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Friday Roundup: ESPN+, Denver Naming Rights And Rich Paul

A breakdown of this week's most important stories in sports business, including ESPN+, Denver naming rights, and Rich Paul.

October 23, 2020

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Friends,

With yesterday being such a busy day in the sports business space, we’re going to do something a little different today.

I’m going to summarize the top 3 stories, digging a little deeper than your traditional headlines. We’ll get back to the regular format on Monday, but let me know what you think.

First up?

ESPN.

(📸 / ESPN)

Headline

Important Quote

“Beginning Nov. 9, the stellar collection of talented ESPN+ writers will expand, with ESPN+ subscribers having exclusive access to the insider perspective, analysis and insight-driven work by some of the most recognized experts and in the industry,” ESPN said in an announcement.

The Details

This one isn’t super complex — ESPN has announced the decision to move the majority of its written insights and analysis content behind the paywall of its subscription platform ESPN+ — a service that costs $12.99 per month as a bundle with Disney+ and Hulu, or $5.99 per month as a standalone service.

The list of ESPN writers moving behind the paywall is long—over 20 names in total—and includes their most popular writers like Zach Lowe, Jeff Passan, Matthew Berry, Jackie MacMullan, Wright Thompson, Baxter Holmes, Dan Graziano, Malika Andrews, Ramona Shelburne and Brian Windhorst.

The question is — as cable subs continue to decline, sports broadcast rights keep getting more expensive, and ESPN continues to lose hundreds of millions of dollars from the negative arbitrage, will their latest move to increase the value of ESPN+ and drive new subscriptions work?

In my opinion, it’s not really even about that.

Sure — ESPN will undoubtedly seen an uptick in subscription revenue, as consumers, who are committed to certain writers, purchase the subscription service in response.

But the move is more about retention than addition.

Subscription services like Netflix and The Athletic rely on a business model which pulls you in with compelling content and heavily discounted offers, but the key to keeping churn low and customers happy is the continuous addition of new content.

The move won’t be popular, and I’m still concerned about their overall business model—and Disney’s long-term desire to own the sports entity for that matter—but it was a necessary decision.

We’ll see how it plays out.

(📸 / Ball Arena)

Headline

Important Quote

“This is not a transaction where we write a check, slap our name on the stadium, high-five each other and go home. This is the beginning of a long-term journey about educating consumers on the benefits of aluminum packaging.” — John Hayes, Ball Corp CEO.

The Details

Ball Corporation, which manufacturers and distributes glass jars, cups, and lids—to the tune of $11 billion annually—has purchased the naming rights for the home of the Denver Nuggets and the Colorado Avalanche, which will now transition from the “Pespi Center” to “Ball Arena.”

Financial details weren’t disclosed but prior marketing estimates put the value of arena naming rights in Denver between $7-$9 million.

The interesting part?

It’s not your typical naming rights deal, where a large corporation spends a chunk of their marketing budget to slap their name on an arena with hardly any quantifiable data or results.

Ball Corp., who runs a B2B sales model by providing packaging for companies like Coca-Cola and Anheuser-Busch, inked the deal with Kroenke Sports Group as a much larger strategic partnership to raise awareness around their new reusable aluminum cup retail offering.

As part of the agreement, single-use plastic cups will be phased out in Kroenke Sports Group owned stadiums across Denver, Los Angeles, and London — with Ball Corp. reusable aluminum cups being phased in.

Point being — It’s a win-win.

Ball Corp. purchased the arena rights, but received a much larger marketing, distribution, and sales channel in return — while Kroenke Sports Group finds a long-term strategic partner for their stadiums across the world.

(📸 / Basketball Network)

Headline

The Details

The Athletic released part II of their annual NBA agent survey yesterday, where they allow 20 NBA agents to provide anonymous comments on headlines that are sure to dominate the NBA offseason.

You can read the entire article here, but one comment stuck out in particular.

When asked to provide his thoughts on LeBron James, in whatever context he wanted, one NBA agent decided to anonymously go nuclear on LeBron’s connection to Klutch Sports — the sports agency founded by his friend, agent, and business parter Rich Paul.

Here’s the quote:

“The worst thing that LeBron is doing is forcing this power with Rich Paul and what that is, in terms of, he’s a player, but he has prowess in the media space. His company Spring Hill, that’s awesome. Doing the movies and all of the projects. That’s so commendable. I love that. But now that they’ve jumped into the agent game, which the reality is, it’s illegal for a player, particularly if you’re in the state of California, to be licensed to represent talent.

“Now I know it’s this façade that it’s Rich Paul, but it’s really LeBron who recruits for Rich Paul. So it’s almost like they’re trying to control AAU at the NBA level. This is my AAU team and they’ve carried that to the highest level. And because of his power and his prowess, people, the young players are seduced by LeBron James in the same way people were seduced by Michael Jordan with David Falk. He went from having Michael Jordan and a few other players, to getting the top players in the NBA, because of the Jordan factor. Rob Pelinka had tremendous success as an independent agent because he had Kobe Bryant and the players idolized him. So, the fact that LeBron recruits and has empowered Rich Paul, and I get it, on the top guys, but if someone does their research, a lot of these guys have really gotten screwed, a large number of them, by mismanagement.

“There’s at least five or six massive casualties. Nobody is saying anything and you can even say that the union should take some responsibility because they represent all of the players, not just LeBron James. Because this is anonymous. I hope you have the courage to put this out there, because nobody is talking about this but this is the reality, and if you ask any other agent what I just said, they would all agree.

“They’ve been able to leverage KCP, two or three years in a row because they have the power and they’re forcing it down their throat. Nerlens Noel. There are four or five of them that have suffered millions of dollars from mismanagement but nobody has the courage to support it, because all the media wants access to LeBron. They want access to AD.

Don’t get me wrong, I think there is a time and place for anonymous quotes — I certainly don’t love them, but I get it.

But how are you going to trash everything Rich Paul has built “because this is anonymous” but then request The Athletic “have the courage to put this out there.”

Whether other NBA agents hold the same opinion or not, that’s a joke.

Here’s my response.

Have a great weekend and we’ll talk Monday.

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