Just over a year ago the sports world shut down. Now the ‘comeback’ is dominating sport and business headlines as stadium capacities increase, media deals are redefined, and the major sporting events we’re accustomed to resume. Further, if history is any indication, it’s possible we are entering the golden age of sports with salary caps going up, focus intensifying on infrastructure developments, and franchise valuations continuing to rise. Innovations in gambling, esports, and streaming are changing access to sports, sponsorships are returning, and individual player brands are swelling. So, how are asset and brand valuation impacted by these trends?
That’s what Foley & Lardner and host Rick Horrow of Horrow Sports Ventures recently explored in the fourth installment of their Leadership Insight series, The Comeback: Sports in a Worldwide Pandemic. Here are some of the key takeaways and learnings from each panelist’s conversation on the business in and around sports brand and asset valuation, covering issues of franchise valuations, the current state of the sports media landscape, building and maintaining a pristine sports brand, and the state of women’s sports and its impact on asset valuation.
Gary Bettman; Commissioner, National Hockey League
- The Evolution of the NHL Brand: When Gary took helm as commissioner in 1993, the state of the NHL brand was very different than it currently is. There were fewer teams, 24 at the time – there will be 32 next year. The gross revenue was $430 million – it would have been $5.5 billion last year, if not for the pandemic. They’ve established competitive balance across the league afforded by a salary cap and revenue sharing. And, ultimately, they believe they are a bigger, stronger, more popular league that is reaching a wider audience than ever before.
- Navigating the NHL’s Covid Seasons: To accomplish the many important objectives of the NHL over the Covid era, Gary highlighted the importance of full league unity, including buy-in from the players, player associations, and ownership. Furthermore, Gary underscored the importance of remaining agile and flexible enough to execute in the face of the many uncertainties brought by the pandemic. Finally, the league sought ways to preserve as much cash as possible, work with business partners, and most importantly – stay connected to their fans.
- Measuring Success: Franchise values have increased exponentially, and the Seattle Kraken just paid $650 million to enter the League later this year; clear indications of success. But what Gary evaluates his tenure on is three-fold: (1) fans are coming back in surges following the pandemic, (2) their media partnerships are strong, with Warner Media and Disney showing confidence in the League, and (3) the strength of the NHL fanbase – which he believes is comprised of the best, most affluent, tech-savvy, and passionate fans in sports.
Fred Ridley; Chairman, Augusta National; Partner, Foley & Lardner
- The Masters Brand: Fred’s background with The Masters gives him a 50-year history with Augusta National, which has allowed him to observe the brand value from a range of perspectives. Fred believes the first chairman of the club set the standard for attention to detail, believing that you either improved or moved backwards. This value of continuous improvement was built into Augusta National’s culture, and in turn its brand. Furthermore, they’ve made every effort to improve the club and tournament annually, from venues to food to broadcast. Ultimately, the Augusta National brand is one that relies on its traditions but has a continual willingness to adapt and evolve.
- When Less is More: The Masters brand is largely built on restraint: limited patrons, minimal commercials, smaller broadcast windows, etc. But Fred has also expanded the offering by adding events like the Drive, Chip, Putt championship and the Women’s Amateur event – both of which have proven successful. Fred notes, balancing the opportunity to expand with the minimalism that is key to Augusta National’s brand is difficult, but is confident they do so effectively by expanding in ways that grow interest in the sport.
- Philanthropy and Brand Culture: One of Augusta’s longstanding core values is a commitment to community. With the societal issues and social unrest that had been highlighted in the country over the past year, Fred felt action was the most effective response, and focusing on lifting up those closest to their community was the best way to do so. This materialized through an initiative they took on with two local areas, Harrisburg and Laney Walker, where they, along with several select sponsors, donated $10 million to seed projects in these areas intended to lift up the community.
Angela Ruggiero; Hockey Hall of Famer and 1998 Olympic Gold Medalist; Co-Founder and CEO, Sports Innovation Lab
- Closing the Gap: While the gap between men’s and women’s sports in terms of sponsorship, revenue, and television exists, Angela believes it will soon be shut; likening women’s sports to startups in the sense that they’re here, but their growth is exponential. Angela is bullish on the prospects of the women’s sports market for many reasons, but highlights that society is in many ways is demanding progress, and the technology to enable this growth is now present.
- Building Brand and Asset Valuation: Following the men’s sports model for growth doesn’t make sense for women’s sports, as they try to innovate around the edges with the rights they already have; compared to women’s sports which has a clean slate. This allows the women’s leagues to entertain creative opportunities to take on capital, build interest in their sport, and seek opportunities to partner and grow with established men’s associations, as is the case with the WNBA and NBA.
- Evolution of Fan Engagement: Fans are evolving how they consume media and entertainment. To help grasp this evolution, Angela and Sports Innovation Lab are turning to social media data to better understand where the digitally savvy consumer is headed. During the pandemic, so many fans turned to alternate forms of entertainment – like Netflix, Fortnite, or Esports – which Angela believes should not be taken lightly by the sports industry. This new project will help sports executives think through new fan behaviors, where they’re headed, and understand what an evolved business model might look like.