What’s Next for the Business of Sports

Post-Pandemic Return Strategy

• Major leagues utilized distinct timelines to resume play based on their calendar stages: the NBA and NHL were finishing seasons, MLB was starting, and the NFL had time leading up to September.
• Reviving operations was driven by the need to generate multi-billion dollar television revenues, pay player salaries, and support the broader live entertainment economy and employment sector.
• Leagues prioritized reaching the postseason, as television revenue is disproportionately weighted toward playoff games, necessitating "bubble" environments (e.g., NBA and MLB playoffs) to ensure completion.
• The NFL remains on a COVID-driven timeline, with potential bubble scenarios considered for the postseason if necessary to secure revenue.

Financial Ecosystem and Franchise Valuations

• Sports franchises are revenue-dependent on game-day attendance, concessions, apparel, and ancillary programming (RSNs, pre-game shows, social media), which requires playing a high volume of games to sustain.
• Franchise valuations have surged dramatically over the last decade:
  • Average NBA franchise value is approximately $2.1 billion (up over six times from 2010), with top teams like the Warriors valued at over $4 billion.
  • Average NFL team value exceeds $3 billion.
  • Average MLB team value is approximately $1.9 billion.
• Future valuation growth is expected to continue but at a slower pace than the previous 10 years due to a scarcity of buyers capable of writing checks for $2 billion+.
• Financing constraints exist as leagues enforce strict debt limits on franchises; capital acquisition now relies more on limited partner investments and specialized funds (e.g., Dial Capital, Arctos) rather than individual owner purchases.
• Scarcity of "must-see" live content continues to offer high value to advertisers in an increasingly fragmented media landscape.

Social Justice and Player Agency

• A significant shift has occurred in athlete involvement regarding social justice, driven by the ability of stars to control their own narratives via social media and direct fan engagement.
• League leadership, particularly NBA Commissioner Adam Silver, and owners have moved to actively support player protests, marking a departure from previous eras where such actions were met with immediate backlash.
• Specific actions included the NBA and WNBA suspending playoff games in late August following the shooting of Jacob Blake, and MLB postponing games; these moves were widely supported by owners across multiple leagues.
• Dave anticipates this trend of players using their platform to drive societal conversation will continue and views it as a constructive development.

2021 Outlook and College Sports Impact

• The 2021 season is expected to face disruptions regarding fan attendance and start dates due to ongoing COVID-19 restrictions, though a return to normalcy is projected for 2022.
• College sports face existential financial pressures as only Football and Men's Basketball generate sufficient revenue to subsidize other varsity programs.
• Conference decisions to play or suspend football were driven by revenue requirements, with the Big Ten and Pac-12 reversing initial no-play decisions five weeks into the season.
• Revenue distribution per school varies significantly: Big Ten ($78 million total pool, $50+ million per school), SEC ($45 million per school), and Pac-12 (~$35 million per school).
• Cancellation risks are high, with over 40 college football games already canceled due to the virus.
• A College Football Playoff and national champion are still expected, possibly requiring a bubble format for the final four teams.
• Financial distress is already visible; Stanford has cut 11 varsity sports, signaling potential widespread cuts across Division I, II, and III schools as academic and athletic funding gaps widen.