This article is an online version of our Scoreboard newsletter. Sign up here to get the newsletter sent straight to your inbox every Saturday
It’s been another momentous week for tennis. Just days after the sport said it’s farewell to Serena Williams, another great has gone. Roger Federer is hanging up his racket after a stellar career spanning more than 1,500 matches and 20 Grand Slam titles.
“I wish this day would have never come. It’s a sad day for me personally and for sports around the world”, said Rafael Nadal, Federer’s great rival on the court and close friend off it. Carlos Alcaraz, the rising star and newly-crowned US Open champion, simply tweeted a broken heart emoji.
We’ve been writing for a while now at Scoreboard about the generational shift under way in tennis, but things are really gathering pace. We’ll be on watch to see if the big commercial deals start rolling in for the young guns — a sign that the sporting world really is moving on.
This week we’re looking at the latest bit of blue sky thinking from Chelsea FC’s new headline-grabbing owner. Plus we explain how the European energy crunch is beginning to grind the gears in Formula 1. Do read on — Josh Noble, sports editor
Send us tips and feedback at scoreboard@ft.com. Not already receiving the email newsletter? Sign up here. For everyone else, let’s go.
Imagine, for a moment, that you could assemble as diverse an ensemble as Machine Gun Kelly, Tiffany Haddish, and Olympic high jump champion Gianmarco Tamberi, among others, put them in an arena in Ohio and watch them play basketball on international television.
If it sounds farcical, the above scene actually took place in real life this past February as part of the National Basketball Association‘s annual All-Star Weekend, a circus of slam dunk stunts, celebrity gimmicks, and a friendly basketball game between the league’s top stars.
The two-day event resulted in $249mn in total economic impact to the greater Cleveland area, including over 100,000 tourists from 45 US states and two dozen countries.
The concept of the All-Star Game — and indeed, the All-Star weekend — is a staple in each of the core four US professional sports leagues, a slice of peak Americana for its alchemy of celebrity, glitz, and tourism glossed with the fleeting experience of watching a sport’s top players like Steph Curry or Shohei Ohtani line up once a year in a friendly match with middling stakes.
It is this idea that new Chelsea FC owner Todd Boehly floated this week as a suggestion for the English Premier League, speaking at the Salt financial conference in New York. In sum, Boehly posited hosting a “North vs South” football match featuring the league’s best players, and a tournament between the bottom four squads in the table, using the proceeds to help smaller clubs.
Boehly speaks from experience: his Los Angeles Dodgers baseball team hosted the Major League Baseball All-Star weekend this summer, a two-day extravaganza with a home run contest that drove in $200mn, by his account.
It remains unclear how serious any discussions about a potential Premier League All-Star fixture may be — it seems better suited to a video game than the real world, where fixture congestion is already a major concern. The reaction within football has so far varied from the diplomatic “it’s an interesting idea” to the more brazen “is this guy for real?”
But let’s look at the underlying economics and media impact of such a festival.
For one thing, anyone wondering about the athlete component — why would stars from rival clubs like Arsenal and Tottenham suit up alongside one another? — there are financial incentives. Terms in the collective bargaining agreements between American leagues and their respective players’ associations specify the bonus pay earned by athletes selected to compete in All-Star Games (for basketball players, upwards of $50,000 apiece), not to mention résumé accolades that often translate to better endorsements and opportunities. Selection for such games is often a composite of votes by fans, members of the media, and fellow players.
US domestic television ratings for 2022 All-Star games and events drew viewership from about 1mn to nearly 8mn per broadcast, according to SportsMediaWatch. In the case of the MLB All-Star Game, the highest rated among all the leagues, viewership was at an all-time low this year, though it tracks with general declines in television ratings.
Pulling off such an event in a European context might be an affront to vast disparities between American and English sporting culture. Could the league host its own celebrity sideshow — maybe a friendly between the casts of Love Island and Made in Chelsea? Would football fans even care? If nothing else, the brainstorming component of an English All-Star festival is entertainment in itself.
Formula 1: rising costs put teams under pressure
For years, Formula One had a cost problem. Teams like Ferrari could afford to spend big in the fight for championships. Mercedes and Red Bull were able to keep up. But others, such as McLaren, burnt through cash and struggled to close the gap in performance.
A lot of money was lost. And the competition suffered too. You have to go back to 2009 for a season in which Mercedes or Red Bull didn’t win the constructor’s championship. Brawn GP, who were bought by Mercedes, won that year and Ferrari won in 2008.
US investment group Liberty Media, which bought F1 in an $8bn deal almost six years ago, saw the problem. It convinced teams to agree to a budget cap after tough negotiations. The pandemic, and the threat it posed to the sport, helped focus minds.
The cap came into force in 2021, and dropped to $140mn this year. It’s meant to go down to $135mn next season. That’s attractive to investors, who want a ceiling on costs, and helps to make teams sustainable.
Only, there’s a hitch. The cap was agreed before double-digit inflation and dwindling supplies of energy. In July, Federation Internationale de l’Automobile, allowed the cap to be increased by 3.1 per cent this year. Next year’s constraint has also been loosened.
Some teams say that’s not enough. Ferrari, which once threatened to withdraw from F1 over cost caps, now tells the FT that the budget cap is still too low. Teams are worried about the consequences of rising energy prices feeding into the cost of car parts and raw materials, and, ultimately, salaries. Teams that already have big budgets, like Ferrari, are more likely to run up against the cap.
Aston Martin F1 finance chief Robert Yeowart told the FT that inflationary pressure is an early “test” for the budget cap. A bit of flexibility now could help avoid the embarrassment of multiple teams failing to comply.
That said, other teams started off with a cost base well below the cap. Some senior executives in the sport say that the big teams will stop at nothing to regain their spending advantage. And if the cap is loosened too far, the long-term competitive balance of F1 will be at risk.
An invitation
Our Business of Sport Summit takes place in New York on October 24. Marc Lasry and Josh Harris will be among those there to share their insights. As a Scoreboard subscriber, you can claim your free digital pass using the promo code Premium22 and purchase access to our VIP in-person discussions and drinks reception. Register for your pass today.
. . . and a recommendation:
Our FT colleagues covering banking and financial technology just launched a revamped weekly fintech newsletter, The Future of Money. Scoreboard readers may be interested in the forthcoming edition this Monday, which will cover a new platform for student athlete wealth management. Check it out and sign up here.
Highlights
-
PayPal yesterday said it would no longer sponsor the Phoenix Suns if owner Robert Sarver remains part of the basketball franchise when his one-year suspension ends. The National Basketball Association this week suspended Sarver, who also owns the Phoenix Mercury team in the Women’s National Basketball Association, after an independent investigation found he had used “racially insensitive language”, mistreated female employees and fostered a workplace culture that included bullying on occasion.
-
Axel Springer chief executive Mathias Döpfner used his best-selling tabloid, Bild, to protest Adidas’s decision to stop paying rent during the pandemic. He didn’t disclose that he was the German sportswear maker’s landlord.
-
Activist investor Dan Loeb appeared to pull back from urging Disney to sell or spin off its ESPN sports television network. The entertainment group’s chief executive, Bob Chapek says he has a plan to restore ESPN’s growth.
-
US private equity group Silver Lake has emerged as the second-largest shareholder in the parent company of Manchester City Football Club after acquiring more preferred equity in the Abu Dhabi-controlled group.
-
Fosun International, the owner of English football club Wolverhampton Wanderers, is showing signs of stress, according to the FT’s Lex Column. The Chinese conglomerate’s shares have lost nearly one-fifth of their value this month.
Transfer Market
-
Global sports merchandise and collectibles platform Fanatics has tapped Jason White as its new chief marketing officer for its betting and gaming division. White joins from Paramount’s MTV Entertainment, where he also served as chief marketing officer, and previously worked on ad campaigns for Nike at Widen + Kennedy.
Final Whistle
You couldn’t do this in the UK pic.twitter.com/tCG2qu5oWz
— The Lightskinned Cube Of Saturn (@Java_jigga) September 15, 2022
On the topic of bringing US features to European sport, there might be no more iconic slice of the American affection for sporting spectacle than the 2001 Dallas Cowboys Thanksgiving game halftime show. Just months after the September 11th attacks, rock group Creed gave a riveting performance of their hits including “Higher”, complete with cheerleaders, aerial acrobats, pyrotechnics and a release of doves. Could this be replicated in the UK?
Scoreboard is written by Josh Noble, Samuel Agini 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
Recommended newsletters for you
Cryptofinance — Scott Chipolina filters out the noise of the global cryptocurrency industry. Sign up here
Unhedged — Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here
Credit: Source link