Moag and Company Sports Notes (16 Aug 2019)

Date: Aug 2019

Trivia

When was the first American Football League (AFL) game played?

Last Week’s Answer: Team USA won their first soccer World Cup title in 1991. They defeated Norway 2 to 1 to win the Soccer World Cup in Guangzhou, China.  

Football:

The Ninth Circuit Court of Appeals "reversed a decision to end a nationwide class-action lawsuit" over DirecTV's Sunday Ticket package in a "potentially huge decision," according to the Hollywood Reporter. Subscribers of Sunday Ticket are "challenging the league's dealmaking in a bold antitrust case." The action was "dismissed by a federal judge who two years ago rejected the proposition that restraining broadcasts of out-of-market games resulted in less output and higher prices." But Ninth Circuit Judge Sandra Ikuta led a "majority decision reversing the dismissal." The plaintiffs contend that without the NFL pooling out-of-market telecasts, there would be "multiple telecasts of each game with teams competing against each other by distributing telecasts through various cable, satellite and internet channels." A limited injunction against the NFL prevented teams from "broadcasting games into another team's market when that team was playing road games." Ikuta in her decision said that no individual NFL team is "permitted to sell its telecasting rights independently." The NFL "put up several arguments to foreclose the conclusion." Among them was the "proposition that it was necessary to analyze the horizontal agreement separate from the vertical agreement -- the NFL-DirecTV deal -- and that the latter effort to enter into an exclusive distribution agreement was presumptively legal." The Ninth Circuit "rejects the approach, saying it is required to take a 'holistic' look at how the interlocking agreements actually impact competition".

Baseball:

MLB has added FanDuel Group to its growing portfolio of authorized sports betting providers, evidence that its controversial strategy of tying the sportsbook sponsorship category to the purchase of the league’s official data feed continues to gain traction. FanDuel joins MGM Resorts and DraftKings as “authorized gaming operators,” giving them access to MLB’s official data feed and league and team logos, as well unlocking opportunities for sponsorship deals and promotional opportunities with MLB clubs in states that allow and regulate sports betting. MGM’s status as “official gaming partner” makes it the only sportsbook that can market through MLB channels, such as its web site. This is the first deal between FanDuel and MLB, which held a stake in daily fantasy competitor DraftKings and promoted that company’s daily fantasy product exclusively. Execs from MLB and Fan Duel declined to discuss financials, but confirmed that the structure remained as it was when MLB began negotiating with sportsbooks earlier this year. Multiple sources have said MLB’s commercial payment structure for data approximates the 0.25% royalty it sought when lobbying state legislators.

Basketball:

Brooklyn Nets co-Owner Joe Tsai is "close to signing a deal" to buy the 51% of the team he "does not already own" from Majority Owner Mikhail Prokhorov, according to sources cited by the N.Y. Post. Tsai "already owns 49% of the team," which he bought last year for $1B. At that time, he "locked in the right to buy the remaining 51% of the team" before the '21-22 NBA season for an additional $1.35B. Sources said that the full $2.35B transaction is "expected to be announced this week," and would "mark the highest price ever paid for a sports franchise." Tsai will be "exercising his right to buy" Prokhorov's 51% share two seasons early. The sale "comes at a time when the Nets are still high off their recent off-season buying spree." In March, it was reported that Tsai also was "in talks to buy the Barclays Center and the new Nassau Coliseum," which would "pave the way for him to get NBA approval to buy the team." Sources said that the NBA "pushes its owners to also own their arenas, and that is one of the reasons Tsai will also be acquiring the Barclays Center".

Soccer:

MLS plans to announce next week that St. Louis has "secured an expansion team," with plans for an event in the city on Tuesday, according to the St. Louis Post-Dispatch. After the St. Louis ownership group presented their bid to the league at the MLS All-Star Game last month, Commissioner Don Garber said the group's effort has been "amazing." The "MLS4TheLou" group is led by Enterprise Holdings Foundation President Carolyn Kindle Betz, World Wide Technology CEO Jim Kavanaugh and other members of Enterprise’s Taylor family. The group has plans for a "primarily privately funded downtown stadium and a majority female ownership group." In April, Garber said that the league was "entering 'exclusive, formal' discussions with St. Louis and Sacramento as it aimed to expand from 27 teams to 30." The St. Louis team is "targeting" '22 to start play. Final plans for "stadium financing, sponsorship deals and team details, such as team name and colors, have not been revealed". The stadium funding issue was a "critical hurdle to overcome." A '17 attempt to bring MLS to St. Louis "died when a referendum that would have" provided $60M in public money toward a venue was "rejected by voters".

The Seattle Sounders have announced 11 families who will be joining their ownership group, "forming the Seattle Futbol Club LLC that partially bought out Hollywood producer Joe Roth’s stake in the team," according to the Seattle Times. Once Roth announced he was stepping aside, Adrian Hanauer "increased his majority stake in the club" while Drew Carey "bumped up his investment with Jody Allen and the new owners entered at various levels as minority owners to round out the group." Recognizable names such as Seattle Seahawks QB Russell Wilson and his wife, Ciara, join hip-hop star Macklemore and his wife, Tricia Davis, as "new investors." The investments "took 15 months to finalize," but the Sounders now have "one of the world’s most diverse soccer ownership groups." The new faces will be formally introduced Aug. 19. Hanauer said, "This was not a financial investment. This was about community, team, culture, diversity, inclusiveness and, yeah, winning." He also said he wants "input" from all 11 families on club matters.

Other:

Disney "fell short of analysts' expectations" for Q3, as the "three months ended June 29 were marred by the weak performance of Fox entertainment assets purchased" in the $71.3B deal that closed in March, according to the Wall Street Journal. Disney's purchase of the "high-profile assets" from Fox gave it "valuable franchises like 'Avatar' and significant overseas expansion." But it also "tied the industry leader to a smaller rival that has lagged behind so far this year." Disney's Q3 profit declined 40% to $1.76B. Revenue in Q3 was $20.25B. Disney Chair & CEO Bob Iger said that he has a "'bullish view of the future' despite a lackluster quarter, but that it will be a couple of years before Disney turns around the fortunes of Fox live-action content". CNBC.com said there was “some strength at ESPN in terms of advertising rates increasing." But with the whole media networks business, there is "declining viewership because of the cord-cutting issue, and it’s not just a Disney issue”.

Sources: SportsBusiness Daily; The Athletic; ESPN.com; Hollywood Reporter; N.Y. Post; St. Louis Post-Dispatch;

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