Moag & Company Sports Notes (11 Nov 2022)

Date: Nov 2022

Trivia

Who are the five teams to have never been relegated from the English Premier League?

Last Week’s Answer: The Los Angeles Lakers are the team with the longest winning streak in NBA history.

Football:

Speculation about a “potential buyer was widespread,” after the Washington  Commanders retained a bank to explore all options regarding the team's future, and "at least one prominent name" was confirmed as having interest: Amazon Founder Jeff Bezos, according to the Washington Post. His bid "might include" Jay-Z as an investor. The news of Bezos’s interest was first reported by People magazine. Some in the league have said that for several years Bezos was "interested in purchasing an NFL franchise at some point.” But he “apparently did not enter the bidding” for the Denver Broncos. Other NFL owners in the past “have expressed a strong desire to have Bezos buy a team.” Amazon became the exclusive national carrier of “TNF” as part of the NFL’s new broadcasting deals announced last year. The Amazon deal reportedly is worth about $1B annually. Another person familiar with his thinking “left open the possibility of a bid for the team but added that Jay-Z would not pursue a minority stake in the franchise" if Dan Snyder remains the majority owner. Having someone like Bezos "commit and rid the NFL of what’s clearly a problem (in Snyder) is not a bad thing. The more guys like that who don’t worry about the money, who spend the money to improve a franchise, is ultimately good for the sport”.

Baseball:

With MLB free agency starting, the Washington Nationals’ "entire existence" is "defined by the uncertainty of their ownership situation," according to the Washington Post. Nationals GM Mike Rizzo on whether the ongoing sale process will affect spending this offseason "kept with the company line, saying, 'We’ve been told to do business as usual.'" Rizzo said what has "changed is the uncertainty of what’s the final payroll going to look like" and "what’s the ownership group going to look like down the road." He added they are "going as we always have with the Lerners as ownership, trying to just do what we can do to move this process along." Rizzo "remains committed to a simple roster-building method: Once the Nationals know what they have in-house, he will return to aggressively pursuing big-name players" through free agency and trades." But the "reality is Washington is both being shopped and at a rebuilding stage that wouldn’t typically yield splashy signings". The Nationals’ sale is "at the moment, kind of perplexing." If the issue around what revenue the Nationals will receive from MASN in the future are "slowing down a transfer of power even a little bit," then an "already painful rebuilding process feels as if it’s on pause. Does all that mean the people who built the first winner, Rizzo and his staff, deserve the chance to do it again? Or are fresh eyes and fresh voices a better remedy? In some ways, it’s pointless to ask those questions when you don’t know who’s providing the answer." There is some "built-in lame-duckness to all of it," and it is "hard to see how that wouldn’t impede progress, even a little." Not knowing who is in charge next year at this time "brings with it a little bit of paralysis".

Basketball:

The NBA's new investment arm NBA Equity is an "expansion of an already-existing operation" which has "accelerated the league’s interests," according to The Athletic. The NBA’s equity portfolio is now “approaching nearly 20 companies," with the "total value of those stakes" worth nearly $1B. While the league has been investing in companies for "about a decade, roughly half of those deals have come over the last year,” and the NBA has been "active in surveying the market for new opportunities.” NBA CFO David Haber said that the league is in “constant communication with startups,” and is “looking at companies in their early and growth stages.” The NBA has “taken a wide approach, looking for companies that can complement its core business” but also could “help with some of the problems inherent to the league.” David Lee, who the league hired in May to head its NBA Equity team, said that the NBA has “invested in companies that create sports technology, media and fan engagement, data analysis, apparel and sports betting.” Last year, it signed a long-term partnership with SportRadar to “manage its data globally,” and this summer, the NBA “closed several deals.” It “took equity stakes” in NFT fantasy sports company Sorare, QuintEvents, and in New Era. Haber said that the intent is to partner with companies that can “benefit the NBA ecosystem over the long-term”.

Monumental Sports & Entertainment Chair & CEO Ted Leonsis predicted that the rapid increase in sports franchise valuations will lead more companies that own teams to become publicly traded entities. In a conversation at SBJ’s Dealmakers conference with his son, Monumental Sports President of Media & New Enterprises Zach Leonsis, the elder Leonsis said sports teams offer potential investors reccurring revenues, predictability and stability. “You're going to see a lot of big-market, sophisticated operators who still can keep the fan central, having to get scale, having to build big businesses and you'll see some of these companies going public.” He was quick to add that while Monumental isn’t necessarily planning on going in that direction, the increasing value of sports teams will continue to lead to ownership groups taking outside investment. “There is an inevitability if you connect the dots to what's happening in our industry, we have to be much more sophisticated as financial operators building enterprises, taking other people's money now, not taking it for granted, finding a way to show that we can increase value and get liquidity to some of these investments,” Leonsis said.

Other:

Crypto exchange FTX, which has multiple high-level sports sponsorships, filed for Chapter 11 bankruptcy. The total amount that the exchange "owes its customers is unclear, though it may be as much" as $8B. FTX had "gone on a tear signing prestigious sports partnerships." Teams and organizations "may try to recover money through litigation and look for a replacement sponsor." A spokesperson for Miami-Dade County called the FTX- Heat arena naming rights deal “an evolving situation,” and said the county was reviewing the crypto exchange’s financial situation. The spokesperson added, “Should FTX be unable to meet their financial obligations under the naming rights deal, the county will explore all legal remedies.” In 2002, executives of the Houston Astros "agreed to buy back naming rights from Enron, the disgraced energy company." Enron Field later became Minute Maid Park. Mercedes AMG Petronas F1 Team suspended its relationship with FTX prior to the filing, and the crypto exchange's branding will no longer appear on the team's cars and other assets this weekend in Brazil. This is a reversal from Mercedes originally telling media outlets including SBJ yesterday that it was planning to display the logos this weekend. The reason for the quick about-face was unclear but FTX's unraveling has happened suddenly.

Sources: SportsBusiness Daily; ESPN.com; Washington Times; USA Today; ProFootballTalk; Washington Post; N.Y. Times; The Athletic; 

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