Friday Dump 🥟 - Dartmouth's sticky situation, League revenues, Friday football

3…2…1…Friday Dump 🥟

Each Friday, we’ll breakdown 3 sports business stories that have caught our eye throughout the week. They will be assembled in the following format:

🔴 - Stories that make us stop, think, and question.

🟡 - Stories with a hint of risk and unpredictability.

🟢 - Stories that make us feel good to go and empowered.

We are baaackkkk.

🔴 Dartmouth basketball playing with fire. On Tuesday, the Dartmouth men’s basketball team took a step in unchartered waters to become the first team in NCAA Division I history to officially vote to unionize 😳. With National Labor Relations Board (NLRB) officials present, the players voted 13-2 in favor to unionize and be classified as employees under U.S. labor law (these Ivy-leaguers just can’t wait to join us peasants in the real world, huh?). This wouldn’t be the first time something like this has occurred. The Northwestern football team tried to unionize in 2014, though the results of their vote were never announced since the case ultimately failed. So what does this all mean?

• Well…it’s no surprise, but both Dartmouth College and the NCAA were not too happy about this “unionization meeting”.

  • Right after this occurred, Dartmouth filed an appeal to the NLRB. But…that might not do too much as NLRB regional director, Laura Sacks, ruled in February that players are employees and allowed them to move forward with their election.

  • What could follow is a potential appeal to federal court (yep, the Highest Court in all the land!) 🫣.

• Let’s just imagine for a second: If the players unionize and it moves forward through the courts, players could bargain for everything from wages to limits on hours and overtime pay, to additional health insurance benefits, as well as becoming eligible for workers’ compensation.

• But the reason they’d be allowed to move forward with these rulings is because the NLRB doesn’t have jurisdiction over the public sector (yet), which means they can only deal with private schools (you are correct, Ivy League schools are just that).

🟡 US sports bring home the bacon. When we think about how US sports leagues and teams make money, it’s not all too surprising to assume revenue is generated from: tickets, sponsorships and broadcast rights, concessions, parking, merchandise, and non-team events. But the peak of our interest comes in the form of comparing these leagues with one another to analyze how each generate revenue. A write-up was done by Sportico to compile the sources of how US sports leagues make their money. And the findings were quite interesting (see Table 1)…

• NFL:

  • TV is the main money-maker with renewals from ESPN, NBC, CBS, Fox, Amazon and YouTube worth combined ~$125B.

  • Each team gets just ~$20M as part of the NFL’s ticket sharing agreement.

  • NFL teams have 10 home games a year (including preseason) but the lack of games is no issue…they generate more than $3B a year in ticket and suite revenue 🤯.

• NBA:

  • TV revenue is also huge for the NBA, led by deals with ESPN and TNT (expect those percentages to increase dramatically for their new media rights deal in 2025).

  • Seating is also very important for the NBA, which is why we see more celebrities sitting front row to bolster the star power even more.

• MLB:

  • Local media (RSNs) impacts baseball more compared to other leagues, and it makes sense. There’s 162 games! National TV can’t cover most of these games (and it’s not the 1940’s, you can put your radio away).

  • Ticket sales aren’t slouching either. It’s a great summer sport to attend and fans have embraced the rule changes (shortened games, more action, etc.) that led to record ticket and sponsorship revenue.

• NHL:

  • Ticket sales are also very important to hockey as they currently have much smaller TV deals compared to the NFL and NBA. In fact, if an NHL team has a long playoff run, they can keep ~65% of the ticket revenue from postseason play, which is extremely lucrative especially since teams raise prices by each round.

• MLS:

  • Thank god for Lionel Messi! Once he arrived in Miami, that helped boost total revenue ~27% to $2B.

  • You’ll notice there’s no local media. In 2022, Apple became the league’s official broadcast partner after announcing a 10-year $2.5B deal with the MLS. Let’s just say that ended up being a saving grace as only a few teams had local TV deals that were profitable.

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🟢 Fox Football Fridays sound pretty lovely. It’s been announced that Fox Sports is set to take over our Friday nights and will feature a prime-time college football game each week beginning this season. Just when we thought Friday fall nights were for dashing out to happy hour early, perusing the fantasy football waiver wire, and high school football pep rallies, Fox grabbed our eyeballs again. The games will feature matchups from the Big Ten, Big 12 and Mountain West. But why the change?

• Well for the longest time (5 years to be exact), Fox had the rights for WWE’s Friday Night SmackDown, which is ending this year and moving to USA Network. This means…there’s room in the TV schedule for another money maker!

• College football might be the best replacement for SmackDown as the wrestling franchise constantly outperforms in viewership ratings. It’s the third highest-rated primetime program on broadcast TV, averaging ~810K adults from ages 18-49.