Yeezy does it for United; Squeezed Middle; What is British Cycling; Matt Cutler joins UP; The Pirates vs The Premier League; Portnoy's complaint; ESPN and Penn; Convergence Brainstorm
Overthinking the sports business, for money
This week’s UP Newsletter is sponsored by our friends at the Institute of Sports Humanities and Loughborough University London.
ISH and Loughborough University recently launched the new Leadership in Sport Master’s course, running from Autumn 2023.
Students on the MA Leadership in Sport programme will join an amazing ecosystem of sports experts – Loughborough University has been ranked the #1 university for sports-related subjects for the past 7 years. So the world’s top sports university is working in tandem with a unique sports network at ISH.
The new intake starts in October 2023 and applications are currently open.
Find out more at www.sportshumanities.org ISH and Loughborough University recently launched the new Leadership in Sport Master’s course, running from Autumn 2023.
BREAKING TRANSFER NEWS: Cutler Joins UP
Yes, the rumours are true.
Matt Cutler, former SportBusiness editor and Two Circles communications supremo has jumped aboard the runaway Unofficial train (what is an Unofficial train btw?).
Cutler will head up Unofficial Partner Productions, a new division with a brief to create different types of podcasts and other forms of sports related content for both business and broader sporting audiences.
The first UPP project lands next week.
The Pirates vs The Premier League is a five part documentary series that goes deep in to the worlds of illegal sports streaming.
Data commissioned for the documentary shows that watching sport illegally in the UK is far more widespread than previously thought
We talk to criminals in the sports piracy network about their illegal operations and the people trying to catch them.
The Pirates vs The Premier League is going to be the first of many.
Our aim is to work with the sports industry to develop and produce sports business stories for all platforms – podcasts, TV, streaming platforms, radio, social media.
And that includes journalists and content creators who have the germs of an idea but need help making it a reality.
It also means organisations that think they have a story to tell that hasn’t been told yet.
So if you think that could be you, come and talk to us.
More details in tomorrow’s podcast.
Welcome Matt!
Yeezy does it
The Adidas, Man Utd deal is worth dissecting.
(We’ve recorded a podcast on it for next week, so keep an eye out).
As Leo Thompson, now of Two Circles, formerly Man Utd, points out on the pod, the club is a listed company so are mandated to reveal the minimum guarantee number.
Compare that to say, FC Barcelona and many other of the super clubs, who can go with a best of all possible worlds number (aka a much higher one). (See UP Rule: The number’s always wrong).
The ‘how many shirts will they sell’ sponsorship frame isn’t useful here.
Of course, the shirt(s) are the poster child of the relationship, but really it looks a lot like a JV between two big firms.
In fact, it looks a lot like Yeezy, aka Adidas’ relationship with Hiphop’s Hitler-loving-Trump-wannabe Kanye West.
Spoiler: That didn’t end well.
So bad is the fall out from Adi’s Kanye deal that the man himself can’t be named, like Macbeth.
In the latest earnings call, West’s presence in the company’s history was referenced only as ‘Adverse Yeezy Impact’, which sounds like a skin complaint.
The discontinuation of Yeezy sales has led to a $441 million (€400 million) year-over-year drop in overall sales, the company noted in its earnings press release, which makes multiple mentions of “adverse Yeezy impact.”
So let’s talk about risk.
Put Man Utd up against Kanye and suddenly 900milllion looks like loose change.
Man Utd is as secure a ten year bet as it’s possible to make in the sport and entertainment business in 2023.
See also - Penn’s move away from BantzBro Dave Portnoy and Barstool and in to the arms of ESPN, another safe harbour for - again - ten years (see more below).
The Kanye Slide and the Boring Incentive
The commercial decks of every club, tournament and event rights owner will now contain a Kanye Slide, with a big scary picture of the risks of personal endorsement sponsorship.
The flip slide is that the money will now flow to that dreaded receptacle, the safe pair of hands.
A generation of sports stars have been told to shut up and smile.
The worst phrase in the English language is brand safe.
The Ripple Effect of Adi’s Ten Year Plan
The other number is worth your attention.
10 years.
That’s a long time in today’s money.
Empires can fall. Super League pt2 may come and go. The metaverse and the AI revolution could engulf us all.
But whatever happens, Man Utd will be there, like a cockroach after a nuclear winter.
Ten years is a decent timeline in which Adidas, and Man Utd, can answer the question: What are you, exactly? Retailer? Entertainment brand, Tech platform? Media Co? Betting shop?
And by extension, what is the sports business in 2030?
The Zero Sum Conclusion
United’s 900million is 900million now not going elsewhere in the sports biz jungle.
You don’t have to be Alan Turing to decode signal from Herzogenaurach.
The big dogs are making some big bets.
It’s football. But super football. With a caveat that super means super.
Fun fact: A disproportionate number of elite European soccer shirts are out of contract in 2030, says Leo Thompson.
How many 900million deals are out there for say, PSG, Inter, Milan, Man City….
In the end it comes down to numbers.
I’m the first to laugh at the grandiose claims for the Utd fan base but let’s not forget that United are massive. Disproportionately so.
The photo below was taken by Stuart Wareman, recent pod guest and head of sponsorship at ACCOR Live.
It’s Man Utd v Inter Milan in Singapore, summer tour of 2019.
Two European super clubs wowing their international fans.
The blue dot, barely perceptible on the right side of the stadium?
That’s the Inter fans.
The ripple will be felt by clubs, and sports, lower down the pecking order where the kit license market will see a squeezed middle fought over at a far lower price point by Puma, Castore, Macron, Hummel et al.
Spoiler: The rich just got richer.
See also: The new third shirt reveal - creative by Homeground.
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See also:
Asleep at the Wheel pt2
Last week’s newsletter (24 Years of Hurt) covered the scandal of women’s football kit and the lack of investment in tech research by the big sports brands.
This week, the Women and Equalities Committee received responses from Adidas, Nike, Puma and the hero of the hour, Ida Sports, founded by Laura Youngson.
NGB as NHS
This week’s podcast is the second episode of The Squeezed Middle, our series collaboration with PTI Digital.
Our guest was Jon Dutton OBE, fresh in to his new job as CEO of British Cycling.
It’s a rare opportunity to talk to the person in charge while the paint’s still wet.
Fresh eyes. The start of things.
Our conversation quickly gets to the bigger question, facing all National Governing Bodies.
What are they?
Or more specifically, how big are they?
British Cycling’s potential constituency is broad and deep.
It runs from Dame Laura Kenny at the top to me, riding my electric bike along Brighton seafront, overtaking the Mamils while eating a packet of Quavers.
My assumption is that membership of British Cycling is for other people, the ones who want to race each other and take it seriously.
So more Laura Kenny than me.
As I’ve written previously (What’s the point of British Cycling?), I’m in a quandary.
I’m instinctively in favour of big, healthy publicly funded institutions. But I’m losing faith.
What if, British Cycling is crowding out innovative and exciting privately owned and run cycling initiatives just by being there? What if, the money has created a series of perverse internal incentives that reward the wrong things, causing those in charge to chase attribution and take credit for other people’s work in driving up cycling numbers?
In short, what if British Cycling is the problem not the solution?
Then, something happened.
The week of my pod with Jon Dutton, the government got in touch and asked if I’d do a turn for the DCMS and the Department of Business and Trade, who co-hosted a private session at Wembley Stadium.
One Goal. UK Sport Investment
The Department for Business and Trade and the Department for Culture, Media and Sport invite you to participate in their One Goal: UK Sport Investment Symposium to encourage new investment, innovation and long-term growth of the UK sports sector.
One Goal, two different worlds.
On one side there was the money - CVC, Goldman, FSG etc.
On the other, the sport - Public funded bodies of varying shapes and sizes.
There was a distinct Dragon’s Den feel to proceedings.
The talk was of synergy. Operational efficiencies.
The rationale is simple enough.
Some parts of publicly funded sport are easy to monetise.
The hard work - safeguarding, communities, participation, pyramids, rule book etc - will be left well alone, that’ll be the council’s job.
P/E won’t dirty its hands with that shit.
But I came away wondering if it’s an idea that’s passed its sell by date.
It all felt very 2014.
Very Cameron and Osborne, selling the silver.
Now we’re swimming in shit, sometimes literally.
Even some Tories are talking about public ownership.
P/E is a simple sounding solution to a bunch of really difficult problems.
Is there really widespread appetite for their schtick to be applied to sport?
Meanwhile, elsewhere:
Cycling’s C-Sweet: UCI lose £8.2 million, boss gets a big bonus.
The link goes to an elegant dissection of the UCI’s new financial statement by David Owen on Inside the Games.
Contains this nugget.
On a separate subject, the accounts also underlined what a thoroughly European institution the UCI still is: of 123 employees at the year-end, 105 were said to be of European nationality and just 18 from elsewhere.
Remember that when UCI suggests rebranding to World Cycling…
Convergence Watch: Do you have an informed opinion on ESPN’s big bet on betting?
This week’s headline news is Penn’s exit from its Barstool ownership and a new deal with ESPN.
Penn will pay $1.5 billion in cash to ESPN over a 10-year term and grant ESPN approximately $500 million of warrants to purchase approximately 31.8 million Penn common shares that will vest over 10 years, in exchange for media, marketing services, brand and other rights.
Where does it leave Dave Portnoy’s Barstool, the poster boys of editorial fronted gambling as the favoured platform for gambling in the US?
“[W]e underestimated just how tough it is for myself and Barstool to operate in a regulated world, where gambling regulators, the New York Times [and] Business Insider hit pieces, fucking with the stock price every time did something,” Portnoy said in an “emergency press conference” video postedon X (aka Twitter) Tuesday.
For what this means and why it matters, make sure you’ve bought your ticket to our UP Live event on September 28th.
