The Business of Sports
It is draft night in the National Football League (NFL). There are going to be a lot of happy people, at least 31 of them. We will also see a number of millionaires made tonight.
There is a lot of talk about things on the field. However, with professional sports, there is money involved, big money
It is reported the NFL brings in roughly $20 billion per year in revenue. Considering there are 32 teams, we can see how each is raking it in (on average). The projects are that, by 2027, it will pull in $25 billion.
No matter how you slice it, that is a lot of cheese for playing a game.
Of course, the old agage, especially when there are labor issues, a bunch of multi-millionaires fighting with billionaires.
As a fan you can root with your heart. That said, for everyone else, it is a business.
Tokenization of Sports
Could be it be possible to tokenize sports teams?
The answer here is obvious: absolutely. This is something that might enter the picture down the road. Why can't fans also get a financial interest in the teams?
That said, team ownership is a very small circle. In the major US sports, there are roughly 120 teams. Major League Baseball (MLB) is talking expansion and the entry price is $2 billion. The league is looking to add 2 teams. That means $4 billion would be spread among 30 owners.
Not a bad payday.
It could be possible, however, that, at some point, an owner looks to sell by tokenizing the team. This would mean that laws, in addition to league policies, would have to change. Nevertheless, it does set up an interesting thought process.
Social Layer
To me, the entry into sports will be at the fan layer. There is the ability to tokenize the fandom that people have. Imagine being a fan of a team and it brings out a token. This could be used to reward people for various aspects of their fan loyalty while also providing a mechanism to purchase tickets or merchandise.
Since sports teams are businesses, it is crucial to treat them as such. The fans are customers yet help to drive the business. Like all corporations, there is the equity and debt layers. Since these are not public, individuals cannot invest in either as they can with corporations such as Home Depot and IBM.
A social token tied to teams is a way to drive and capture more value to the enterprise. This will be a layer fans can invest in or even earn based upon the distribution models they employ.
Changing of the Money
A great deal of the revenue for major sports leagues comes from the broadcast rights. This is something that was always the case, yet it is now at an absurd level.
The reality is that things are likely to get even crazier.
Traditional broadcast television is dying. That is Baby Boomer era stuff. Look at the cable news ratings to see how their customer base is starting to die off. This is a reminder of what happen with the previous generation and the nightly news. That period was Rather, Brokaw, and Jennings. Of course, that that generation passed on, so did the viewers.
Baby Boomers were not nightly news people. Why wait until 6:30 when you could flip on CNN all day long? Now, the Millennials are wondering why watch the news on T.V. when you have all the information on your devises?
This is affecting the sport networks also. ESPN is still strong but it is losing ground. They are now down to 75 million subscribers, a number may believe will sink below 50 million by the end of the decade as cord cutting continues.
For sports leagues, there is nothing to worry about. There are other entities with more money looking to step in. Amazon and Apple have started to make noise in this arena. They have an ulterior motive for their acquisition of the rights: to feed their other products.
Here we see the need to make money off the rights as secondary. If Amazon, as an example, can drive more prime memberships by having the NFL, it only makes sense.
This is where the model is changing for sports but the money is not.
It is big business and will continue to be.
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Great article, @taskmaster4450le! You've captured the fascinating business side of sports excellently. From broadcasting rights to sponsorships and digital platforms, it's clear that sports is not just a game but a thriving industry with immense economic potential. Well done!
I think they have tokenized sports for soccer but I don't think there is any use for people. I still think it would be a good way to involve the fans.
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Sports has always been a good business and it has a kind of effect on the economy. You are very right
Very good analysis of how business moves in sports. Sometimes, as a consumer, one does not realize this kind of details that you highlight. No wonder many channels apart from paying a subscription, you have to pay an even more special subscription to access them. But, I guess this also has its expiration date.