Warmin’ up the knees… and the nachos (Jamie Squire/Getty Images)
Warmin’ up the knees… and the nachos (Jamie Squire/Getty Images)
In honor of Super Bowl weekend, we whipped up a Snacks special edition on the business of sports, from streaming and betting to players and paydays.
Stocks ticked up yesterday, with the S&P 500 briefly hitting the 5K milestone. Today, investors have eyes on annual revisions to consumer prices for more insight into inflation’s path.
🧠 7-Layer Quiz: The layers of our weekly Snacks Seven Quiz are biz-news Qs, not guac and beans, but they’re almost as tasty (when you get ’em right). Try the first one:
Tickets to which sporting event are the most expensive on record this year, averaging ~$10K apiece? (Check your answer here.)
The playing field… Big Tech has successfully truck-sticked its way into live sports, signing multibillion-dollar deals to score America’s most popular — and most lucrative — content. Last year, streamers spent $6B to give subscribers live sports. The pricey gamble’s started paying off: Google’s YouTube TV said its first season as the home of NFL Sunday Ticket drove 1.3M subscribers, and Apple TV+’s MLS deal netted 110K sign-ups in a single day — Lionel Messi’s first match in the league. NBCUniversal’s Peacock said its exclusive NFL playoff game was the most-streamed live event in US history. As they shoot for profitability, streamers are coming for the one thing that kept folks from cutting the cable cord all along: live sports.
The players… Raising the stakes on streaming’s live-sports race: a new collab just announced by Disney, Fox, and Warner Bros. Discovery that’ll bundle 14 sports channels into one ad-backed streaming package. Now, NBCUniversal, Amazon, Paramount, and Apple may have to draw up a play to avoid getting left behind. Sports-streaming tie-ups, including Netflix’s recent $5B deal with the WWE, could be the alley-oop that shatters cable’s backboard. Over the past decade, 30M US households have ditched cable. Disney’s ESPN pulls in $2B/year in ad revenue, but now the cable staple is moving full stream ahead.
Broadcast rights for the five major US sports leagues cost $15.4B last year — twice as much as a decade ago.
The playing field… 68M Americans plan to wager $23B on the Super Bowl, from bets on how the game’ll play out to gambling on T. Swift’s lipstick color. US sports betting has surged since the Supreme Court struck down a federal ban in 2018. Since then, over half of states have legalized sports bets, with 10%+ of Americans considering themselves online sports bettors. The American Gaming Association projected that sports betting topped $100B last year, and it’s expected to top $200B by 2025. Sports gambling is still illegal in California and Texas, the two most populous states, so the field has room to expand.
The players… FanDuel and DraftKings control ~70% of the US online sports-betting market. Last month, FanDuel parent Flutter, one of the world’s biggest sports-betting cos, listed on the NYSE in its US market debut. While casino rivals like MGM and Caesars are smaller mobile players, they've been revamping their wagering apps (think: live-streaming options). Casino owner Penn Entertainment and its new ESPN-branded sportsbook aim to make up 20% of the US sports-betting market by 2027. Next week, Penn’s expected to drop its first quarterly #’s since converting its Barstool Sportsbook into ESPN Bet.
Over a third of Americans bet on sporting events, and 19% have an account with an online sports-betting service.
The playing field… The world of sports merch and collectables is having an all-star moment. Sales of NFL-licensed products alone are a $3B/year market, and the overall trading-card biz is estimated to be worth $44B. And vintage-gear sales (picture: classic jerseys) have surged as fans splurge for the perfect game fit. The global market for sportswear’s expected to hit $512B in retail sales by 2027, up 7% from today.
The players… The industry’s MVP is mega-merch master Fanatics, which pays 300+ teams and brands for the right to sell official jerseys, caps, and koozies. In 2022, Fanatics added to its roster, buying throwback-jersey maker Mitchell & Ness and rival trading-car co Topps (for a reported $500M). Thanks to the Topps deal, Fanatics has the rights to MLB, NFL, and NBA trading cards. Last month, it signed an exclusive trading-card deal with LeBron James and secured the license to sell UFC cards. But dominance isn’t a slam dunk: rival Panini has the rights to FIFA World Cup collectibles through 2030, and last year it sued Fanatics over antitrust claims.
In 2022, a jersey worn by Michael Jordan in the 1998 NBA Finals sold for $10.1M.
The playing field… As the sports industry makes more $$, players want a bigger piece of the pie. The pros have been forging record-breaking contracts with their teams, and raking in millions with endorsement deals on the side. Meanwhile, the biz of college athletes’ name, image, and likeness (NIL) deals has grown to $1B/year since a 2021 SCOTUS ruling first allowed students to earn off their fame. And this week the National Labor Relations Board ruled that Dartmouth basketball players are employees who can unionize. Though it’ll likely be appealed, it’s a step toward college athletes having more power over their perks. Even high-school players in some states (where it’s legal) are making six figures with brand collabs.
The players… Travis Kelce may be making all the headlines now, but it’s Shohei Ohtani who made contract history last year, signing a $700M, 10-year deal with the LA Dodgers as teams shell out top dollar for top talent. On the college scene, Colorado University QB Shedeur Sanders makes $4.3M/year off NIL deals, and USC basketball’s Bronny James has an NCAA-topping ~$6M/year NIL earnings potential. LSU gymnast Olivia Dunne, who has ~8M TikTok followers, could earn as much as $3.2M promoting the likes of American Eagle and Vuori.
For brands, student athletes are the best-performing subset of social-media influencers.
Eyes: The average cost of a 30-second Super Bowl ad is $7M as corps like AB InBev and Mondelez pony up for exposure (115M people watched last year’s game). Expect to see Peyton Manning tossing Bud Light and Kris Jenner playing with Oreos.
Yeah: Usher teased a surprise guest for his halftime show (and promised to roller-skate). Having left his record label, Usher’ll be the first independent artist to headline an NFL championship show.
Fluffy: The NFL has adorable competition in the Puppy Bowl, which has been broadcasting on Super Bowl Sunday since 2005. Warner Bros. Discovery has used the pup programming to raise awareness of pet rescues.
Last year’s Super Bowl ranks second only behind the first moon landing as the most-watched TV program ever
Super Bowl weekend kicks off
Earnings expected from Canopy Growth, Pepsi, and Enbridge
Authors of this Snacks own shares of: Alphabet, Amazon, Apple, Comcast, and Disney
Correction: In yesterday’s Snacks we mischaracterized Khan Academy as a paid service. It’s a free resource. We regret the error.