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Sunday, April 18, 2021

NCAA March Madness: Making Basketball Profitable

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NCAA March Madness is a spectacle. It’s exciting, dramatic, heartbreaking and exhilarating. It draws viewers from across the country from all walks of life, all applauding for their local favorite. Amidst all of the drama, we tend to forget how much money is involved in college sports.

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Think about it; people pay subscriptions to watch the games, billions of dollars are bet on the results, and bars and restaurants across the country have big deals as fans flock. Beyond that, there are advertising dollars for the sales of advertising, equipment, and memorabilia, and even hotels and airlines are profiting from trips to the games. Simply put, college sports are a massive industry.

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Even though college sports players are not paid, almost everyone else is, which means there are investment opportunities. While the opportunities are plentiful, there are three areas in particular that are worth considering. The first is advertising and marketing. Second, subscriptions and content delivery. Third, the betting and gambling associated with modern sports are also worth considering.

Advertising and content:

Advertising as an industry has changed dramatically over the past few years. Rising internet usage, declining cables, and the abandonment of print media have rocked the industry. Covid-19 has taken all of this a step further, drawing even more people online and reducing traffic to some of the other more traditional advertising paths such as billboards.

With the big change there are some obvious winners like search engines and social media platforms. Another potential winner is live television. The TV advertising industry has come under pressure as more people cut the cord and abandon their cable subscriptions.

However, the biggest events always get a lot of viewers – and if there is less stuff people want to watch live, the ones in demand are more valuable. That’s why the big media companies that own the broadcast rights to a lot of college sports are willing to pay so much for them. Again, look at the March Madness.

UKTN
VIAC
has continuously renewed its March Madness streaming contracts since the 1980s, and recently pledged to pay $ 8.8 billion for tournament rights for another 8 years until 2032. That’s more than one billion dollars a year for the broadcast rights to a basketball tournament. !

Access the content:

Cable subscriptions are dropping – no one wants to watch a movie on TV when they could watch it uninterrupted on a streaming service like Netflix
NFLX
, Disney
Dis
, etc. Live sports, however, remain a staple of the cable subscription with standalone streaming options available.

This creates a dilemma for casual sports viewers; they often can’t justify the cost of a cable subscription just to watch a few live games here and there, but they don’t need cable to watch all the shows they want to watch. These price-sensitive customers put broadcasters in a sticky situation – they must walk a tightrope between offering slim digital subscriptions to attract cord cutters, without making it too easy for cable customers. existing lucrative.

Two companies in particular stand out for their different strategies in space, Disney and Viacom UKTN. Once a cable giant that refused to offer any sort of best-for-its-content articles, Disney has continued to take a cautious approach to delivering digital experiences. While Disney Plus has been a huge success, having garnered more than 100 million subscribers in less than a year and a half, the company has been much more careful with its sports assets. Some limited services are available through ESPN Plus, but most of the content in the ESPN Crown Jewel remains accessible only through a more expensive wire harness or through expensive on-demand purchases. In short, they protect their wired assets with sport.

Viacom UKTN, meanwhile, has done everything in its power to try to capitalize on the digital wave. UKTN All Access, now renamed Paramount Plus, offers all of its sports content through an in-app subscription – no cable subscription required. In other words, Viacom UKTN backs itself to have exclusive content that can stand on its own – if all you wanted was their content, you can ditch your cable subscription altogether.

Engage the fan base:

While accessing and delivering content certainly sees innovation, the change in the engagement side of sport is happening much faster. From fantasy sports to social engagement to gaming, engagement around sport is a multi-billion dollar opportunity.

It all started with Fantasy Football a few years ago – the NFL needed a way to engage fans beyond the team (s) everyone could support. Fantasy Football has given people a reason to care and get involved in the results of every game. Meanwhile, the NBA took a different path and started trying to make its players friendlier and more engaged with their fans – athletes have gone from being a team cog to being an individual brand and social influencer. .

Fast forward a few years and today the opportunity to invest in fan engagement is through online gaming. Just forget about competing in fantasy football with your friends – in many states you can now bet on an outcome or even a particular facet of a match. Think the Lakers are going to lose, but LeBron James will score over 30? There is a place to bet on it. Companies like Penn National Gaming
PENN
, or Draft Kings Inc, have burst onto the scene to offer easy digital interfaces and easy access to gambling wherever it has been legalized.

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