Tweet
by Gabe Oppenheim
A friend of mine who works for Goldman Sachs texted me minutes ago -- being bombarded by the queries of fellow finance people, he wanted to know how the hell DAZN -- a brand I insist rhymes with chazan no matter how many times I'm told otherwise -- had made Canelo Alvarez the highest-paid athlete in the world.
You might have heard about the $365-million, 10-fight contract he signed last night while wearing an $890 Givenchy sweatshirt.
The answer is basically two-fold.
One, DAZN isn't new -- it has been operating as a sports Netflix across the world for a few years now and is a major presence in Germany and Japan especially. Today alone, for instance, on a non-soccer day, here's its stacked sports lineup in Deutschland:
It's showing live feeds of the NFL Network and the MLB Network and NBC's Golf channel; the Kremlin Cup women's tennis tournament; the Luxembourg Open women's tennis tournament; German league basketball; both MLB playoff games (Brewers-Dodgers and Red Sox-Astros); and, finally, the Houston Rockets versus the New Orleans Pelicans -- because even in Germany, they wanna see the Beard face the Unibrow.
Again, that's just one day in one country for a streaming service that already pervades several others. Practically the only market England-based DAZN doesn't care about, ironically, is England's -- because the rights to air football and rugby are too damn high (not the rent, though).
The glut of global subscriptions -- excluding the US market, which it only just entered -- has taken the company's consumer streaming revenue from $12 million to $118 million.
This is where the second part of the answer kicks in -- that money is hardly a drop in DAZN's parent company's bucket -- Perform Group took in $577 million in revenue last year -- a half-billion freaking dollars.
Where'd it come from? Ah, that's the Haagen-Dazn secret. The streaming service sells sports info to viewers like you. But the big money Perform makes comes from selling sports info and action to leagues and teams and networks.
The company was not originally consumer-faced: It was all business-to-business.
It sold info on soccer players' pitch movements to teams, it distributed NFL games to non-American channels, it provided video to sports ******** operations (which is a huge hustle elsewhere and will be here, too, soon enough).
The twist today isn't that Canelo is receiving all this money -- the twist is that the money is coming from soccer leagues and betting parlors and international executives who ply non-Americans with American football.
Canelo is rich because Khalil Mack can tackle and, in so doing, entertain.
But that's not even the full twist: Perform's owner is Len Blavatnik, the Russian oligarch-turned-exile whose outlandish purchasing ability requires a whole other article (it might be easier to list what he can't or hasn't yet acquired).
Blavatnik bought Perform for $900 million four years ago. At the time, the idea that there could be a Netflix for sports was very new and very untested and it's unclear whether creating said service was even Blavatnik's initial goal. He might have wanted to continue selling only to business.
But once the new consumer strategy was hatched, Blavatnik went on a tear, buying global sports rights by loaning the company $700 million from his own pockets.
More recently, he hired ESPN's former head John Skipper to run his ship (dumb pun intended) -- and Skipper's longtime motto, when it comes to buying up airing rights, is: "You have to build a deeper moat."
Now -- surprise! -- the Netflix of sports seems to Blavatnik a company of the future while the B2B venture seems one of the past. So B2B is getting chucked.
Canelo getting gelt is part of that shift. His contract is lucrative to fulfill a higher mission: Blavatnik now wants to make his loaned money back.
And so he is at this very moment working with UBS bankers to separate DAZN from Perform and to retain the former company while selling the latter.
And you know how you jack up the value of the company you're keeping? Splash across the news that DAZN has the highest-paid athlete in the world, that it's a giant in the OTT world of TV -- that is has become the Netflix of sports it was founded to be.
The better Canelo looks today -- in every sense of the word -- the better the company Blavatnik will get, since he's already decided which of two to keep.
No pressure, but in one sense, Blavatnik, the wealthiest man in Britain, is betting on today's proceedings -- on the Cinnamon Freckle Face who twice fought GGG.
It's a bigger bet than Floyd Mayweather or 50 Cent has ever laid down or been able to (although who among the sly trio manages to pay the least in taxes is up for debate).
So to answer your questions and that of my Goldman friend: All this money came out of an oligarch's pocket who first made it in post-Soviet mining operations. Now, he wants it back.
Let the games begin.
You might have heard about the $365-million, 10-fight contract he signed last night while wearing an $890 Givenchy sweatshirt.
The answer is basically two-fold.
One, DAZN isn't new -- it has been operating as a sports Netflix across the world for a few years now and is a major presence in Germany and Japan especially. Today alone, for instance, on a non-soccer day, here's its stacked sports lineup in Deutschland:
It's showing live feeds of the NFL Network and the MLB Network and NBC's Golf channel; the Kremlin Cup women's tennis tournament; the Luxembourg Open women's tennis tournament; German league basketball; both MLB playoff games (Brewers-Dodgers and Red Sox-Astros); and, finally, the Houston Rockets versus the New Orleans Pelicans -- because even in Germany, they wanna see the Beard face the Unibrow.
Again, that's just one day in one country for a streaming service that already pervades several others. Practically the only market England-based DAZN doesn't care about, ironically, is England's -- because the rights to air football and rugby are too damn high (not the rent, though).
The glut of global subscriptions -- excluding the US market, which it only just entered -- has taken the company's consumer streaming revenue from $12 million to $118 million.
This is where the second part of the answer kicks in -- that money is hardly a drop in DAZN's parent company's bucket -- Perform Group took in $577 million in revenue last year -- a half-billion freaking dollars.
Where'd it come from? Ah, that's the Haagen-Dazn secret. The streaming service sells sports info to viewers like you. But the big money Perform makes comes from selling sports info and action to leagues and teams and networks.
The company was not originally consumer-faced: It was all business-to-business.
It sold info on soccer players' pitch movements to teams, it distributed NFL games to non-American channels, it provided video to sports ******** operations (which is a huge hustle elsewhere and will be here, too, soon enough).
The twist today isn't that Canelo is receiving all this money -- the twist is that the money is coming from soccer leagues and betting parlors and international executives who ply non-Americans with American football.
Canelo is rich because Khalil Mack can tackle and, in so doing, entertain.
But that's not even the full twist: Perform's owner is Len Blavatnik, the Russian oligarch-turned-exile whose outlandish purchasing ability requires a whole other article (it might be easier to list what he can't or hasn't yet acquired).
Blavatnik bought Perform for $900 million four years ago. At the time, the idea that there could be a Netflix for sports was very new and very untested and it's unclear whether creating said service was even Blavatnik's initial goal. He might have wanted to continue selling only to business.
But once the new consumer strategy was hatched, Blavatnik went on a tear, buying global sports rights by loaning the company $700 million from his own pockets.
More recently, he hired ESPN's former head John Skipper to run his ship (dumb pun intended) -- and Skipper's longtime motto, when it comes to buying up airing rights, is: "You have to build a deeper moat."
Now -- surprise! -- the Netflix of sports seems to Blavatnik a company of the future while the B2B venture seems one of the past. So B2B is getting chucked.
Canelo getting gelt is part of that shift. His contract is lucrative to fulfill a higher mission: Blavatnik now wants to make his loaned money back.
And so he is at this very moment working with UBS bankers to separate DAZN from Perform and to retain the former company while selling the latter.
And you know how you jack up the value of the company you're keeping? Splash across the news that DAZN has the highest-paid athlete in the world, that it's a giant in the OTT world of TV -- that is has become the Netflix of sports it was founded to be.
The better Canelo looks today -- in every sense of the word -- the better the company Blavatnik will get, since he's already decided which of two to keep.
No pressure, but in one sense, Blavatnik, the wealthiest man in Britain, is betting on today's proceedings -- on the Cinnamon Freckle Face who twice fought GGG.
It's a bigger bet than Floyd Mayweather or 50 Cent has ever laid down or been able to (although who among the sly trio manages to pay the least in taxes is up for debate).
So to answer your questions and that of my Goldman friend: All this money came out of an oligarch's pocket who first made it in post-Soviet mining operations. Now, he wants it back.
Let the games begin.
Comment