The Athletic expands to combat sports, will fans subscribe?

June 10, 2019

The Athletic unveiled another vertical in its ever-expanding sports journalism business with coverage in combat sports.  The expansion gives the sport greater coverage but will the company’s foray into combat sports be rewarded with an uptick in subscribers.

Last week MMA coverage was introduced with MMA writing veterans brought on to write about the sport.  Today, Lance Pugmire, Mike Coppinger and Rafe Bartholemew announced that they are moving to The Athletic to write about boxing.  Pugmire wrote for The Los Angeles Times, Coppinger, for The Ring, and Barthomew a former writer for Grantland.  Notably, I interviewed Rafe back in 2010 about his first book at basketball in the Phillipines.

The expansion into covering MMA amd boxing was foreseeable.  Memorial Day weekend saw the unveiling of the company’s expansion into motorsports.  It also started to cover the WNBA when the season began in late May. With the company’s core business based on subscribers, robust content plus good writing, they are banking on an audience of hardcore sports fans that want a little more than the box score.

The Athletic has disrupted traditional sports journalism.  The standard business model for web sites with content is based on the selling of ads.  But The Athletic is solely based on subscribers as their main revenue source.

It hired away some of the biggest writers in the industry from other outlets and started a focus the localizing of journalism which hone in on certain cities and their teams as the writers gave a more detailed look at the teams including more features.

The startup was a creation of the Summer 2016 class coming of the Y Combinator – think summer camp for young entrepreneurs where they learn how to cultivate their ideas and most importantly, meet investors.

The company premised its business plan on the belief that there is still demand for “truly local content, written by sportswriters” with established credentials and contacts in the industry they cover according to a NY Times interview.  It started in Chicago where they hired the top sportswriters full-time and gave them a quota of writing quality, original content each day.

Perhaps the most notable early hires once it expanded past Chicago was the San Jose Mercury’s Tim Kawakami and veteran baseball writer Ken Rosenthal.  It also hired Seth Davis and Stewart Mandel.  Both known for their knowledge of college basketball and football respectively.

At a time when journalism was thought to be dead, The Athletic has shown it is not.  In a 2016 TechCrunch article, Alex Mather, co-founder of the company, said that 80% of readers view every article that is produced and subscribers spend an average of 90 minutes a week reading the content.  You can conclude that there is a base of fans that still want to read about the sports they follow and are willing to pay.

In addition to the written content, one of its main selling points is the quick load times for articles which, in a ‘right now’ society, is helpful.

Another aspect of The Athletic is that writers are incentivized to promote their work and build subscribers via social media as pay is tied toward the number of subscribers that they recruit.

Access is another linchpin for The Athletic.  With hiring established sportswriters, it gained instant credibility with teams and athletes.  NBA and MLB broadcasts refer to The Athletic articles all of the time.  Reporting on sporting events and interviewing players is just one component of The Athletic’s writing.  Long-form articles with intense detail and storytelling are a tell-tale characteristic of the web site.  This part of the web site has allowed them to be more creative and less-driven by press releases and/or PR pitches than with other sites demanding clicks.

Another facet of The Athletic that is pleasing to readers is no ads.  No sponsored content or banner ads that detract from the site.  Readers are asked at the end of the article if they find the content, “Awesome,” “Solid,” or “Meh,” which one might assume will factor into future content.

With the written content, it was only time before podcasts came along.  There are several podcasts on its platform and one might suspect MMA podcasts in the near future.

The Athletic has been a success since its launch.  As of late last year, it had over 100,000 paid subscribers with 60% under the age of 34 and a 90 percent retention rate for those retaining their subscription past the initial introductory offer.

Will this work for the MMA audience that have been accustomed to twitter for its news and looking on social media for the latest dust-ups between fighters?  Moreover, a fan base which is very supportive of fighters getting paid more and a union or association to combat the perceived injustices.  Yet, openly admitting to not wanting to spend money on PPVs and going through illegal streams to watch instead.  Paying $60 per year for stories up against web sites without a paywall seems to be a hard sell to MMA fans.  Alex Mather stated in a TechCrunch article that the $60 price is a “meaningful price, but not prohibitive.”

Of course, there is still backlash, by the MMA fan that doesn’t feel like they should spend money for writing.  It’s not a unique argument, but, as pointed out by Ben Fowlkes below, there is a price for writing:

In the TechCrunch interview, Mather differentiated The Athletic from others online as it being more original content as opposed to aggregated content.  With the advent of online content, there has been a demand for journalists to churn out blog posts in addition to stories for the daily paper.  The Athletic still demands daily original content, but there is also more feature material which could only live online without the parameters of a normal print paper or magazine.

The Athletic is the creation of co-founders Alex Mather and Adam Hansmann.   The two were co-workers at Strava – the subscription-based fitness company.  There has been a total of 6 rounds of venture funding.  Two seed rounds and three additional funding rounds.  According to Crunchbase, the initial seed round in 2017 drew 2.3 million.   A series A round saw it get $5.4 million.  A series B round raised another $20 million.  In October 2018, it drew another $61.8 million and the latest round in May 2019 saw it get another $21.7 million.  In total, it has raised approximately $89.5 million.

The company was valued at around $200 million after its October 2018 round and its likely more now after this latest round.

The Series C round this past fall was based on the possibility of diving into audio and video.  It also looks like there are rumblings that The Athletic will be expanding into the UK soon.

Eric Stromberg of Bedrock Capital, who met Mather and Hansmann at the Y-Combinator, and is an early investor in The Athletic stated that there were two things that they focus on when looking into investing a subscription business:  retention and a positive flywheel.

Retention seems self-explanatory in that there must be retention of customers after an introductory price is made.  The Athletic usually offers introductory offers to entice those interested.  It’s the retention to the usual price point is what matters to investors.

A positive flywheel is based on the premise that the more you build your subscriber base, the more you build your revenue base.  This provides the opportunity to reinvest the capital into hiring writers, expansion and technology.  Stromberg stated, “[w]hen this flywheel is working it’s actually quite hard to put a ceiling on the business.”

It would seem that The Athletic’s business model is working and the expansion into other sports will yield more fans to subscribe.  But the question of how much fans will be willing to spend becomes something dependent on the consumer.  Right now, things are looking great in the industry of combat sports as there are fights on multiple platforms and every weekend there’s an event to cover or write about.  The area of combat sports is not devoid of characters or notable stories.  This will keep the hardcore fans intrigued.  On a personal note, I think that boxing has a rich history that there would be a lot of stories to choose from.  Since MMA is relatively new, there’s only so much to pull from in comparison to boxing.  Yet, with the expansion of the subscription model where fans are paying for ESPN+ and DAZN and PPVs will there be a breaking point for paying out money for content that can be culled from the internet.  We shall see, but as of now the plan is working for The Athletic.

 

GGG tops Saturday’s DAZN event payouts

June 9, 2019

ESPN’s Dan Rafael reported the purses for Saturday night’s Madison Square Garden event featuring Gennady Golovkin.

According to Rafael, the official payout for GG was $2 million although its likely he’s getting closer to $15 million.  Steve Rolls, his opponent, drew $300,000.  Ali Akhmedov earned $25,000.  His opponent, Marcus McDaniel received $45,250.  Akhmedov defeated McDaniel.  Charles Conwell received $15,000 as he defeated Courtney Pennington who received $13,500.  Brian Ceballo defeated Bakhtiyar Eyubov.  Ceballo earned $25,000.  Eyubov earned $8,000.  Israill Madrimov earned $48,000 as he stopped Norberto Gonzalez who drew $15,000.  Nikita Ababiy earned $8,000 as he KO’d Juan Francisco Barajas who earned $3,500.

Despite loss, AJ sponsor Under Armour is sticking by the boxer

June 5, 2019

According to the Baltimore Business journal, Saturday’s loss to Ruiz received more news coverage due to the upset than if Joshua would have beat the heavy underdog.

Since the event was held on digital streaming service DAZN, still photos were used for coverage by ESPN and other reports.  The Under Armour “UA” logo was prominently displayed on the front of Joshua’s trunks.  Thus, there was more exposure than usual for the event if Joshua had knocked out Ruiz as many had anticipated.

While it is debatable that the publicity may have been bad since the UA-sponsored athlete lost.  But you could also argue that many did not know that Joshua was fighting since his US debut was meant to be against an opponent that he could easily defeat.  Ruiz was a fill-in opponent when Joshua’s original matchup failed his drug test.

Under Armour is sticking with Joshua after his loss.  Attica Jacques, the senior vice president of brand management told the Baltimore Business Journal that they would “stand with AJ and look forward to supporting him in the future.”  Under Armour once sponsored Canelo Alvarez but he is now a free agent per an interview last month.

Under Armour used Joshua’s fight week as an activation for its ‘Rush’ training apparel.  Joshua was one of three athletes featured in a marketing campaign for Rush.  Stephen Curry and U.S. women’s national team member Kelley O’Hara are the others.  Curry is currently in the NBA Finals and O’Hara and the U.S. National Team begin World Cup action this month.

Joshua was a part of a documentary on his training with the new ‘Rush’ training material showing behind-the-scenes training in lead-up to Saturday’s fight.  UA also created ring boots for Joshua to wear during his fight.  There was also social media promoting the UA brand.

While the loss may have hurt Joshua momentarily, UA is sticking by him for the long run.  UA says that activations were “extremely successful throughout fight week.”  It’s unlikely that the surprise loss will harm the marketing campaign for the new training apparel, but it may have hoped a win would propel the brand for future marketing campaigns.

Ruiz upset of Joshua helps heavyweight division

June 3, 2019

The biggest upset in boxing this year, and perhaps in several years, occurred at Madison Square Garden on Saturday night as Andy Ruiz, Jr. stopped Anthony Joshua in the seventh round.  The upset victory put a damper on the first appearance in the United States for one of the best in the world in the heavyweight division.

Ruiz knocked Joshua down 4 times in the fight.  Twice in the third round and another two in the seventh round with the last ending the night.

Ruiz was a fill-in for the original opponent for Joshua, Jarell Miller, after Miller tested positive for PEDs.

The loss may be seen as a setback for DAZN, which lists Joshua as one of its pillars in its boxing arm.  Last month, Canelo Alvarez and Daniel Jacobs fought on the digital platform.  Next week, Gennady Golovkin fights on the digital platform hoping not to fall to an opponent seen as a huge underdog.  Joshua, Canelo and GGG are three of the top boxers that have committed to DAZN as the company has offered each lucrative multi-fight, multi-year deals.

The upset derails a possible matchup with Deontay Wilder which was projected for 2020.  Wilder has inked a deal to fight Luis Ortiz again this fall.  Then, there is Tyson Fury.  The heavyweight that resurrected his career with his draw against Wilder last November is now looking for a rematch with Wilder.  But Fury must get past relatively unknown Tom Schwarz on June 15th for any talk of a rematch to occur.

Ruiz became the first Mexican American Heavyweight Champion and ascended to the short list of heavyweights that can demand big paydays from promoters.

The good news for Ruiz was that he professed to eating Snickers candy bars before fights.  On social media, Snickers gave him a shout out, and according to its twitter, sent him a care package:

In a free-rider sort of way, it also took advantage of Ruiz’s win:

In addition to Snickers, other sports celebrities’ game him props:

All is not lost for Joshua, although the luster of a matchup of undefeated fighters with Wilder or even Fury will no longer happen.  Big money fights are still on the horizon.  He still could sell out Wembley Stadium in a return against Ruiz or an eventual showdown with Wilder or Fury.  Despite the loss, we know that boxing forgets about these blemishes so long as the fighter returns to form.  Even a big fight showdown can still happen.  When Manny Pacquiao was knocked out by Juan Manuel Marquez, all thought that the superfight with Floyd Mayweather would not happen.  In fact, the fight did come to fruition and made big money at the gate and PPV.

While the boxing timeline may have been pushed back due to the upset, Ruiz’s win likely made the division that much more interesting and gave promoters more viable matchups to work with and push.

 

NAC discloses attendance and gate for Canelo-Jacobs

May 13, 2019

The Nevada Athletic Commission has released the attendance and gate for the May 4th fight between Canelo Alvarez and Daniel Jacobs at the T-Mobile Arena in Las Vegas.

The event was the sixth largest boxing event at the T-Mobile Arena with the top 5 involving Canelo.  The other event, Floyd Mayweather-Conor McGregor had the largest gate with $55,414,865.79, drawing 13,094.

The other events included:

Canelo-GGG I, 9/16/17 – 17,318 for a gate of $27,059,850

Canelo-GGG II, 9/15/18 – 13,732 for a gate of $24,473,500

Mayweather-Canelo, 9/14/13 – 16,146 for a gate of $20,003,150

Canelo-Julio Cesar Chavez, Jr, 5/16/17 – 17,143 for a gate of $10,631,850

Canelo-Daniel Jacobs, 5/04/19 – 15,730 for a gate of $8,685,750

Also, of note, there were 1,388 comps for the event.

Payout Perspective:

While it might be the lowest gate of the Canelo events listed above, Canelo-Jacobs did draw more than the second GGG fight. Admittedly, the other fights on this list had more heat and drawing power.  Not that Daniel Jacobs was not a worthy opponent for Canelo, but the others on this list already had a name many casual fans were aware of prior to the fight.  JCC, Jr. rode his family lineage for his popularity and therefore the big attendance and gate for that fight.

1.2M viewers watch Canelo-Alvarez

May 8, 2019

DAZN announced on Wednesday that it had more than 1.2 million viewers watching the Canelo Alvarez-Daniel Jacobs fight across its eight territories.  More than 700,000 devices were tuned into the fight with more than 600,000 concurrent streams coming from the United States.

The news was confirmed by a source to ESPN.  DAZN offers two tiers of payment for its over the top digital platform – an annual subscription of $99 and a monthly pay as you go for $19.99.

Alvarez, the crown-jewel of the DAZN boxing stable, signed a 5 year, 11-fight, $365 million deal.  According to the Nevada Athletic Commission, Canelo made a reported $35 million for his fight against Jacobs.  Jacobs made $2.5 million although his DAZN deal guaranteed a payday of over $10 million.

Payout Perspective:

Assuming these numbers are true, DAZN came through on its big night despite some complaints about signing up, the production and announce team.  Yet, the number of reported streams in the U.S. affirms the expansion to North America.  Would Canelo-Jacobs have made more money if it was on PPV?  Maybe in the short term, but one has to believe this is the long-play for DAZN.

Payouts from Canelo-Jacobs; Canelo nets $23.6M after fees, license and taxes

May 7, 2019

MMA Payout has obtained the payout sheet from the Nevada Athletic Commission from this past Saturday’s Canelo-Jacbos fight. Canelo Alvarez earned the most for the night as he grossed $35 million.

Saul “Canelo” Alvarez: $35M
Daniel Jacobs: $2.5M

Vergil Ortiz, II Jr.: $75,000
Mauricio Herrera: $75,00

Joseph P. Diaz, Jr.: $100,000
Freddy L. Fonseca: $10,000

Lamont Roach, Jr.: $75,000
Jonathan Oquendo: $50,000

Sadam Ali: $150,000
Anthony Young: $45,000

John P. Ryder: $100,000
Bilal Akkawy: $30,000

Aram Avagyan: $12,500
Francisco Esparza, Jr.: $13,000

Alexis Espino: $6,000
Wiliamm R. Wagner: $2,000

Yamguchi Falcao: $50,000
Christopher Pearson: $20,000

Steven Butler: $70,000
Vitali Kopylenko: $15,000

Erik Bazinyan: $50,000
Alan Campa: $17,000

Alexis Salazar: 23,150
Abraham Cordero: $5,850

Richard Acevedo: $3,900
Mario Sosa: $1,600

According to the payout sheet, Canelo netted $23.6M as a result of the fees, license and taxes associated with his payout. Jacobs netted $2.27M although, as reported by many, he is guaranteed over $10M for his part in Saturday’s fight.

Top Rank Boxing on ESPN draws 480K viewers opposite Canelo-Jacobs

May 7, 2019

Top Rank Boxing on ESPN drew 480,000 viewers Saturday night for the event in Stockton, California.  It also drew 166,000 viewers in the A18-49 demo.

The event featured Artur Beterbiev as he defeated Radivoje Kalajdzic.  The opener for the telecast saw a slugfest between Jerwin Ancajas as he stopped Ryuichi Funai.  In addition, Gabriel Flores, Jr. defeated Eduardo Pereira dos Reis.

The ratings are the second lowest for Top Rank Boxing and ESPN since the two began its working relationship in 2017.

Payout Perspective:

It’s hard not to think that most boxing fans were watching the Canelo-Jacobs fight on DAZN.  While the event from Stockton showed the best from its featured fighters, it had the unfortunate scheduling conflict of one of the biggest fights this year.

Payout Perspective: Canelo-Jacobs

May 6, 2019

Welcome to a special edition of Payout Perspective.  This time we take a look at the Canelo Alvarez-Daniel Jacobs fight taking place at the T-Mobile Arena in Las Vegas, Nevada.

Alvarez handles Jacobs for unanimous decision

Canelo Alvarez put on a great performance against Daniel Jacobs in the matchup between the two 160-pound boxers on Saturday night.  It was the best Alvarez had looked as he used impeccable head movement, speed and power to outpoint Jacobs.  While Jacobs was able to get in some good rounds, Alvarez’s chin held up when he was not slipping and sliding past shots.

Sponsorships

For this DAZN event, Tecate remained a prominent sponsor for this fight.   Per Forbes.com, it had a pool table, green screen photo booth, full-size boxing ring and Tecate Bold Punch, a punching bag machine.

While Tecate previously offered rebates off of PPV purchases of big fights it sponsored, it still gave out $20 mail-in rebates for purchasing Tecate at participating stores.

There were no other sponsors on the mat for Saturday night.  Jacobs’ promoter, Eddie Hearn’s Matchroom Boxing and Golden Boy Boxing were also on the mat.

Roger Dubois, the high-end, swiss watch manufacturer was on the front of Canelo’s trunks. Hennessy, another Canelo sponsor, was featured prominently during the lead-up to the fight.    He was an Under Armour-sponsored athlete but he revealed during an episode of Sneaker Shopping that he was a free agent.

DAZN stream and production

The weigh-ins came under criticism due to issues with the stream which broke up in spots. Also, the length of time for the weigh-ins (over 2 hours), seemed to border on self-indulgent rather than promotional.

With DAZN’s new payment structure, there was skepticism as to whether the technology would hold up when an influx of people ordered the service for $19.99 per month the day of the fight.

The answer.  Similar to ESPN+’s first foray into same-day digital purchases, there were issues.

In addition, many were not pleased with the announce booth.  Specifically, there were many fans tweeting about how much they favored Canelo.

Payouts

The Nevada Athletic Commission disclosed a portion of the payouts for the event which included Canelo receiving $35 million. Daniel Jacobs made $2.5 million although his DAZN contract indicated he’d make a guarantee of over $10 million.  He was docked $1 million for being over the contracted day of fight weigh-in.  The rest of the fight card payouts are here.

Odds and ends

Notably, Canelo Alvarez made an appearance on Complex.com’s Sneaker Shopping. He listed himself as a shoe ‘free agent.’  During the episode he purchased several pairs of Nikes and one pair of Adidas.

“Canelo vs. Jacobs channel” drew over 1 million google searches Saturday night which likely is due to people trying to find DAZN.  “Canelo” drew over 1 million google searches on Friday.

Maverick Carter and LeBron James’ production company did the ‘behind the scenes’ episodes for the fight, dubbed ’40 Days’ it premiered on DAZN as a primer for the fight.

Top Rank on ESPN ran an event from Stockton, California at the same time as the DAZN event.

Conclusion

We probably never know the amount of views the DAZN event since those numbers are private.  The event was also on shown in theaters so there may be some barometer as to the level of interest this fight had with boxing fans.  One has to think there were many casual fans clamoring to sign up for DAZN.  The question will be whether its a ‘one and done’ situation or will they stick around for more boxing.  It’s hard to say with such a mediocre review of the production and broadcasting.  Yet, having Canelo Alvarez in your stable with a potential trilogy fight upcoming versus GGG should grab more subscriptions.

DAZN deals with complaints after Canelo-Jacobs

May 6, 2019

DAZN is dealing with the aftermath of this weekend’s big fight between Canelo Alvarez and Daniel Jacobs on the digital platform where USA Today reports there were many complaints.

Perhaps foreshadowing the Saturday night issues was the choppy stream of the weigh-ins on Friday afternoon.  The digital platform and the company’s YouTube channel which streamed the weigh-ins.

The USA Today article included screenshots showing potential customers receiving “Payments Error” screens as well as general complaints about the streaming.  There was a snafu during the Jacobs’ walk out to the ring which also can be attributed to the stream.

There was also a critique about the perception that the pro-Canelo commentators had dismissed the fact that Jacobs could win the fight.  The most notable coming from UFC Heavyweight Champion Daniel Cormier.

Payout Perspective:

One might have anticipated some issues with DAZN’s first big event on its digital platform.  There were comparisons to the HBO Boxing crew of Jim Lampley, Roy Jones, Jr. and Max Kellerman.  There is always criticism when there’s change.  Brian Kenny and Sergio Mora may have favored Canelo but it goes without saying that he’s the company’s biggest star.  Similar fawning has happened with Manny Pacquiao in his prime.  But the bigger concern is ensuring that DAZN’s digital platform is solid including last minute sign-ups, maintaining a steady stream and production upgrades.  Next month when Anthony Joshua and GGG fight on back to back weeks, we will see if DAZN learns from these issues.

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