account and the first line would be Bet365 at say, £1million a year and the second item was Pizza Hut for 24 quid, and I remember Richard saying, ‘Ooh, someone’s had a Meat Feast’.

It’s fair to say I learnt a lot about sport and the internet at that point.

Unofficial Partner is a podcast about the sports business. Go to our site to explore the back catalogue of previous guests including Ed Smith, James Brown, Jackie Fast, Dame Heather Rabbatts, Paul Hawksbee, Rory Sutherland, Faris Yakob, Jimmy Worrall, Derek Pringle, Steve Martin and many others.