I was recently wondering where to watch an F1 car race in the U.S. and saw it's on Apple, after ESPN lost the rights. This app, to just watch a car race, joins many other subscription sites that are needed to watch sports. Like Amazon's to watch Thursday Night Football, Netflix's to watch Christmas Day NFL games, and Peacock's to watch an NFL playoff game (and I'm sure I'm missing many others).
The U.S. congress has began looking into these practices. Leaving aside that I don't blame you if you cringe when the government does such things, it's probably a discussion worth having, right?
Americans are pretty rich (disposable per capita income in the US is around $63k versus Canada's $35k for example), but when is the cost too much even for them? One would think it has to come, and the market will have to correct. But there to me is the problem.
The sports broadcast market is so fractured, to change pricing and distribution, you have to unravel TV deals that are 5 or 10 years out, with five or six or ten different entities. And we can't forget player power - the first time the NFL salary cap is proposed to be reduced, there's going to be hell to pay from the NFLPA.
Demand can go down and revenue can crack, but to fix it, the response will be like solving several Rubik's cubes (without AI) with your hands tied behind your back.
I can't help but think it's a lot like our sport.
Horse racing moved to excess as a monopoly - we got tons of money in from government and slots, handle was growing with the Internet betting advantage - and nothing moved. It was virtually the status quo.
Then the cracks game; handle fell, interest fell, and the sport lost gamblers to other games and vocations. This happened year after year. Every one of us saw it and lived it.
And still nothing moved. Takeout is as high or higher than 10 years ago; than 20 years ago. Effective takeout with CAW's has risen even more than that.
The retail player has been demolished, and continues to be, while the sport did and does virtually nothing (ABR party buses and Youtube influencers don't count).
This sport - just like the streaming environment - is complex, with tentacles and fiefdoms as far as the eye can see. It can't solve multiple Rubik's cubes, hell I don't think it can solve one, even with AI.
For McDonald's, global supply change issues with the pandemic resulted in a 40% increase in menu prices from 2020-2024. Because consumers expected it, the gravy train of high prices helped profits at the food giant..... until they didn't.
When demand fell, McDonald's (and others) pivoted. Suddenly, less than a year later we could order $4 meal deals for breakfast and $1 coffees again.
McDonald's saw the change in demand and had no choice but to respond. It was fast and commensurate - it was exactly the way things should work.
Racing could never have hoped to have done that. And, in my view (which might be worth what you pay to read it), logically the sports leagues will find themselves in the same boat at some point. The NFL and MLB and F1 are structured a lot closer to the 5th at Churchill than they are to a fast food joint.
Have a nice day everyone!
5 comments:
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