📉 The Case Against the NBA’s Newest Arena

They say, “Never meet your heroes,” but did they ever consider that your heroes could actually be a fan of yours and super complimentary of the work you’ve done in your shared industry?

I bet they didn’t… more on that at the end.

In today’s newsletter:

🗞 The Big Story: The NFL’s Plan to Escape a $14B Punishment

📉 Biggest Loser: The Case Against the NBA’s Newest Arena

🏆 Winner’s Circle: A Solid Gold, MLB Lifetime Pass for Just $1800?

🗞 The Big Story

The NFL is about to save over $14 billion because of a legal error…

And it could mean you’ll lose out on over $3,000. Let’s break it down.

Background: A few weeks ago, a jury ordered the NFL to pay $4.7 billion in damages for artificially raising the price of NFL Sunday Ticket.

Under U.S. Antitrust Law, that total would be tripled ($14.1B) and split between subscribers from '11-'23:

• 2.4 million residential

• 48,000 business

A total that Mike Florio estimates could amount to $3,450 per person.

The Problem:The NFL is now saying that the damages the jury found are "nonsensical," "irrational," and grossly miscalculated.

Apparently, the jury was told that the advertised price for Sunday Ticket was $294 per season. However, during testimony, they learned that the average price most people actually paid after discounts was just $102.74.

Now, the NFL claims that the jury simply multiplied the $192 difference by the number of residential and business subscribers to calculate the $4.7 billion in total damages the league now owes.

(List Price - Discounted Price) x (Number of Subscribers) = Damages

And the league is arguing that the $192 difference isn't an overcharge; rather, it’s a discount.

Fork in the Road: That last point is up for debate because, as we saw in the trial, in 2018, ESPN wanted to acquire the rights to Sunday Ticket and only charge $70 a month for it - which the NFL declined.

Regardless, this has led the NFL to file a motion with the judge, which could result in him:

1. Deciding the jury's decision was irrational

2. Ordering a new trial

3. Reducing the damages

If none of those things happen, then the NFL will likely appeal this ruling to the Supreme Court, where it thinks it can get a favorable decision.

Long story short: don’t spend that $3,450 quite yet.

📉 Biggest Loser

The NBA’s newest arena is set to open next month, but some fans wish it had never been built at all.

Background: The 18,000-seat, $2 billion Intuit Dome, which was funded entirely by Clippers’ owner Steve Balmer, will open on August 15th with a concert from Bruno Mars.

The arena, which was built just a mile south of SoFi Stadium and completed less than five years ago, cost $5.5 billion, all of which was privately funded.

So why are local fans so upset?

More Stadiums, More Problems: Their main frustration comes with how many stadiums are located in one place, which now includes:

• Intuit Dome

• SoFi Stadium

• The Forum

• 26 acres of additional development by the Clippers for practice facilities, team offices, etc.

Residents are worried that because of this, traffic and rent will get even worse, and they have a point.

Rents have increased since SoFi Stadium was completed in 2020 and even though Inglewood has rent control measures so that rent can only be raised between 3-10% every year, residents say that hasn’t been good enough.

Part of that is because Inglewood has always been known as a working-class, affordable city in Southern California.

It’s also the city with the largest Black population in LA county, at 40%, but since the addition of these stadiums, median housing prices have skyrocketed to almost $1 million, pricing out many long-time residents.

These second-order effects have even hit the local schools, which have recently been forced to sell off land to developers, only worsening these issues.

Silver Lining: However, some residents are hopeful that with the addition of these stadiums, billionaire owners will be motivated to help chip in for initiatives that help local residents, as well as their teams - like the addition of an automated transit system that’s estimated to cost $2 billion.

But that might be as good as they’re going to get…

🏆 Winner’s Circle

It only costs $1,812 for a gold card that gets you and a guest access to every MLB game (for free) for the rest of your life…

But getting one isn’t actually that easy.

Background: In 1905, the Washington Senators gifted then-President Teddy Roosevelt a 14-karat gold card that granted him access to any American League game to drum up some free publicity.

As it turns out, President Roosevelt thought baseball was too “soft” and never used the pass, but at that moment, a tradition was born.

Years later, in 1935, the National League president gifted long-time players similar cards as long as they had played for at least 20 years. These players included legends like:

• Babe Ruth

• Ty Cobb

• Cy Young

• Honus Wagner

• Tris Speaker

Who Gets One: The first batch was handed out to just 17 players, but eventually, the program broadened out to include:

• Any MLB player who had played for eight full seasons

• Any front-office executive or employee who has worked for a team for 25 years.

Today, thousands of these gold cards are in circulation, and more are being handed out every year.

How it Works: The cards come with a leather case containing instructions on using it:

Players simply have to show the card at the V.I.P. ticket window, and they and a guest get access to the best available seats in the stadium.

Unfortunately, these cards don’t work during the playoffs, and it’s unlikely that just buying one online would work either.

However, playing in the MLB isn’t the only way to get one.

For example, Charles Lindbergh received one after flying across the Atlantic Ocean in 1927, and 24 astronauts received passes in 1965 for their contributions to the space race.

There were even 52 people who were held hostage in Iran in the 1970s who got passes upon their return to America.

But honestly, the easiest way to get one might be working as a janitor for 25 years…

⏱ In Other News

• The WNBA’s first million-dollar player is coming soon.

• POV: You dox yourself to make a point that nobody agrees with.

• The craziest overtime format in all of sports.

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👋 Happy Friday! I did it. I met Jesse Cole (owner of the Savannah Bananas).

To many who read this newsletter (sports marketing nerds), you probably know him as the GOAT of this generation, and I had the chance to talk with him for 5 minutes ahead of their sold-out game at Nationals Park (the largest crowd in Bananas history).

The best part was that he not only knew who I was and said he had sent my videos to people in his circle, but he was also a genuinely kind, engaging, and personable guy.

Here are the highlights of our conversation:

TW: Break the business out into a pie chart for me. What are the big sections, and what do you hope to grow next year?

JC: What do you think?

TW: Oh man, based on publically available numbers…

JC: Which those numbers are outrageously outdated and not even close. So, every financial number out there is not even close.

TW: I would say you’re probably 33% tickets, maybe another 33% merchandise, and the sponsorship piece is the interesting part to me because it feels like it could be massively fluctuating.

If I were to go with those three categories, maybe a third, a third, a third?

JC: Not even close.

TW: What is it?

JC: Merchandise and tickets account for almost 50% each, and partnerships account for almost nothing. We don’t focus on partnerships… everything is tickets and merch.

TW: And why is that? I know your ethos about it, but especially on the social stuff, it seems like that could integrated in a non-intrusive way.

JC: We don’t focus on that. We say, “Fewer things done better.” Everything is about the fan experience and is done directly for the fans.

So what happens is you have a contrasting view. You have a sponsorship. What do they want to get? They want to extract value from your experience.

Generally, most want to do that.

And so, for us, everything is our fans. Our fans support us with tickets, our fans support us with merchandise.

Now, are there partnership opportunities in the future? Yes.

Is media a part of the future?

Create fans first. It’s a different model. Everyone says that when you start a league or a team, you have to get media rights and sponsors.

They forget the most important piece of that puzzle, which is create fans.

So when you look at each one of our brands, the Firefighters have 200K-300K followers, the Party Animals have 3M - we build fans first.

And now the Party Animals are doing a headlining tour and selling out Vegas in 16 minutes. They’re selling out places immediately.

And now the Firefighters—there’s a reason that they’re playing here right now. They’re playing in this area right now in DC, so now they create fans, which takes care of it.

And then, later down the road… the really long game, there is the opportunity for more stuff.

We leave millions of dollars on the table.

TW: I believe it

JC: No, I mean it. No ticket fees, no convenience fees, no service fees, no shipping fees, no sales tax and very little sponsorships. It’s millions of dollars.

Create fans first, and then in the long game, there are opportunities later.

That’s the model.