Friday Dump 🥟 - SI issues, WWE-Netflix deal, Real Madrid makes it rain

Welcome back to the Friday Dump 🥟

If you somehow missed the last couple of weeks, each Friday we’ll breakdown 3 sports business stories that have caught our eye throughout the week. Look for them to be assembled in the following format:

🔴 - Stories that make us stop, think, and question what could happen next.

🟡 - Stories with a hint of risk and unpredictability.

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

And we’re off…

🔴 Will we get our Swimsuit edition in the mail or what? Last week, the ever so popular sports magazine, Sports Illustrated (SI), was informed by their publisher, The Arena Group, that massive layoffs would be underway. According to FOS, Arena missed a $3.75 million license payment to SI’s intellectual property (IP) owner, Authentic Brands Group (ABG), after purchasing the magazine for $110 million five years ago. Since Arena missed the payment, they had no more rights to publish SI’s content. The rumors have been wild and crazy — from possibly all SI employees losing their jobs to re-packaging and selling the brand altogether.

Will my dreams ever get answered to be on the SI cover? 

• Short Answer: No, because you’re not a popular athlete, dummy 🤨

• Overall, SI has been in trouble for years. This is just the tip of the iceberg. They struggled to shift to the digital media world, and it was hampered by mismanagement and low-quality work. Such as…

  • SI has been thrown around like a hot potato. First owned by Time, Inc. —> 2018 sold to Meredith Corporation —> 2019 SI IP was sold to ABG —> separately, later in 2019, SI’s publishing rights were sold to The Arena Group as part of a 10-year license deal —> now The Arena Group is looking to be bought by 5-Hour Energy billionaire, Manoj Bhargava (y’all got that? wow my head hurts 🤕)

  • Reports that SI published AI-generated stories, photos, and authors…which were all FAKE!

• There’s clearly more questions than answers when it comes to the issues SI has faced throughout the years. One thing we know for sure, after all these sales, the brand is still strong — but is that enough to revamp and build a new-age sports media empire from the ground up?

🟡 Netflix busting out the suplex. The streaming giant is back at it again and this time, they’re coming for blood (it might be fake blood, but it looks so real!). On Tuesday, Netflix entered the live sports chat and agreed to a 10-year deal worth $5 billion with World Wrestling Entertainment (WWE) to stream its popular weekly show, Raw, beginning in January 2025. It’s just another step for the big red N to takeover our eyeballs and dominate the streaming space. Here’s the breakdown of the deal…

• Raw will leave USA Network (the network’s top show), which attracts 1.5-2 million viewers per episode.

• Netflix will also have international rights for other WWE properties, like SmackDown, WrestleMania, SummerSlam, and Royal Rumble.

  • Currently in the US, Smackdown airs on Fox (moving to USA) and Royal Rumble & Wrestlemania air on Peacock…but the WWE-Netflix agreement might make these networks sweat as Netflix has the option to extend for an additional ten years. Maybe even turn to long term deals with WWE’s other properties? 🧐 

• Wrestling fans, or investors (same difference these days right?), already love the deal — TKO, parent company of WWE and UFC, grew nearly 19% Tuesday, and shares of TKO majority owner Endeavor increased more than 3%.

Does this really move the needle for Netflix? They’re already crushing it with Selling Sunset and Love Is Blind!

• As we’ve hit on in past posts, access to live sports is considered the HOLY GRAIL for streaming platforms. But..this won’t be Netflix’s first time dipping their toes into (kinda) live sports.

  • They created and recently aired in November, The Netflix Cup (golf event featuring PGA and Formula 1 athletes), and in March they will also put on, The Netflix Slam (friendly tennis match between Rafael Nadal and Carlos Alcaraz). (But let’s be real this is wayyyy different) 

• It’s no secret Netflix is mostly a subscriber-based model, which gives them the opportunity to grow and accelerate their advertising business (get the pitches ready, Sterling Cooper!). And since Raw is already an established platform for advertisers, look for them to secure more sponsorships as WWE will be viewed more internationally (Have fun with all the ads “Basic Plan” users 😂).

• Netflix is also growing! They announced their subscriber base grew by 13 million in Q4 and they also saw a nice ~13% bump in revenue. (And we’ll break some news here, more subs are coming because of this agreement 😉)

Why is this such a good marriage?

• Short answer: The WWE is a 43-year-old established brand that has millions of viewers for each of their programs (i.e. they have extremely loyal followers). Netflix is easily the most popular streaming service out there, being in the homes of 260 million people and counting. From a viewing POV, WWE programming is right up Netflix’s alley as these are scripted live action matches and storylines for pure entertainment content.

  • WWE production + WWE fandom + Netflix subscriber base + More Netflix content = CA$H 🐄 

• Content creation for WWE wrestlers. One thing we could also see is the opportunity for Netflix to create special content around the characters themselves, (i.e. behind-the-scenes or documentary type series).

🟢 ¡Hala Madrid! raking it in. According to Deloitte Football Money League 2024, Real Madrid comes in as the highest revenue generating soccer (football) club last season 🤯 (you think they’ll share some of that $$ after we gas them up?). Here are the highlights:

• Even though they couldn’t repeat as La Liga and Champions League champions, Real Madrid made a record €831 million in 2022-23 to jump above Manchester City (see Table 1).

  • All this after Manchester City won the treble (definition: when a club team wins three trophies in a single season — for Man City it was the Premier League, FA Cup, and Champions League).

• Most of Real Madrid’s growth is attributed to strong retail performance and higher stadium attendance - even though renovation work at their Santiago Bernabeu Stadium limited their projected matchday revenues to €122m.

• Manchester City’s commercial income at €399m (see Table 2), remain at the top of the Premier League. Even though their matchday revenue didn’t clear Europe’s top 10 😳.

• The total revenues of the top 20 European clubs climbed to €10.5bn, which was ~15% jump from 2021-22.

  • The Premier League’s humongous TV deals have been the greatest force in driving that growth.