Are Declining Gambling Revenues a Summertime Slip or a Concerning Trend?
The stock prices for DraftKings and Caesars are both down more than two-thirds from their price 12 months ago, and DraftKings alone lost nearly one-fifth of their stock value in the month of June–nearly twice the rate of decline suffered by the S&P 500.
Let’s get one thing straight right off the jump–sports betting is here to stay. A recent study showed that the majority of Americans support legalization of sports gambling, up quite a bit from this time a year ago, as more and more states adopt legislation to make services accessible to their citizens. With states such as Kansas and Ohio opening for business–and potentially California, Massachusetts, and Texas waiting in the wings–the sports betting wave is not heading back to sea anytime soon.
However, with the finalization of numbers from May and June, there are some worrying signs that the tide could be receding just a bit in established markets. Whether this is due to higher inflation currently impacting most Americans, or the looming fears of a possible recession, or simply due to the lack of summertime sports aside from baseball, is up for debate. What isn’t up for debate is the fact that revenues dropped for multiple states, and the advertising budgets are drying up along with them.
The American Gaming Association reported that May of 2022 saw more than $448 million in revenue was brought in by mobile sports books, an increase of eight percent over the same month in 2021. However, that increase is mostly driven by the state of New York, where gambling wasn’t legal until early this year.
Even the Empire State is seeing a drop in what is being wagered in their state. After bringing in nearly $108 million in revenue in May, the month of June saw that drop down to just $72 million. Early July saw their worst single week total of revenue since legalization, with a mere $190.2 million wagered from July 3-10. The 51% tax rate in the state is keeping the government’s coffers full, but declining revenue is a key driver in the pullback of advertising dollars for broadcasters in the state.
New York’s legalization played a key role in the nosedive suffered by the numbers in New Jersey, as well. Companies in the Garden State suffered a massive drop in June, with revenue down 36% from May and a whopping 45% from June of 2021. Furthermore, the state lost 16% revenue in the first six months of the year compared to the same period in 2021, as many New Yorkers were able to stay home and wager. Due to this, it’s hard to glean from their numbers how much an impact other factors played a part.
One state where recession and rising prices clearly played a role is Indiana, who pulled in their lowest handle in nearly a year. With just over $256 million wagered in June, Indiana saw a drop of 17% from May, although their revenues were up slightly from June 2021. Their second-lowest handle in nearly two years was fueled partly by many gamblers staying home, rather than driving from nearby Ohio and Kentucky to place wagers before heading home. Living in Indiana and working in Kentucky, I personally know multiple people who used to do this very thing who have stopped over the past two months, and who have no plans to resume this behavior even when football starts up.
It’s very easy to write much of these figures off to baseball being the only real driver of betting action at the moment–and it could very well be the case. The summer of 2021 featured the European Championships, which provided plenty of alternate gambling activity, as well as the delayed NBA playoffs stretching until July 20th.
However, there are further signs that those in the industry are seeing real signs that the market has become oversaturated, and that decisions have to be made regarding advertising budgets, promotional offers, and other areas of spending. The stock prices for DraftKings and Caesars are both down more than two-thirds from their price 12 months ago, and DraftKings alone lost nearly one-fifth of their stock value in the month of June–nearly twice the rate of decline suffered by the S&P 500.
Additionally, at the SBC Summit North America last week, FanDuel CEO Amy Howe stated that while inflation isn’t impacting their industry nearly as much as it is others, consolidation is necessary for sustained success in the sports gambling space. She said that having more than a dozen companies vying for a piece of the same pie is “a challenge to sustain in any economy” and expects to see some smaller mobile sports betting companies swallowed up by the larger ones.
For those looking ahead to the football season, the next few weeks should shed some light on just how much these companies will start to pull back from their advertising spend figures from a year ago. Going a step further, will more people pull back from watching or listening to gambling shows and podcasts because they’re having to cut back on how much they wager–or potentially stopping altogether–as their cost of living rises and they begin saving for the cloudy economic future?
With discretionary income quickly dwindling for many bettors, and fewer new customers to attract, will companies like DraftKings and FanDuel go for more targeted advertisements in larger markets? Or will they be more aggressive in trying to bring in the more limited bankrolls of players and maintain a larger market share? The answer to these questions remains to be seen, but one thing is for certain–this is a very volatile time for all involved in making money in the sports betting space, books and broadcasters alike.
Jason Ence resides in Louisville, KY and is fully invested in the sports betting space. Additionally, he covers Premier League and Serie A soccer, college football, and college basketball for ESPN Louisville 680 including serving as the station’s University of Kentucky correspondent, and co-host of the UK football and basketball post-game shows. He can be found on Twitter @JasonUK17 and reached by email at email@example.com.
Coaches & News Conferences Don’t Have To Be So Boring
“It is a recent phenomenon that the public even sees a full news conference. Now that they do, though, they get to see how the sausage is made…and it’s pretty boring.”
I couldn’t possibly count how many news conferences I have watched or attended in my career. It would be like counting each individual pine tree you pass while driving a two lane country road. Eventually, every tree and news conference looks the same. You would just end up losing count and interest.
Most news conferences contain ten times the recommended daily amount of cliches and safe answers. There’s the occasional oasis in the desert of “one game at a time” answers that restores faith in the existence of a non-cookie cutter news conference. Often, those hopes are quickly reeled back in by the coach that would rather have his teeth pulled out one by one than show even an iota of personality in an answer.
I get that the purpose of a news conference is to get the answers to the pertinent questions facing a coach or his team at that given moment. The view inside a news conference that the general public is given is rare. It is like a live look-in at the accounting firm’s weekly staff meeting (and, often just as exciting).
It is a recent phenomenon that the public even sees a full news conference. Now that they do, though, they get to see how the sausage is made…and it’s pretty boring. The fan of the team gets to see how the quote of their coach is edited down from the 90 second soliloquy to the 20 second “money quote”.
Here’s the thing; there is no law mandating every question has to be the boring, run of the mill roster spot question. The reason they are is that most of these news conferences are a race against time by media members that cover the team on a daily basis to gather as much information as possible. It is a race against time because the head coach will not stand at the podium all day. He’d rather be anywhere else.
It is in that environment that a member of the media risks raising the ire of their colleagues by asking a coach if they could be one movie character in all of history, who would they choose? Can you imagine Bill Belichick, unlikely as it may be, explaining why he’d choose to be Michale Corleone from The Godfather? Instead, he is mumbling a non-answer on any variety of positional battles in Patriots practice.
Last week in the news conferences leading up to Kentucky’s NCAA Tournament game against Providence, Wildcats coach John Calipari was asked about not taking the North Carolina State job because of bad Raleigh, North Carolina pizza. The story, originally told by former Calipari assistant Josh Pastner, was relayed by WSJS’s Josh Graham. The ensuing answer, far from a knee slapper, showed some personality from Calipari. He informed the reporter the pizza was from Mellow Mushroom and it was not why he passed on the Wolfpack.
Calipari is a guy not afraid to show a little personality, in fact, he is a very big personality. It is not uncommon to see a news conference clip from him that is beyond the normally mind numbing coach speak. This is the guy that had a press conference interrupted once by Temple coach John Chaney trying to fist fight him. It would be nice to randomly see that from other coaches across sports.
Imagine if we discovered most coaches were actually funny people who didn’t mind not being robots 24/7? It would be like dropping a rock in your driveway only to have it break into pieces revealing gold dust on the inside. We could inadvertently stumble into a whole new realm of news conferences. I mean, the breakdown down of the two deep at the offensive guard spots might not get discussed in excruciating detail but, maybe, we find Andy Reid’s go to burger patty seasoning.
What we may discover is that our audience actually likes that kind of thing. It doesn’t mean Reid, or any other coach, never gets to tell us it is one week at a time and they’ve moved on from last week’s game. There will be plenty of that kind of talk, it is in their DNA. We could only hope the fun stuff gets seasoned in.
It will take a member of the media that doesn’t mind ruffling the feathers of some of the old school writers who wear mustard stained shirts and Sansabelt slacks. Those guys devour the coach speak of the week one two deep. They’ll ostracize the media member who “doesn’t take this seriously enough”. Deep down inside, though, I think they’ll give it a laugh, heck they may even use it in their content. When that day comes, you’ll thank me for this idea. Then you can go right back to the battle for the back-up spot at the left corner.
Ryan Brown is a columnist for Barrett Sports Media, and a co-host of the popular sports audio/video show ‘The Next Round’ formerly known as JOX Roundtable, which previously aired on WJOX in Birmingham. You can find him on Twitter @RyanBrownLive and follow his show @NextRoundLive.
RSNs’ Demise Could Make Baseball Even Less Competitive
How many fans would have to buy a $20/month package to equal $60 million/year in local TV revenue?
Baseball fans should consider being careful what they wish for regarding the seemingly inevitable demise of regional sports networks (RSNs).
Yes, Diamond Sports Group’s recent filing for bankruptcy puts the television broadcast agreements that Bally Sports Networks have with 14 Major League Baseball teams in possible jeopardy. Many fans of those 14 clubs — which include the St. Louis Cardinals, Texas Rangers, Milwaukee Brewers, and Minnesota Twins — are hoping this development frees up local TV rights to be picked up by a streaming platform.
Currently, fans in those 14 markets who cut the cord with cable and satellite providers have been unable to watch their favorite teams locally because of Diamond’s failure to work out carriage deals with popular streaming outlets like YouTube TV and Hulu + Live TV. And many of them aren’t interested in subscribing to Bally Sports’ own streaming package for $19.99 per month. Especially if they just want to watch baseball for six months and have no use for local NBA and NHL coverage. (A few of those markets don’t have a local NBA or NHL team, either.)
Amid the bankruptcy proceedings, Diamond is attempting to get out of broadcast agreements with the Arizona Diamondbacks, Cincinnati Reds, San Diego Padres, and Cleveland Guardians. Those four clubs cost Diamond more in rights fees than they generate in cable contracts and ad revenues. MLB intends to pick up the broadcast packages for those teams and stream those games for free if that happens.
Fans of the other 10 teams tied to Bally Sports deals are hoping for a similar outcome. Though that would be highly unlikely, Diamond apparently is not close to an agreement with MLB that would help the company get out of bankruptcy, as it has with the NBA and NHL. Furthermore, Diamond is arguing that MLB has no interest in such a deal, preferring to take back streaming rights for those 14 teams.
Yet would that really be the best development for MLB in terms of competitive balance? Baseball has long struggled with a significant financial disparity between large-market teams and those in mid-sized or small markets. According to Spotrac, the New York Mets will have the highest payroll for the 2023 season at $355 million. At the very bottom of the league, the Oakland Athletics’ payroll is a fraction (11 percent, to be exact) of the Mets’ at $40 million.
But the gap between teams playing in large media markets (and thus getting significant revenue from local TV contracts) versus small market clubs is nearly as vast. The Los Angeles Dodgers reportedly earn $239 million per year from their local TV contract, while the Pittsburgh Pirates get $60 million.
The Pirates are also one of three MLB teams who have a TV deal with AT&T SportsNet. Warner Bros. Discovery recently announced its intentions to transfer ownership of those RSNs to their respective teams and leagues. If a deal can’t be made, WBD will likely enter bankruptcy proceedings for the RSNs. So add the Pirates, Colorado Rockies, and Houston Astros to the team whose local broadcasts could be taken over by MLB.
But would the Pirates still get $60 million in local TV revenue under such an arrangement? Teams with local cable contracts were able to draw enormous fees by being part of a larger overall package in which even non-sports fans were paying fees for RSNs.
However, if these networks are no longer part of a cable bundle, can their broadcasts come anywhere close to matching those revenues from streaming packages? As The Ringer’s Bryan Curtis asked on The Press Box podcast, how many Pirates fans would have to pay $20 a month (or more) to generate $60 million per year? Even if RSNs began to feature sports betting broadcasts, would that draw enough revenue to make up the shortfall?
The Pirates aren’t competitive as it is, finishing last in the National League Central division in 2022 with a 62-100 record (31 games behind the first-place Cardinals). Pittsburgh also had the lowest payroll in the NL at $59 million. How does taking away $60 million — which essentially covers the Pirates’ player payroll — improve any chance of contending?
MLB commissioner Rob Manfred told the Wall Street Journal, “I think we can get into a mode where we are better able to say to fans: You can watch baseball on whatever platform you want to watch it.”
Manfred and MLB will also have to address the sport’s restrictive local market blackout rules to make game broadcasts as accessible as the commissioner envisions. Many baseball fans and observers likely know that Iowa, for example, is blacked out from six teams (Cubs, Twins, Brewers, White Sox, Royals, and Cardinals) locally. An MLB.TV subscription isn’t of much use in that region.
Reportedly, MLB is working on that very goal. But current TV contracts and local media rights deals create a ball of yarn that could take years to untangle. In the meantime, baseball’s elite teams could separate themselves even further from those less fortunate — or without lucrative local TV rights deals.
Having local broadcasts liberated from RSNs sounds appealing to fans who ditched cable and currently can’t watch their teams on streaming platforms. But losing those revenues could prevent their favorite teams from funding competitive — or even respectable — payrolls. Be careful what you wish for, baseball fans. The team you get to watch may not be nearly as good.
Ian Casselberry is a sports media columnist for BSM. He has previously written and edited for Awful Announcing, The Comeback, Sports Illustrated, Yahoo Sports, MLive, Bleacher Report, and SB Nation. You can find him on Twitter @iancass or reach him by email at firstname.lastname@example.org.
Disney Has One Logical Choice For The Future – Jimmy Pitaro
“If Bob Iger wants his next successor to come from the sports world, that is his guy. Hell, forget sports. Pitaro may be the best person available no matter how far and wide the search goes.”
Bob Iger’s latest tenure atop the Walt Disney Company fascinates me. The company begged him to come back to clean up the mess made by his handpicked successor, but it was made clear from the get-go that he has a very limited window to get this right and then go home. That is why, less than six months after Iger returned to Burbank, we are already hearing about who will be the next CEO of Disney.
There is reportedly a shortlist of candidates for the job and it is sports-heavy. Two of the four spots are occupied by NBA Commissioner Adam Silver and ESPN Chairman Jimmy Pitaro. I see the value both men could bring to the job, but I think there is a clear frontrunner and obvious choice.
Jimmy Pitaro is already inside the Disney walls. He has already learned to operate within the Disney hierarchy. He has had to answer investors’ tough questions about budget and direction. If Bob Iger wants his next successor to come from the sports world, that is his guy. Hell, forget sports. Pitaro may be the best person available no matter how far and wide the search goes.
Adam Silver’s tenure as NBA Commissioner is the target of all sorts of criticism, mostly from people that don’t watch the NBA anyway. For all of the pissing and moaning about load management and player empowerment, people are still watching and the league is still as profitable as ever. By the metrics that matter to the people that matter (team owners), he is doing an excellent job.
On a recent episode of Meadowlark Media’s Sports Business, John Skipper made it clear that he loves Silver and thinks he would make an excellent CEO for the Walt Disney Company, but that is a totally different world from the one Silver is currently thriving in.
“My advice would be to stay at the NBA,” the Meadowlark Media boss said. “It’s not a public company. You don’t have to face shareholders. You do have to face 30 NBA owners, but you don’t have activist shareholders. And I think Adam is a committed NBA commissioner. He’s been for a long time.”
The public posturing of Ron DeSantis will always get attention, but it doesn’t always have to be taken seriously. The moment he threatened to dissolve the special district in Central Florida that Walt Disney World operates out of, legal scholars were quick to point out that the proposal would create a major burden on the state and its citizens that no politician wants to be responsible for.
DeSantis wanted his culture war. Disney wanted the problem to go away. The two sides quietly found a compromise that made it look like the governor didn’t lose while Disney got to go on basically with business as usual. That is the kind of corporate policy war whoever takes over for Bob Iger will have to be ready to wage.
Disney needs a salvager in that chair, someone who knows how to diagnose the problems of business relationships and find fixes that hurt each side just enough that both can say the other really took it on the chin. Pitaro is that guy.
Look at ESPN’s relationship with the NFL when he arrived versus where it is now. The company needs someone that makes stars and creators feel like this company is one that it can trust and one that they want to be in business with. Look at what Pitaro has done to bring the Manning Brothers, Pat McAfee, Joe Buck and Troy Aikman under the Disney umbrella while simultaneously finding ways to keep stars like Stephen A. Smith and Bomani Jones happy with non-exclusive deals that allow them to grow their profile with new opportunities outside of the company walls.
Most importantly, no segment of the Walt Disney Company and arguably, no network on basic cable, has had to answer as many questions about the future of distribution as often as ESPN. Jimmy Pitaro has been asked about a future where entertainment is driven solely by the needs of the audience so many times that he has undoubtedly thought about the ups and downs of the streaming landscape more than just about anyone else on Earth.
Bob Iger will be atop Disney through the end of the year and into 2024. This isn’t a decision that is being made tomorrow. Even when it is made, Iger doesn’t just get to write a name down on a piece of paper, slam down an “APPROVED” stamp and go home.
Everyone on that reported shortlist will be vetted by Iger, his confidants, members of the Disney board, and shareholders. Some may wince at the fact they have no idea how Jimmy Pitaro envisions running theme parks and a cruise line, but the reality is that no one checks all the boxes for any job as big as this one until they have been in it for a while.
When you know the perfect fit for a job doesn’t exist, you go looking for the person that is the best fit. I think Bob Iger and Disney have already found him in Bristol, CT.
Demetri Ravanos is the Assistant Content Director for Barrett Sports Media. He hosts the Chewing Clock and Media Noise podcasts. He occasionally fills in on stations across the Carolinas. Previous stops include WAVH and WZEW in Mobile, AL, WBPT in Birmingham, AL and WBBB, WPTK and WDNC in Raleigh, NC. You can find him on Twitter @DemetriRavanos and reach him by email at DemetriTheGreek@gmail.com.