Sports Business Report: NBA Becomes First U.S. League to Sign Official Sports Betting Partnership

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NBA Becomes First U.S. League to Sign Official Sports Betting Partnership

The National Basketball Association became the first U.S. pro sports league to sign an official sports betting partnership, announcing a deal with MGM Resorts Intl. (MGM) on Tuesday. The agreement gives the resort and gaming operator authorization to use “league highlights, names, logos and its direct data feed” and enables the company to market itself as the “official gaming partner of the NBA & WNBA.” MGM will pay the NBA at least $25 million over 3 years, but the league will not receive an “integrity fee” or percentage of all bets placed on league games. MGM is not permitted to offer odds on screen during NBA games under the terms of this deal.

Howie Long-Short: Tuesday’s announcement comes just 24 hours after MGM announced a $200 million joint venture with GVC Holdings (to create an online gaming experience) and a market access agreement with Boyd Gaming (giving MGM ability to operate in 15 states, evening the playing field with CZR and PENN). While sports betting is currently limited to just 4 states, MGM is gearing up to cash in in 2023 when upwards of 32 states are expected to offer single game sports wagering.

The key to this deal on the MGM side is the direct data feed, which enables the company to provide an advanced in-game betting product. While live-betting currently represents just a small fraction of all bets placed on league action, it’s suspected that delays in 3rd party feeds have hampered its potential. It must be noted though, MGM’s pact with the league does not give it exclusivity over the data; only their title as the “official gaming partner of the NBA and WNBA” is protected. I expect mobile sports betting to gain momentum, inevitably forcing others gaming companies to purchase the same “official data.”

The NBA is finally going to receive compensation for its intellectual property, though not the 1% “integrity fee” it originally sought. While it’s far too early to project how much will be bet on league games (and ultimately the percentage $25 million equates to), the league must be ecstatic that they were able to get a deal done without any federal statutes in place; there really was no reason for a gaming company to cave to their demands.

Fan Marino: Sure, no gaming company had to cave, but MGM made for an easy target (i.e. there will be many more) for the NBA in its quest to profit off legalized sports betting. Why? It owns the WNBA’s Aces (they play at the MGM owned Mandalay Bay Events Center), it’s sponsored the NBA’s summer league the last 2 years and its believed the company wants to place an NBA team in the T-Mobile Arena; in other words, they’re motivated to work with the league. That’s certainly not the case for the remainder of the players in the sports betting space though, who vehemently oppose fees of any sort and are now placed in a tough spot with the precedent set – gaming companies will pay for access to official data.

FYI for NJ Residents: MGM will be taking mobile sports bets, within the state, by the end of the week.

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Charter Shutters First 24-Hour Spanish Speaking RSN

Charter Communications is expected to shutter the Spanish-language regional sports channel Spectrum Deportes on August 15th. The company said in a statement, “while we never expected Lakers and Galaxy games to have equal viewership on Spectrum SportsNet and Spectrum Deportes, the [Spanish-language] network averaged less than a few thousand viewers per season since its launch (2012).” The company is expected to offer subscribers an alternative Spanish audio feed of live Lakers and Galaxy games and will replace the channel’s sports content with hyper-local all-news programming; Spectrum SportsNet will continue to operate unchanged.

Howie Long-Short: Charter, which brands its services as Spectrum, assumed control of SportsNet and SportsNet Deportes following its ’16 acquisition of Time Warner. The decision to cancel Deportes simply boils down to dollars and cents, the company was spending a lot of money to operate a network that had little viewership. While you can’t argue with that reasoning, the timing seems a bit odd; LeBron James’s arrival in Los Angeles has SportsNet commanding a 100% YoY increase ($14,000) on the cost of ad spots during Laker’s games. It’s reasonable to suspect Deportes would also have benefited from the James effect.

Charter Communications (CHTR) reported Q2 financials on Tuesday, reporting both YoY revenue (+5% to $10.9 billion) and earnings (+96% to $273 million) growth; despite the loss of 57,000 net pay-tv subs during the most recent quarter. CEO Tom Rutledge isn’t concerned though as he reiterated the company is a broadband provider at its core, simply using video to attract and retain customers. That philosophy helps to explain why the company has chosen not to pursue content related acquisitions despite “a lot of” advances. Shares rose +3.5% on the day, closing at $304.58, but remain down -9% YTD and -21% over the last 12 months. It’s worth mentioning that Liberty Broadband (LBRDA) is a large stakeholder in CHTR.

Fan Marino: One might think that the decision to fold-up Deportes would result in a mass exodus of Spanish-speaking fans from CHTR, but that’s likely not going to be the case. Spanish speaking fans tend to watch American sports (think: NFL, NBA, NHL) on U.S. outlets. In fact, SportsNet drew 12x the number of Spanish speaking Lakers fans that Deportes did during last season). While CHTR doesn’t need Deportes to reach fans of the Big 4 sports, it might to reach those who prefer soccer and boxing; bilingual Latinos have historically chosen to watch those sports in their native language.

Fun Fact: 2018-2019 will be the first season in 25 years the Lakers will not have a Spanish-speaking broadcast.

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What is JohnWallStreet?

JohnWallStreet, located at the intersection of sports and finance, is a destination for the educated sports fan.

While we won’t be publishing “hot takes” on LeBron’s relative greatness to Jordan, we will be offering up the most relevant sports related business news, in easily digestible bites, with commentary from both the sports money and sports fanatic perspectives.

We’ll cover publicly traded professional teams & stadiums (MSG, RCI, BATRA, MANU), television networks (DIS, FOXA, CMCSA, CBS, TWX, MSGN), apparel & footwear companies (NKE, UAA, ADDYY, FL, LULU), equipment companies (GOLFELY, FIT), ticketing companies (EBAY, LYV) content and facilities providers (CHDN, DVD, ISCA,TRK, LMCA).  If it trades on Wall Street, and has a sports angle, it’s in our wheel house.

Howie Long-Short and Fan Marino will be providing their expert opinions on each story. They have slightly different areas of expertise. Fan Marino is a firm believer that the SEC is the premier football conference. Howie Long-Short knows it as the Securities & Exchange Commission. Fan Marino lives and dies with the college selection of 5 star, blue chip recruits. Howie Long-Short spends his days analyzing blue chip stocks. Howie Long-Short knows that Black Monday occurred on October 19th, 1987. Fan Marino swears it happens every January after Week 17. You get the point.

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