Friday Dump 🥟 - ESPN+ subs decline, NASCAR cashes in, Adidas athlete exec

Author

Michael Sheinfeld
May 10, 2024

Bow down to the 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.

Sit back, relax, and enjoy the show.

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🔴 Bad time to be pro-streaming at ESPN. We’ve long touted the debates of streaming vs. linear TV and cord-cutting vs. cable. We’ve even gone over how streaming services have officially outpaced linear TV in viewing usage within the U.S. When it comes to sports, we’re constantly playing hypotheticals in our head and inputting excel formulas in our spreadsheets as to which streaming platform is going to takeover media rights for a league, tournament, etc. But what happens when the worldwide leader in sports is showing a slow decline of subscribers on their own platform?

  • For the 2nd straight quarter and 3rd time in four quarters, ESPN+ subscribers have now decreased to 24.8M (see Table 1), which is around the same number as early last year.

    • Disney execs blame the decline due to normal seasonality, particularly following the end of the 2023 NFL and college football seasons…but, again, it’s not like this is a one time thing.

  • ESPN+ also posted a $65M operating loss for the quarter — which according to Disney CEO Bob Iger, was due to a drop in cable subscribers and higher programming costs because of the College Football Playoff.

Table 1: Number of ESPN+ Subscribers in U.S. (Statista)

In a dumpshell…maybe none of this matters. Maybe ESPN+ has peaked in terms of subscriber growth. Would we really be surprised? It’s not like ESPN hides their most popular live events such as, Monday Night Football or the College Football National Championship, behind a paywall.

The real question that comes into play for the sports giant is, what’s causing the streaming platform to potentially peak? Because before last summer, ESPN+ showed more than 5 years of uninterrupted subscriber growth. And, let’s be real, the timing isn’t great…Disney/ESPN is in the middle of long and tedious media rights negotiations with the NBA. Even though Iger feels “confident” in Disney completing a long-term rights renewal with the NBA, it’s not like this news gives the home of Mickey Mouse tons of leverage.

Or maybe Iger had the intuition this “peak” was coming all along, which lead to reports of getting in bed with Warner Bros. Discovery and Fox for a new DTC skinny sports bundle?

Photo: David Tucker, Daytona Beach News-Journal

🟡 NASCAR followed a rainbow to their pot of gold. Shoutout to all our southern brothers and sisters who love hearing those engines roar around the track while rocking cut-off tees, jorts, and cowboy boots, because we have a story for you! Just a couple weeks ago, NASCAR announced a seven-year broadcast partnership for its Cup Series with Fox Sports, NBC Sports, Amazon, and Warner Bros. Discovery, which is set to begin in 2025. The sum of all the new deals amounts to ~$7.7B, according to multiple reports. That ends up being ~40% annual increase on what NASCAR is currently receiving from Fox and NBC 🤯 (who said their isn’t any money in NASCAR?!).

  • It’s still being determined as to which network/streamer will get certain races. But as of now, it looks like NASCAR will continue to let Fox get the season-opening Daytona 500 and NBC the Cup Series championship race.

  • The race broadcast breakdown will look as follows:

    • Fox Sports: 14 races (5 on Fox, 9 on FS1)

    • Amazon: 5 races on Prime Video

    • WBD: 5 races on TNT and simulcast on Max’s sports tier

    • NBC Sports: 14 races (4 on NBC, 10 on USA Network)

In a dumpshell…it’s not too hard to see how successful of a deal this is for the sport. Especially after NASCAR’s 2023 season, which was the least watched on record (to give you an idea, the 2013 season average TV viewership was more than double than 2023 😳). We saw ratings drop 5% last year to an average of ~2.9M viewers per race and 12 of the final 13 races saw declined TV viewership from 2022…which might be why NASCAR joined the Netflix parade this year with the debut of its own docuseries, Full Speed, centered around last season’s playoffs.

But this new deal isn’t about the progress (or lack thereof) of the sport, it’s about the need for broadcast networks to diversify their live rights portfolio. It’s no secret, this provides more security for NASCAR going into the 2030’s and maybe we’ll see viewership tick up as more have cut the cord.

Ultimately, this will be a challenge for these networks and streamers. Especially since their international competitor, Formula 1, has seen their U.S. viewership soar each year. Not to mention, they’re also on the precipice of renegotiating their current deal with ESPN once it ends after the 2025 season.

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Candace Parker (Photo: Adidas)

🟢 Candace Parker for President. Oh wait. You thought the 2x WNBA MVP, 2x NCAA champion at University of Tennessee, 3x WNBA champion, and 2x Olympic gold medalist was running for President of the United States 😂?! Lol jokes aside we know we didn’t stump you…(well at least we hope we didn’t since we’re currently in an election year). Back to the point at hand: Candace Parker, having just retired from the game of basketball, was just named president of Adidas women’s basketball 👏.

  • Parker has been playing in Adidas basketball shoes ever since her high school days.

    • In 2010, Parker was the first woman to receive a signature shoe with Adidas, the ACE Commander.

    • She later created three collections with Adidas and led a mentorship program for their NIL-sponsored college athletes.

  • You can even make the argument no one knows the brand better than her at this point. It’s why she was hired for this role and now has the creative liberty to collaborate and create a powerful platform aimed at influencing and elevating the future of women’s sports.

  • She’ll now be able to build Adidas’ roster of women’s basketball athletes, which includes:

    • Chelsea Gray (Las Vegas Aces), Aliyah Boston (Indiana Fever), Kahleah Copper (Phoenix Mercury), Hailey Van Lith (TCU), Nneka Ogwumike (Seattle Storm), and Chiney Ogwumike (ESPN).

Table 2; Kicks Crew

In a dumpshell…as women’s basketball popularity continues to soar, we’re now seeing a brand take advantage of that popularity by naming a future Hall of Famer as an executive.

Parker also joins a short list of current and former players who are executives at sporting brand companies: Shaquille O’Neal (president of Reebok Basketball), Allen Iverson (vice president of Reebok Basketball), and Shai Gilgeous-Alexander (creative director of Converse Basketball).

We’ll see the type of impact Parker can bring to Adidas woman’s basketball and Adidas woman’s athletics as a whole. That impact might not be in sales right away, as Nike owns a giant market share of the basketball sneaker space — ~44% in 2023 (see Table 2).

The good news: there’s room to grow and Parker is one of the greatest ambassadors of the women’s game. Only time will tell, but to get to a level, like Nike, these other sports apparel brands will need to incorporate new strategies. Which might be why they’re focusing on impressions from legends instead of sales.

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