What’s Over the Horizon for Sports Properties and Partners
Michael’s career has come full circle from his early years in advertising sales supporting the NBC Sports and Olympics properties to a phenomenally successful career across new media, content and digital platforms at NBC Universal, Comcast and the founding of Hulu before forming and leading Playfly for the last two and half years.
In his interview with host Jim Andrews, Michael explores multiple areas of revenue generation for sports rightsholders, from content development and data utilization to streaming video and hospitality opportunities at the high and low ends.
Jim: I’m sure many of our listeners are familiar with some, if not all of the segments of the sports business that Playfly is in, but if you wouldn’t mind just giving us a quick overview of the Playfly story—how you have built the company and what it looks like today—that would be a great place to start.
Michael: Playfly, as you mentioned, is two and a half years old, so we are still a newbie when it comes to the marketplace having awareness of what the Playfly brand means. But the businesses that make up Playfly have been around for 20 to 30 years, so we have a multi-decade heritage in terms of what we do.
We built the company over the last two and a half years by buying a number of longstanding businesses in the sports industry. We are putting puzzle pieces together to represent a significant number of different services for sports organizations. The goal of Playfly Sports is to provide services to the teams, leagues, conferences and networks of the sports world. We are a marketing agency and a sports agency that focuses less on the athlete and more on the sports organization. That’s where we want to excel and drive value for our partners.
We have built the company asset by asset and were able to build very quickly inside the pandemic. We put extra fuel on the fire when sports went dark in 2020. We wanted to go quickly because we knew that pandemics are temporary and sports are forever, so we wanted to double down on our vision for Playfly Sports. We thought, “What a better time to enter the market than when everyone is in need of help.”
Sports is going to be robust not just for decades or centuries, but forever. Sports is never going to end. If you go back to ancient cultures, sports has always been a part of people’s lives.
Jim: With your extensive media background, you have said that Playfly’s key strategy is getting sports properties to operate more like media companies in order to create value. Just how big is the opportunity for properties to act like media brands and use data to determine the right content to produce, optimize ad inventory and price, demonstrate ways to engage with fans, etc.?
Michael: We believe the future of being a sports organization is going to come with a lot of the expertise you see in traditional media companies. The thought behind that is that at the end of the day, talking to audiences, building engagement with fans and turning that into revenue and long-term fandom is the core goal of most sports organizations.
When you parallel that with a TV show or movie, it’s the same thing. When you think about how do you promote? how do you message? how do you get your marketing set up in the right way? It all comes from the traditional media company elements of promotion, engagement and audience building.
Some of those tenets may be new to people in the sports ecosystem, but a lot of teams are experimenting and doing really interesting things in that space.
The biggest category for a sports team is content. Not just thinking like a media company, but actually producing content and delivering it in interesting ways. There are a significant number of teams producing social media content and delivering it to their fans. But you can take these content experiences even further. To the point where you can create full-length documentaries, whether its historical stories, or current stories about players and how they are getting prepared leading up to the playoffs, etc., there are a bunch of story arcs that can be used to create more content.
You can take that further and take all the great content that has been produced in the last year, whether for social media or other platforms, and build a linear experience, a 24/7 experience for that content provider. You can go a step further than that and create subscription offerings, where you make a significant amount of behind-the-scenes content available to your superfans.
I’ll throw one other thing out there that we participate in. (Again, we are a service provider, so we not only produce content, but we also create platforms to distribute the content and we create the methodologies and marketing support for delivering subscription services for teams. That’s why we get excited about it, because these are areas where we can help instantly turn teams’ experiences into more media-like opportunities to grow those audiences and fandom.)
That other thing is what you mentioned, which is data. Data is a significant driver for figuring out and learning about your fan. Who is your fan? How did they become a fan? When did they become a fan? Why did they become a fan?
Those answers are very different across sports. Fandom for pro sports is based on the geography you grew up in. You usually become a fan at age seven. You usually get it from your parents or your town. With college sports, the obvious answer to where your fandom comes from is where you went to college. But a lot of people went to colleges that did not have big sports programs, so where you live, where your kids went to school, where your best friend went, etc., all play a factor.
Playfly Insights is focused on driving these types of knowledge-base exercises for our partners. You take that type of learning and you flip it to start creating profiles of your fans and understanding who they are. For example, on average, about 50 percent of a team’s fans—sometimes more—are never going to have been in the stadium—now or in the future.
How do you harness that data and separate the segment of fans that is local or that has the opportunity and interest to be in the venue from the segment that is not or does not? Doing that allows you to tailor your marketing, messaging, content and offers. If you are sending ticket offers to fans that don’t have an intention to be in the venue, you have a significant amount of waste.
We are very focused on all of those elements and then we bring advertiser interest into these sports organizations and we can use that same first-party data from the team to enhance the advertising revenue, because what the advertisers are looking for is how to get in front of those fans and have their brands seen at the same time they are having that emotional experience with their favorite team—experiencing deep fandom. Our research shows that that connectivity is one of the most valuable tools in all of marketing.
Jim: Is the message getting through? With all due respect to the folks we know and work with, for years it has been a fair statement to say that sports organizations were behind the curve when it came to adopting some of the things you are talking about. Is that changing?
Michael: With the majority of teams, the intention is there and the understanding is there. In terms of the expertise, they are still working out whether they have it in house or need to use third parties. That’s the evolution that’s going to happen. That’s what we are trying to provide: a stable alternative to outsource a lot of these efforts.
We work with a majority of pro teams in the U.S. and a large swath of the college teams. When we talk to the teams, there is a lot of confidence that they know this and already have some strategies in place. When you really dig into some of the strategies, are they really utilizing the most effective and most efficient models? Not always.
That’s where we find the most interesting opportunities: helping a team that has the intention, and already has initiatives kicked off, and helping drive much more value out of those efforts while taking some of the weight and the cost off of their side of the business utilizing all of our best practices, whether it’s Playfly Insights, our full creative services team, our production company that produces content for some of these teams ourselves. We create efficiencies through these multi-team services that allow us to offer inexpensive opportunities to drive content. We have award-winning producers with track records of producing long-form documentaries that are sometimes so amazing we pitch them to ESPN, HBO, Netflix, etc.
Jim: Is there cross-over or cross-selling between the different Playfly units? For example, are the folks at Home Team Sports sharing insights they have learned about a brand with the people on the college sports side, or are you ever bundling some of the properties you represent together across verticals?
Michael: One of the cool things about the way our business is structured is that not only are we significantly in pro sports, but we are also the fastest growing player in college sports in the U.S. On top of that, we have a business in high school sports and a business in esports.
There are multiple levels of priorities in terms of how a marketer wants to utilize the services of the fandom from a team. This is something we can cross-pollinate across all of those parts of the sports industry.
For example, if a brand wants to get in front of people at their moment of passion—the bottom of the ninth in a close game in baseball, or the last-second buzzer shot from a basketball player, or the third period of a hockey match that’s tied—how do they get there? We have set up our company to allow us to get advertisers embedded in different types of sports. Whether it’s the different pro leagues, college, high school, esports, one advertiser can get its message throughout all those experiences with one conversation.
We have done significant cross-league deals, but not only that, we have done cross-medium deals as well. With Home Team Sports, our linear TV business, we sell into the live TV broadcasts for our team and network partners and we also sell into the livestreams for our digital partners and we sell in venue, experiential and all the in-person type of gameday opportunities. Advertisers have never been able to do that through one partner on one invoice before.
We have a partner development team that sits above all of our businesses and helps achieve that by listening to the advertisers, their agencies and their goals.
Jim: Playfly is very much involved with regional sports networks, a sector that is certainly having its share of challenges thanks to cord cutting and other factors. What is your take on all of that, not just the Diamond Sports situation, but on where we are going with local team broadcasts?
Michael: Being the leader in selling advertisements—as well as providing content, sponsor services, technology, etc.—on behalf of teams and TV networks, we are obviously a key partner in the RSN ecosystem, so for us it’s a really interesting, evolutionary time in that space.
The one thing I go back to constantly is the point I made a little earlier about sports being forever. If you just use the most prevalent statistics you can find—let’s say Nielsen ratings—and you look at any market in the U.S. you will see that local sports content of the three leagues that sit inside the RSN ecosystem—MLB, NBA and NHL—is the top viewed content in every market on an aggregated basis across the U.S. More than news, more than primetime broadcast television, you name it, that local sports content is number one.
Put that fact together with the idea that sports is forever, and this is a really valuable piece of the sports ecosystem. So why are we having these ups and downs inside of that industry? It’s because the pioneers in that industry saw all that value 20 or 30 years ago and very smartly decided to embed that value into cable subscriptions. At the height of cable penetration in the U.S., everybody had these channels. So for the last 20 to 30 years, the cable ecosystem helped the sports industry create more fandom than perhaps anything else out there, because the channel was there and when a kid turned seven and wanted to sit next to his father or mother at 8 p.m. to watch a TV show, they flipped on the game and boom, that kid became a fan.
Cycle up to now and cable penetration and the way people watch content is different. But the one thing that hasn’t changed is that appetite for the game. That’s a forever thing. So we are seeing people shifting from the traditional TV experience to the streaming experience, which sometimes is still on the TV screen, even if it’s coming through a different modality. But ultimately, new habits and new constructs are going to develop out of these models. At some point, we are going to be watching the game on our refrigerator screen, I guarantee it!
So the modality of how it works and the business model that sits behind it is all going to change, and that’s what we are seeing the evolution of right now. The business model of cable subscriptions propped up the value of rights. When cable subscriptions start to go down, that needs to be re-evaluated. It’s all business-deal based, but there is no change in the fandom. It’s still the number-one viewed content.
There are a lot of smart people who are trying to figure out how to re-work some of those business deals, but at the end of the day those games are going to be played, watched, and have natural breaks, whether it’s a timeout or an inning break—and we are going to help monetize those breaks with the amazing partners we have in the advertising world.
Jim: And it’s not just the live broadcasts that can be monetized. There is all of the content that you mentioned earlier. Are you seeing more monetization coming through elements such as co-branded content and things of that nature?
Michael: Habits are changing significantly. I was traveling recently and I asked my son, “Did you watch the game last night?” He said, “No, but I watched the cut down this morning. It was 10 minutes.” The folks that have the rights are creating condensed versions of the games for different audiences. My 15-year-old likes to watch the game in 10 minutes. Okay, get him what he wants. I like to watch a live game—maybe if it’s the regular season it’s just on in my house, but if it’s the playoffs I’m on the edge of my seat, so I might have a different type of attention being paid—but that’s how I prefer to get my sports content and ultimately everyone is going to look for the opportunity to watch the way they want to.
We have athletes as influencers now, so fans sometimes care as much about the person almost as much as you care about their performance, so there are different elements of consuming that team’s and that athlete’s content that are starting to arise.
When you think about cut downs or highlights of these games and how they are distributed and presented, we are seeing an opportunity from a commercial lens, which is you are creating more opportunities for impressions. You still have the game, it’s still number-one on TV and streaming, but then you have all of these other versions inside of the experience that deliver a new, usually different, set of impressions.
For example, you are going to get a much younger audience for the cut downs. If you’re targeting 18-to-34-year-olds, you should be advertising in the cut downs. If you’re talking about traditional television or streaming, it’s a wide variety, but you have that 18-to-54 bracket—even more so the 25-to-54-bracket.
It’s exciting. It adds more touchpoints, more interactivity and more fandom can be created. And in more places, whether it’s your phone, your social media stream, even in metro billboards have video capabilities.
Jim: The major pieces of the revenue “pie” for pro sports leagues and teams are media rights, tickets, licensed products and sponsorship, with media accounting for the lion’s share. Given some of the changes we discussed earlier, do you see the size of those pieces, i.e., the share of the total, changing significantly in the next five to ten years?
Michael: I think you do see that. There are a few interesting things that are happening, one of which is that hospitality is something that’s really changing in sports. There is low end and high end and everything in the middle. At the end of the day, it’s about giving the fan more of an experience and it’s something that people are going to pay for.
One thing we have learned is that fandom is relatively inelastic. Even an indoor sport like a hockey match, if it’s a sunny day you are going to get more people to the stadium. Those types of variables really affect sales. Demand goes up, so your prices should change in a positive way on a sunny day. Your prices should be dynamically set to maximize both attendance and revenue.
When you think about hospitality, it’s really important to provide that experience to the fans. When you go all the way up to the high end, it gets even more inelastic, with companies hosting their most important partners. That’s an area where you can create much more revenue. They want a white-glove experience. They want a low-friction experience. Sometimes they don’t even watch the game, which is kind of ironic! Providing those high-end opportunities and considering the inelasticity of price, that’s going to create more opportunities for sports organizations to change and tilt the amount of dollars that come in.
So back to your question, the evolution that we are seeing in sports, including creating experiences for fans and partners, is going to drive and tilt the model toward other categories other than media, including gameday and matchday revenue.
Jim: Finally, Michael, what’s next for Playfly Sports?
Michael: Our goal is to add more services to our offerings. One of those areas is one we were just talking about—gameday services. Hospitality, ticketing, etc. If we are providing technology, content services, media sales services, fan data and insights, we are providing all the legs of the stool, so we think Playfly Sports can help drive matchday and gameday revenue in a really unique fashion.
That’s an area we are going to invest in, because not only is it going to grow the pie for the teams as we just talked about, but it adds a new value-creation opportunity for us to provide to either existing partners or new partners we don’t work with today.
And right now, we are mostly domestic. I think we have an opportunity for Playfly Sports to expand significantly outside the U.S., with Europe being the most similar to the U.S. from a sports ecosystem perspective. So that’s likely another area of expansion for us.
We’re a young company, so we are nimble, we are disruptive and we can pivot pretty quickly. We are not a big ship that is slow to turn. We can attack a certain market if we deem it will be valuable for our partners and create new services pretty quickly.