Emerging Sports Leagues
A look into the most exciting emerging sports leagues hoping to land the next major media contract.
Bidding War for Sports Content
With the recent news of the massive media deal that the Big Ten Athletic Conference signed this summer, I thought it’d be interesting to take a deeper dive into why these TV rights are so valuable and explore some of the emerging sports leagues that could be commanding viewership, and the media contracts that come along with that viewership, in the years to come.
Why is there such a fierce bidding war for the rights to broadcast live sports in the first place? With the advent of streaming services and the seemingly unlimited options for on-demand content, there has been a deterioration in viewership in most forms of live programming, thus decreasing the value of the commercial space to advertisers. Many consumers, including myself, have gone as far as “cutting the cord” and no longer pay for a live television service, and instead rely almost entirely on streaming services to deliver on-demand content. Sports, on the other hand, are one of the few pieces of live television that people continue to schedule their lives around, and consume from start to finish, commercials included. Advertisers are willing to pay a substantial price to market during sporting events which have led to a bidding war between broadcasting networks to pay whatever it takes to have access to this content. Below are a few examples of recent contracts with major sports leagues:
Major League Baseball (2022-2028): $12.24B deal with Turner Broadcasting, ESPN, and FOX.
NCAA Basketball (2010-2032): $19.6B deal with CBS Sports and Turner Broadcasting.
National Basketball Association (2016-2025): $25B deal with ESPN and Turner Broadcasting.
National Football League (2013-2022): $27B deal with NBC, CBS, and FOX
And most recently, the Big Ten Athletic Conference (2023-2029): $7.5B deal with FOX, CBS, and NBC starting in 2023. The conference recently added UCLA and USC which will give it a presence in the major media markets of Chicago, New York, and Los Angeles.
In addition to the general trend of falling viewership in live television programming, there is also upward price pressure for these sports media deals due to a new entrant in the competition for these rights, “big tech”. Companies such as Netflix, YouTube, Apple, Amazon, HBO, and Hulu are all evaluating live sports as a way to differentiate and draw consumers to their streaming platforms. Although these firms are also pouring financial resources into non-sports content, live sporting events accounted for 95 of the top 100 television programs this past year, meaning big tech would be wise to acquire these sports rights as a way to make their streaming platforms stickier and increase switching costs.
One example of big tech bidding for sports rights just happened earlier in the year when Apple announced a deal with Major League Soccer (MLS) worth $2.5B for the next 10 years. This is a 450% increase in value from the previous deal that the MLS had with ESPN. Beyond the MLS, Apple also committed $85M annually to the MLB for 2 weekly Friday Night Baseball games.
Amazon has also successfully struck a deal with a major sports league, the NFL, paying $1B annually for the next 10 years to broadcast Thursday Night Football.
There is no obvious end in sight to the escalating media contracts for the rights to major sports content. There is already evidence to support this, but I believe many of these media and tech companies will be increasingly interested in taking smaller bets on less established sports franchises, in hopes of locking in affordable prices and exclusivity on the next global sporting interest. Although this is just a small sample, below are 10 interesting emerging sports leagues that I believe have the potential to break into the mainstream.
Emerging Sports Leagues
3ICE
Overview
3ICE is a 3-on-3 ice hockey league (really 4-on-4 with 3 skaters and 1 goalie). It made its inaugural season debut in June of 2022, finishing the season in August. Its goal is to present a similar yet more fast-paced version of traditional hockey with rule modifications including two, eight-minute halves with a running clock, no powerplays (just straight to a penalty shootout), no long intermissions, and no coaches reviews among others. Players can also play the puck off the netting above the boards, eliminating a common play stoppage in the NHL.
The league has 6 teams named after their respective coaches and no city affiliation. The lack of city affiliation is a common theme in many of these upstart leagues that I’ll look at. My guess as to the rationale is that it creates a larger potential audience but also from a financial perspective it allows these leagues to pursue more of a touring model, stopping in fewer locations and having all of the teams play multiple games in each location.
Financing Status
The company raised a $9.55M Seed Round in October of 2021, led by Sports-Tech focused investor, KB Partners. This gave the company a $22.05M post-money valuation.
Media Rights
In February of 2022 3ICE announced a multi-platform international media rights deal with ESPN. ESPN agreed to carry all 9 of the league’s tour stops and show the games on ESPN Player, ESPN on Star+, WatchESPN, and ESPN Play. The financial details of the deal were not disclosed.
Premier Lacrosse League
Overview
The Premier Lacrosse League (PLL) is the most recent organization trying to create a brand in professional lacrosse and is currently wrapping up its fourth season. This is also a touring-based league with 8 teams with no city affiliation, all traveling together to 14 different cities over the course of their 4-month season. Sitting on the periphery of mainstream sports interest for years, the PLL is hoping to bring the sport of lacrosse onto the radar of the entire country. Lacrosse currently has a strong following in regional pockets throughout the United States but has not garnered enough interest nationally to have a major professional league thrive financially.
Financing Status
Most recently the PLL raised a $54M Series D round in July of 2022. This put the valuation of the league at approximately $380M post-money. This is a substantial increase in value from the $139M post-money valuation from the previous financing event in June of 2021. The Series D financing was led by The Chernin Group with participation from World Wrestling Entertainment, Wheelhouse Entertainment, Arctos Sports Partners, ThirtyFive Ventures, Pomp Investments, Brett Jefferson, Joseph Tsai, and Blue Pool Capital.
Media Rights
In March of 2022, prior to the PLL’s fourth season, ESPN announced that it had partnered with the league on a four-year media rights arrangement. PLL games aired on ABC, ESPN, ESPN2 and ESPN+ during this season. The financial details of this deal were not made available to the public.
Fan Controlled Football
Overview
The Fan Controlled Football league (FCF) is bringing the idea of fan engagement to an entirely new level. Through live streaming platforms, fans will actually be able to participate in the game through live voting on play calls. Voted on plays that have a positive outcome will add value to each fan’s “FanIQ score” which attempts to measure football insight and credibility. Votes on in-game plays from fans with higher FanIQ scores will be weighted more heavily in future decisions. (This reminds me a lot of the “Believability-Weighted decision making” methodology used in Ray Dalio’s Bridgewater Hedge fund).
Beyond the in-game plays, fans have a say in each team’s logo prior to the start of a season (which has led to eccentric team names such as The Zappers, The Bored Apes, and The Glacier Boyz), and who actually plays on and coaches each team. It’s a hybrid of fantasy football and Madden.
All of the 1-hour games are played in the same high-tech enabled stadium in Atlanta. As far as gameplay itself, it’s most similar to Arena Football. It’s a 7 vs 7 game played on a 50-yard field. There are no special teams and no kickoffs.
Financing Status
In January of 2022, the FCF raised a $40M Series A round, putting the company’s post-money valuation a $175M. The round was led by Animoca Brands and Delphi Digital among other investors.
Media Rights
In its inaugural season, FCF games could only be streamed on Twitch, a platform that has traditionally been targeted at the gaming community. For its second season in 2022, FCF struck a deal with NBCUniversal to broadcast games on NBCLX(which includes Peacock, fuboTV, and the NBC Sports App), in addition to streaming games on DAZN. Lastly, games can be viewed directly through the league itself on the FCF app.
Major League Pickleball
Overview
There were few greater beneficiaries of the stay-at-home orders to start the COVID pandemic than the sport of pickleball. With an ever-increasing need for outside exercise along with social interaction, Pickleball became the perfect outlet in 2020. Although developed in 1965, the pandemic was the event that really spurred the growth of the sport. With a reported 4.8 million (and increasing) people playing nationally, pickleball has been named one of the fastest-growing sports in America. Tennis courts throughout the country have been repurposed to support pickleball games, and chains of bars have sprung up that offer pickleball along with their food and beverage offerings. Unsurprisingly, there have been a few groups that have attempted to formalize professional leagues to capitalize on the growth. Major League Pickleball (MLP) is one such league. This league has 12 teams and their current season, which started in 2022, will consist of a touring schedule with games in Austin, TX, Newport Beach, CA, and Columbus, OH.
Financing Status
Major League Pickleball raised $500k from a group of undisclosed investors in March of 2022. Social Media guru Gary Vaynerchuk and motivational speaker Brene Brown are two members of the investment group.
Media Rights
Currently, MLP can only be watched at in-person events or through their direct social media channels. If the sport continues to grow in popularity I imagine it will be a very intriguing product for media companies.
Ones Basketball League
Overview
The Ones Basketball League, or OBL, made its debut in New York City over memorial day weekend in 2022. The league was created by retired NBA star Tracy McGrady and as the name would imply is a one-on-one basketball league. Attempting to follow in the footsteps of the similar 3-on-3 basketball league, The Big 3, the OBL will tour 7 US cities (New York, Washington DC, Los Angeles, Las Vegas, Houston, Atlanta, Chicago) with all players competing for a pool of $300,000 in prize money and the title of “Ruler of the Court”. McGrady believes that this league can be extremely appealing to Gen Z consumers, who typically don’t have any interest in sitting through a full-length NBA game, and prefer highlight-rich gameplay delivered in a shorter format.
Financing Status
At this point, the company has been financed by McGrady and other insiders of the firm with a reported Seed investment of just under $10M.
Media Rights
Although nascent in its operations, the league struck a media partnership deal with Showtime Sports. In the inaugural season of the league, Showtime showed games through its YouTube channel. Additionally, it will be producing a documentary on the league with behind-the-scenes footage. No details of the media rights deal have been disclosed to the public.
Overtime Elite
Overview
Overtime Elite is a relatively new professional basketball league, created with the goal of providing high school graduates an alternative to going to the NCAA for a year or two before ultimately turning pro. The NBA currently has age restrictions in place that prevent the majority of high school basketball players from leaving directly from high school and entering the NBA draft. This has led to high schoolers with NBA-level talent playing for one year in the NCAA or going overseas for a year. Overtime Elite is hoping to disrupt this trend by creating a semi-professional league for this age range specifically. Players are paid a salary, have access to world-class training facilities, and receive continuing education that is tailored to future professional athletes. In exchange, the players are split into different intra-league teams to scrimmage each other or occasionally play outside talent. Overtime then uses this internally generated content to promote the broader Overtime Media brand.
Financing Status
Overtime has raised over $240M since its founding in 2011. Most recently it raised $100M in Series D financing on August 9th, 2022. This implied a post-money valuation of $600M. The round was led by Formula One, Sirius XM, Live Nation Entertainment, Blackstone, Sapphire Ventures, Morgan Stanley, Winslow Capital Management, and celebrities Kevin Durant and Drake among others.
Media Rights
One of the most unique aspects of Overtime Elite is that the league currently has no plans to distribute the content through traditional broadcasting channels. Instead, it is bringing broadcast quality content to digital and social media outlets directly underneath the Overtime Media brand. It owns all of its content and controls the distribution in this way.
Professional Fighters League
Overview
The Professional Fighters League is one of the many mixed martial arts organizations that is attempting to compete with the UFC, which in itself has become a multi-billion dollar company and one of the fastest growing sports organizations in the world. Its main difference is creating a more traditional season format with a regular season, playoffs, and championship compared with the UFC which has numerous fight cards that mirror the structure of boxing organizations.
Financing Status
The PFL has raised substantial capital, including the most recent $30 million in Series E funding, led by Waverly Capital, in May of 2022, which implied a value of $500M post-money.
Media Rights
In January of this year, The Professional Fighters League reached a multi-year contract extension with ESPN. The initial deal started in 2019 and now will extend through 2023. The deal gives ESPN the right to carry the majority of PFL regular season events as well as the playoffs. Further financial details were not disclosed.
Major League Crickett
Overview
Major League Cricket is one of the leagues attempting to carve out a foothold for professional cricket in the United States. It is specifically a “Twenty20” cricket league, which is a version of the game with modified rules that lead to shorter gameplay ( in other versions games can last multiple days). Although Cricket is relatively unknown in the United States, it is the second most popular game in the world behind soccer, meaning high stakes for any league that can successfully draw the American mainstream’s attention. This is a similar situation that the MLS faced decades ago when soccer was just making its way into the American sports landscape.
The inaugural season will begin in 2023 and consist of 6 teams. Although there are some competitors, Major League Cricket is the officially sanctioned league by USA Cricket.
Financing Status
Most recently, Major League Cricket raised $43M in a Series A round on May 18, 2022. This put the company’s post-money valuation at $268M.
Media Rights
There haven’t been any public disclosures regarding media rights for Major League Cricket. Disney recently paid close to $3B to retain the media rights for India’s most prominent Cricket League (the IPL).
LIV Golf Tour
Overview
If you are a sports fan in the United States, it would have been hard to avoid hearing about the LIV Golf Tour this past year. Some of the biggest names in golf have jumped ship from the established league, the PGA, to join the very controversial LIV Tour. It’s a controversial group because of its financial backer, the Saudi Arabian sovereign wealth fund, which is the state-sponsored investment vehicle of a country and regime that has had notable human rights abuses.
If evaluating solely economic interests, it will be impossible for the PGA tour to compete with the unlimited financial resources of the LIV Tour and its $600B financial sponsor. Despite the controversy and negative appearances, it has been able to convince some of the biggest names in golf to play on the new tour for exorbitant amounts of money (Phil Mickelson was reportedly guaranteed $250M and Dustin Johnson $125M).
The game is identical to PGA Tour golf aside from playing 54 holes over a tournament as opposed to 72. It is a 5 month season with 8 events. The 48 Golfers on the tour will compete for $255M in total season prize money.
The competition from LIV Golf Tour has already sparked some reactionary innovation from the PGA Tour. They have increased prize money and guaranteed a certain number of tournaments in which all of the top names will participate. Additionally, Rory McIlroy and Tiger Woods announced a new virtual golf league they will launch in 2024 in partnership with the PGA. The new league, called the TGL, will consist of two-hour 18-hole matches on a virtual course. The tech-infused matches will be between 6 teams of 3 PGA tour golfers each.
Financing Status
LIV was founded in 2021 and is backed by the Saudi Arabian Sovereign Wealth Fund.
Media Rights
They do not currently have any media rights but their first tournament was sponsored by DAZN, SuperSport, and Sky Deutschland. It will be interesting to see if any media companies pursue the rights to LIV golf content or if they determine the potential backlash would be too severe.
XFL
Overview
The XFL has emerged, folded, and re-emerged multiple times over the course of its rocky history. Originally launched in 2001 in part by former WWE creator Vince McMahon, the XFL’s goal was to create a viable competitor to the National Football league. In its first iteration, the league attempted to bring much of the flair and showmanship from WWE into a football setting, having some changes of rules that led to faster and sometimes more violet play, experimenting with more access to behind-the-scenes footage, new camera angles, and allowing the players to embrace their unique personalities, going as far as allowing them to have nicknames on the backs of their jerseys. Failing after its inaugural season, the XFL made a second attempt to return, only to be shut down again with the COVID-19 pandemic and the ensuing end to all live sporting events. The league is now attempting to make its third comeback.
Financing Status
The league was acquired by Seven Bucks Productions and RedBird Capital partners through a $15 million leveraged buyout in August of 2021.
Media Rights
In May of 2022 ESPN and the XFL announced a five-year agreement for exclusive broadcasting rights of all XFL games. The financial details of the deal were not disclosed.
Conclusion
New sports leagues are constantly being created and existing sports leagues are always on the lookout for ways to innovate to capture a following in this crowded space. The ten emerging sports leagues listed above are just a handful of the leagues that are looking to break through the noise. What’s safe to say is that as long as people tune in for live sports, media companies and advertisers will pay handsomely for the rights to that content. And as long as the bidding wars continue, entrepreneurs will find new sports to bring to the market and ways to innovate more traditional sports.
Thanks for reading!