In the United States, we are watching the negotiations taking place between the National Basketball Association (NBA) and the media companies. At stake is the broadcasting rights to the league.
This is nothing new. It is the sports model as old as time.
It looks something like this:
Leagues sell the rights to media companies. These entities bid in an effort to win the rights. It is usually simply a numbers game, i.e. put up the most money.
After that, the media outlets sell time on the broadcasts to other companies in the form of advertising. Since they own the rights, they have the ability to sell the airtime, known as commercial breaks.
With the numbers being tossed around for the NBA, this is big money.
The challenge here is we fail to see a direct model. Like much of what was designed, there are "middlemen". This means we are dealing with people who extract from the system.
We see the waters getting murkier as fragmentation occurs. The broadcasts entities do not wield the same power they once did. Attention is being split. The threat of AI actually enhances the value of sports rights since it cannot be produced by technology.
That said, how long will this last.
As media companies get swallowed up by the likes of Big Tech, what kind of deals will they be offering in the future? How much leverage will the leagues hold down the road?
Big Tech is simply another middleman. The goal is to unite the seller (the league) with the buyer (fans).
Notice how we have a separation process.
Why is this needed? Is there another way to structure this which could change the sports industry?
We discussed the idea of social tokens recently. To me, this is going to be biggest aspect to the total crypto market capitalization.
When it comes to social, sports fans are the epitome of this. Their dedication is rabid and they tend to be willing to spend a great deal of money supporting their teams. They buy tickets, broadcast packages, and merchandise.
Nevertheless, they are at the end of the process.
Instead of doing that, how about having the fans at the center of it. This can be done by eliminating the middlemen so commonly used.
How would this look?
To find a potential solution, we go to the idea of a digital platform. Here we can see how AirBNB provides the model.
That company does nothing more than bring buyers (travelers) and sellers (house renters) together. It does so with a digital application that utilizes network effects.
If we look at the sports model, the leagues content is just that: content. That is no different than Hollywood films or YouTube videos. It is something that garners attention.
The true model, and where the money is, comes from broadcasters linking buyers (the fans) with brands. By selling the advertising, media companies are the platform. They pull in the buyers and link it up with the sellers.
So the question is are they really needed?
What if, for the sake of discussion, we set up a fan platform. Take Real Madrid. There is a digital layer developed where fans have a financial interest. This comes in the form of a token.
Suddenly, fans of that team have some stake in the process.
With each team having a digital platform where fans own stake, value can be fed to it. We know sports have tremendous revenue streams. The broadcast can be streamed through these platforms, garnering the eyeballs.
Here is where the tokenized platforms replaces the media companies. The brands are still able to access the attention, both through in person advertising and to those viewing the events. Fans are brought together not only during games but through their ongoing interaction on the platform.
The teams can retain a stake in the platforms, putting fans and ownership on the same side of the equation. Both have the incentive to grow the ecosystem, enhancing the value. The majority of the advertising money would be used to replace the lost contracts to the rights. Since this is a platform model, things such as a percentage of each sale generated could be built in.
In addition to a potential increase in token value, holders can receive a host of benefits. Perhaps there are discounts offered on merchandise or tickets. Programs tied to the different players can be set up such as getting an autographed picture. Events could be held for token holders during the offseason, much in the same was as they do for season ticket holders.
Ultimately, the marketing department could be tasked with coming up with ideas to generate more value tied to the digital platform.
Here is another way Web 3.0 can disrupt a traditional business model in a major way.
