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In this edition of Scoreboard, we detail the financial crisis facing FC Barcelona’s next president, dig into Lachlan Murdoch’s wager on sports betting at Fox, explain NBA Top Shot and the digital craze in sports memorabilia, and more.
Barcelona’s crisis and the cost of football’s short-term thinking
It’s been an awful week at FC Barcelona. The Catalan football club’s offices were raided by police. Its senior staff and ex-president were arrested. And it was ordered to pay back millions in euros after Europe’s highest court judged it had received illegal state aid.
Remarkably enough, these affairs are the least of the club’s problems.
Barcelona’s 140,000 members vote on its next president on Sunday. It is a three-way race between former club president Joan Laporta, technology investor Victor Font and lawyer Antoni Freixa.
Their in-tray includes: recovering lost revenues due to the pandemic; rebuilding a stagnating team; and convincing Lionel Messi, Barcelona’s greatest ever player, to stay at the club. Then there’s the urgent matter of tackling the growing €1.1bn debt pile, the majority of which is considered short term with repayment due this year.
Some of the borrowing relates to a €1bn redevelopment of its Camp Nou stadium, which could pay for itself with the increase of future ticketing revenues.
But other liabilities include money due to its own players for deferred wages in the pandemic and cash owed to rival clubs from past transfers. It is still paying off the £142m fee owed to Liverpool related to the acquisition of midfielder Philippe Coutinho two years ago — a player who then proved to be a flop.
Laporta, considered the frontrunner after collecting the most nominations, reckons once fans return to its stadiums, Barcelona should mount a fast recovery. He plans to refinance its debt and raise cash on the bond markets.
Freixa wants to continue spending on “two or three top players” with the proceeds of a proposed private equity deal: selling a stake in Barça Corporate, an entity that contains businesses such as its merchandising arm and “innovation hub”.
Font insists the club cannot keep on borrowing, with further loans set to be on unfavourable terms in future. “We are dealing with Wall Street,” he told Scoreboard. “They are not going to be kind and nice.”
Cutting costs, such as world football’s largest player wage bill, is a priority. Font hopes to keep the team competitive by handing control of sporting operations to former club legend, Xavi Hernández.
Barcelona’s problems stem from football’s short-term thinking — spending big to achieve immediate results on the pitch. The next president’s financial moves over the longer run will determine if Barcelona retains its place as one the sport’s pre-eminent institutions.
Read the FT’s analysis of the crisis at Barcelona with interviews of the presidential candidates here.
Lachlan Murdoch’s sports betting wager at Fox
In the three years since taking over as chief executive of Fox, Lachlan Murdoch has perhaps made his strongest stamp on the family media empire with a big bet: sports gambling.
Rupert Murdoch’s eldest son was behind Fox’s acquisition of a $236m stake in The Stars Group, a Canadian gambling company. When TSG last year merged with Flutter, the UK company which controls FanDuel, Fox poured another $100m into the combined group.
Lachlan also launched Fox Bet, the company’s own sports wagering platform in the US, which it says has reached more than 4m users.
The strategy is a stark departure from his father’s ethos around gambling. Rupert has always held reservations against sports betting, viewing the business as damaging to poor families, several people close to the situation told the FT.
Robert Thomson, chief executive of News Corp, is also nervous about revenue flowing into the Murdoch-owned newspaper group through sports betting partnerships, these people said.
Fox, like other legacy media groups, is grappling with the long-term decline of traditional television. Lachlan talks with gusto about businesses more primed for the future such as sports gambling and a video-streaming service called Tubi.
The 49-year-old is less interested in the daily grind of running a publicly listed company, and has grown weary of the relentless controversies surrounding Fox News, say several people who have worked with him.
On the most recent Fox earnings call, Lachlan mentioned Tubi 44 times, far more than his 23 references to Fox News, the TV network that remains the main source of profits at the company.
Fox is in the midst of high-stakes negotiations with the National Football League for the rights to air games after the 2022-23 season. Lachlan has spoken of a virtuous cycle between Fox Bet and the company’s TV channels.
The betting platform is meant to engage fans more deeply with the live broadcasts, helping prop up ratings — a crucial point as every year the number of Americans cancelling their pay-TV packages grows.
Other media groups like NBCUniversal and Disney have also sought to enter the budding US sports betting industry, which JPMorgan estimates will produce revenues of $9.2bn by 2025, up from $1.5bn last year, as more US states legalise the practice.
From July, Fox has the option to acquire 50 per cent of TSG’s US business, and 18.5 per cent of FanDuel. Analysts expect Fox will wait to see the final price tag for its NFL deal, before deciding whether to exercise these options. And on Thursday, Lachlan cautioned that Fox still had “a ways to go” before wrapping up negotiations with the NFL.
Read the Big Read on the Murdoch family’s succession drama here.
NBA Top Shot: the crypto-collectibles transforming sports memorabilia
A strange new phenomenon is emerging in the more than $5.4bn US sports memorabilia industry: consumers are buying and selling digital versions of National Basketball Association game highlights, some for upwards of $200,000.
In summer 2019, the NBA and its players’ association announced a partnership with consumer blockchain company Dapper Labs to develop a platform for digital sports memorabilia. The result of that collaboration, launched in beta last October, is NBA Top Shot, a marketplace for “non-fungible tokens,” or NFTs of NBA highlights.
Effectively, Top Shot takes the idea of tradeable sports cards, converts them into digital assets, and allows them to be bought and resold on blockchain — you can read the FT’s full breakdown of how it works here.
The Top Shop collecting mania has taken off over the past two months as players like CJ McCollum and team owners like Mark Cuban have started hyping the initiative. More than 200,000 people waited in an online queue for a release of about 10,000 “packs” of moments — similar to packs of sports cards — last week.
Now, a twelve-second clip of LeBron James dunking on the Sacramento Kings in 2019 is worth almost as much as the typical home in the US. Yet, anyone can watch a version of the dunk for free on YouTube.
What does it all mean? Industry executives say the rabid popularity of Top Shot illustrates two bull cases in the world of sport.
First, that digital memorabilia may be the next frontier of sports collectibles, particularly among Generation Z. “For a new generation of fans, a digital thing may actually be more ‘real’ to them than a physical object”, Dapper Labs co-founder Mik Naayem told Scoreboard.
Second, early anecdotal evidence of the Top Shot craze indicates it’s gaining traction among non-traditional sports fans, broadening the NBA’s appeal to a new audience.
Collectors told Scoreboard the appeal is the experience: finding an online community, combating pandemic boredom, and making a game out of accumulating financial gains, similar to the recent craze of Reddit traders targeting the stock market.
It’s not surprising that the pioneer in this new fad is the NBA, widely considered to be at the forefront of US sports business from its adoption of the salary cap in the 1980s to becoming the first league to allow jersey ads.
Time will tell if this is a passing pandemic fancy, or the start of a new era for collectibles.
Read the FT analysis on NBA Top Shot here.
The women’s Rugby World Cup in New Zealand this October should be postponed, the sport’s international governing body has recommended. World Rugby will make a final decision next week on the future of the tournament.
A new deal could see Amazon taking over the broadcasting rights for a significant number of Thursday night National Football League games, according to The Wall Street Journal. An agreement could be completed as soon as next week.
An image of Irish trainer Gordon Elliott sitting atop a dead horse shocked racing. The Grand National-winning trainer was banned from the sport for a year, with six months suspended, and ordered to pay costs of €15,000 by the Irish Horseracing Regulatory Board.
Manchester United recorded its first quarterly profit since before the pandemic took hold in March 2020, and set its sights on the return of fans to English Premier League games. But net debt has risen to £455.5m, up more than 16 per cent from the same period a year ago.
Cricket, tennis and horseracing will be among the main beneficiaries of a £300m UK government rescue package it was revealed in Chancellor Rishi Sunak’s Budget. The financial support is designed to help sport survive as events continue to take place behind closed doors.
The UK government is also throwing £3m behind a bid for the 2030 football World Cup. Expected rivals to host the event include China and a South American bid led by Argentina and Uruguay.
Earvin “Magic” Johnson, the former basketball star, has joined the board of Fanatics, the merchandiser which helps sports teams digitise the way they sell apparel.
A dozen women have joined the executive board of the delayed 2020 Tokyo Olympics. The symbolic gesture comes after Seiko Hashimoto became games’ president in the wake of her predecessor’s sexist remarks and subsequent resignation.
Kevin Mayer, the dealmaker who launched the Disney+ streaming service and later briefly went on to be CEO of TikTok, has become chair of DAZN, the lossmaking sports streaming platform.
The worst place to be for an American sports franchise is in the middle. Winning is winning. Teams finishing last get the consolation of a top choice for draft picks.
Which is why this video of New York Knicks fans going absolutely bananas this week illustrates just how much their supporters have suffered over the years. The team reached an even .500 record — winning half its games so far this season — for the first time since 2013. That puts the Knicks in contention for an NBA playoff spot. For beleaguered fans, achieving mediocrity is worth celebrating.
Scoreboard is written by Samuel Agini, Murad Ahmed and Arash Massoudi in London, Sara Germano, James Fontanella-Khan, and Anna Nicolaou in New York, with contributions from the team that produce the Due Diligence newsletter, the FT’s global network of correspondents and data visualisation team.