What of the Seattle Sports Tech Venture Capital Market?

May 28, 2018

A general theme hanging over the Seattle startup scene is the lack of local venture capital available.  This forces local entrepreneurs to spend time outside the region seeking funding.  And if such funding is found, the local companies perhaps don’t end up as much of a priority for out of town venture capitalists.

With this background, it doesn’t seem surprising that Seattle isn’t at the forefront of sports tech venture capital.  While some local startups such as VICIS and TraceMe have found funding either locally or outside the area, Seattle is devoid of sports tech-devoted venture capital funds or accelerators.  These have sprung up in many other cities across the U.S., as either offshoots of regular venture capital firms or major league franchises (Courtside VenturesGlobal Sports Venture Studio, Stadia Ventures, for instance).

Seattle doesn’t have anything similar, which is a bit surprising given the region’s large tech presence along with the mostly forward thinking nature of Seattle’s pro sports franchises.  Efforts locally tend to be of a smaller scale, such as the Sounders support for the annual Seattle Sports Tech Hackathon (disclosure: I’ve been a volunteer organizer of these events).  A local venture banker told me a couple of years ago that the region is too small, and the sports tech sector too niche, for such a fund to be relevant and have a chance at earning returns for its investors.  Maybe things are changing for the better.

But there’s no denying that sports tech funding within the entire venture capital ecosystem is small.  One report had 2014 sports tech related investing at just short of $1 billion.  Meanwhile, total venture capital invested in 2017 was estimated at $148 billion.  So, yeah, it’s small.  But the sector’s influence seems to be growing, at least if judged by those scrambling to see how they can benefit by being on the ground floor with the next big idea in sports media, wearables, esports, gaming, social engagement, etc.  Ultimately, potential opportunities will be too important to ignore, and local players will emerge to provide funding when the risks of not participating in the sector become a disadvantage.

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Close Ties of Local Sports Execs, but ROOT Sports NW remains lonely

March 21, 2018

Geoff Baker of the Times penned an article about the coziness of our local teams.  The gist is the expected arrival of Tod Leiweke to run the yet-to-be-official NHL expansion team and his relationships with other local sports executives.

It all makes sense until the part about how the relationships could benefit ROOT Sports NW.  ROOT and the Mariners have had plenty of time to gain full Sounders TV rights, from the club’s entry into MLS in 2009 to when the M’s took a majority stake in ROOT Sports NW in 2014.

In fact, it’s going in the other direction.  This season, the RSN is no where to be found as a cable partner, with the Sounders instead going with YouTube TV in addition to recent broadcast partner KCPQ/JoeTV.  And just like that, the Sounders crest is no longer featured on the ROOT website.  But the rival Timbers are still a partner with ROOT.  That doesn’t seem to bold well of a future where the Mariners share ROOT with the Sounders.

ROOT is not alone this.  Not long after 710 ESPN affiliate 97.3FM lost Sounders radio rights to 950 KJR, 710’s website dropped the Sounders from the “teams” banner on the main page.   These actions tell fans that these media outlets were interested in covering the Sounders when there was a media relationship, but not as interested in covering the club as a local sports team.

Baker also doesn’t touch on the much rumored ROOT Sports NW/TrailBlazers negotiations from last summer, where many thought the region’s NBA team would end up on the region’s main RSN.  For whatever reason, it didn’t work out.  Given this, and the lack of a Sounders deal, it’s easy to conclude that the Mariners primarily want to keep ROOT an M’s specific network, with some Timbers soccer here, and Big Sky football there.  That’s fine, until it’s time to renegotiate carriage deals or a rival network emerges.  After all, who’s to say the new NHL team would even want an RSN?  Maybe they go the OTT route, especially given the demographics of the league and this market.

Lastly, we don’t know if the Storm and Reign fit into this close executive circle.  But we do know their games are additional programming that could benefit ROOT.  Marketing opportunities could range from a Sounders/Reign doubleheader at the CLink to a Storm game at Safeco.

Baker raises some interesting points, but at least when it comes to the Mariners and their running of ROOT, actual events show the network has little interest in becoming an “MSG Network type venture.”  And this doesn’t even get into the M’s real estate strategy, anti-SoDo stance and apparent disinterest in incremental revenue opportunities possible in its neighborhood.  Cozi, maybe.  But not without a lot of local possibilities already left on the table.


The Sounders Seek Revenue Opportunities

August 29, 2017

Not exactly a gripping headline when stating the obvious.  But this month the Sounders announced they’re seeking a new naming rights partner, perhaps most prominently for the jersey.  The current deal with Microsoft, extended multiple times since the inaugural MLS season in 2009, expires at the end of the 2018 season.  Adrian Hanauer acknowledged in media reports covering the story that the team doesn’t earn much revenue from its TV deal (currently with Q13 FOX).  One can infer the radio deal (97.3 KIRO-FM) doesn’t bring in much either.

So this upcoming naming rights negotiation represents a big opportunity for the club to grow its revenues.  Maybe better media deals will follow.  All will only further boost a team value that Forbes pegs at $295M, good for second in the league.

Notably, the Mariners are currently looking for a new stadium naming rights partner, while OVG reportedly is already seeking corporate sponsors for its proposed KeyArena remodel.  We’ll see how the final deals shake out in terms of value compared to league peers and whether the teams stay local when finding their partners.  There’s no better time than now to explore opportunities in the thriving Puget Sound region.  And for the defending MLS Cup champs, seemingly a lot of runway to grow the business.


It Remains the CLink to You

June 17, 2017

CenturyLink extended its naming rights deal for the stadium shared by the Sounders and Seahawks for another 15 years at roughly $10M/yr, reportedly doubling the previous agreement.  The value reflects a stadium in a growing, upper medium sized market that houses teams that consistently make the playoffs in their leagues.

The CLink is one of three facilities that serve as permanent homes for NFL/MLS teams in their markets, along with Gillette (New England) and Mercedes Benz (Atlanta).  The Atlanta stadium’s opening has been delayed multiple times and now is expected to open in August.  With both of these other stadiums being in larger markets, one can expect those naming rights deals to be larger, especially the new Atlanta stadium.  But the newness of the stadium is just one of many factors considered when such agreements are signed, as the linked article notes.

This season, the Chargers will join the Galaxy at StubHub Center for a three season stay until the new NFL facility in Inglewood is completed.  Additionally, Vancouver and Toronto both have MLS/CFL stadium sharing agreements.  So the economics behind the naming rights deals for shared football stadiums will continue to be focused on the long term nature of the setups in Seattle, Atlanta and New England (Foxboro) for the foreseeable future.  And in the case of Seattle, the agreement is more valuable than expected if based on market size alone.

Your turn, Mariners.


Sinclair/Tribune Deal Impact On Seattle Sports Fans

May 8, 2017

The proposed Sinclair Broadcast Group’s acquisition of Tribune Media may have an impact for local sports fans.  Sinclair owns KOMO TV, an ABC affiliate, which shows some programming from its Disney sister channel, ESPN.  Locally, this means some Pac-12 football games and, well…the NBA.

Tribune owns KCPQ, also known as Q13 Fox, being a Fox affiliate.  Because of that relationship, Q13 Fox broadcasts most of the Seahawks’ games.  Additionally, they are the team’s preseason home.  The station also holds the local rights for the Sounders and Storm.  And similar to KOMO, Q13 Fox broadcasts Pac-12 football and basketball due to Fox Sports contract with the conference.

Sinclair is also trying to make a go of it with the American Sports Network.  It’s billed as a multi-platform network, albeit one with secondary conferences and games.  Perhaps the proposed merger is a way for Sinclair to boost distribution of ASN while also acquiring more sports rights to potentially feed its way.

So what changes for fans if the merger is approved?  Probably not much, at least initially, but it bears watching.  Sinclair would own stations that are affiliates of two of the four major broadcast networks, both of which show sports relevant to local fans.  And, Sinclair would be the rights holders for the Sounders, Storm and preseason Seahawks games.  Even mergers in far off places can work their way back to the local level.


First & Goal Hospitality Launched

March 11, 2017

First & Goal Inc. announced the creation of First & Goal Hospitality (FGH), which took over the management and operations of all concessions at CenturyLink Field and related venues as of March 1st.  FGH takes over from Delaware North, a big, long time player in the hospitality business.

It makes sense for Paul Allen’s F&G to do this as a way to increase incremental revenue at a facility the group already operates.  FGH is also believed to be the first locally team owned organization to break into the hospitality sector.  It’s a competitive sector nationally, from Delware North to Yankees and Cowboys’ owned Legends Hospitality to Centerplate (Safeco Field, Tacoma Dome), to Levy Restaurants (KeyArena, Moda Center), to the big heavyweight, Aramark (UW facilities), with over $14B a year in revenue and a market cap of $9B, dwarfing any sports franchise multiple times over.  And these groups have long branched out from concessions, ranging from marketing and sponsorships to ticketing and consulting.

The local venues noted above serviced by the national players make obvious targets should FGH look to expand.  None more so than Allen owned Moda Center in Portland.  And just as the more established hospitality businesses broadened their product offerings, it wouldn’t be surprising to see FGH eventually go that route as well.  So Seahawks and Sounders fans can look forward to new concession offerings this year, knowing that the genesis for those options are indeed, created close to home.

 


Times Red Cards the Sounders Beat

January 22, 2017

A couple of weeks ago, The Seattle Times Sounders beat reporter Matt Pentz announced that his position had been eliminated as part of wider cuts at the Times.  This followed on the heels of a similar situation last summer for Don Ruiz at the Tacoma News Tribune.  So just like the that, the two major daily papers in the region eliminated the position of Sounders beat reporter within a handful of months.

It’s not a great look for the papers, who are struggling to survive.  Nor for the Sounders or MLS, who appear to be not important enough to have beat reporters covering their defending champion.  As Seth Vertelney of GOAL.com notes, it’s part of a wider trend in the league:

There is an air of legitimacy that daily newspaper coverage still provides to an MLS team. When MLS news is pushed off the pages of major metropolitan periodicals and onto websites with more niche followings, it sends a message to those casual fans: MLS isn’t big-time quite yet.

That’s the message the Seattle Times is sending, whether it’s intended or not. In Seattle, the Sounders are big-time though, so a larger swath of the readership suffers there when Pentz and Ruiz leave the beat.

Just as he relates, the loss of newspaper reporters is in some cases being picked up by coverage from blogs, local websites and team sites.  And this is happening in other sports as well.  It’s a trend that doesn’t look like it’s going to reverse itself anytime soon.

It’ll create some new opportunities, though undoubtedly the casual fan who depends on the local daily will lose out.  Certainly this will be the case in Seattle, where local sports talk radio, another avenue of casual fans, mostly neglects the club.  And a less informed fan, or potential fan, is a loss for the team and league as well.