Bally's: An $85M Bet On Legacy Sports Media

Similar to other sportsbook operators, Bally's is making a bet on the marketing & distribution ability of legacy sports media — but will it work?

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Friends,

Earlier this week, Sinclair Broadcast Group (SGBI) struck a 10-year, $85 million deal with casino operator Bally’s to rename 21 of the regional sports networks they acquired from Disney for $9.6 billion in 2019.

Here are the details:

  • Bally’s will pay $85M over 10-years to rename 21 Fox Sports-branded RSN channels as Bally Sports.

  • Those 21 RSN’s broadcast games for 42 professional teams, including the Arizona Diamondbacks, Dallas Mavericks, Detroit Tigers, and Milwaukee Bucks.

  • YES Network (NYC) and Marquee Sports Network (Chicago) were not included in the deal, as Sinclair co-owns those networks.

As part of the deal, Sinclair will receive warrants to purchase a 15% stake in Bally’s. They’ll also have the opportunity to increase their stake by an additional 15% down the road through performance based metrics and pre-set equity execution guidelines.

When it’s all said and done, Sinclair could own up to 30% of their business.

Here’s a good look at where the RSN’s are located (excluding YES):

(📸 / The Streamable)

From a macro point-of-view, this partnership isn’t exactly unique.

Here is a list of media properties that have aligned themselves with sportsbook operators, most occurring within the last 12 months (Source):

  • CBS: Named William Hill their exclusive sports betting partner.

  • ESPN: Agreed to a multi-year deal with Caesars and William Hill.

  • Fox: Teamed up with The Stars Group to launch Fox Bet.

  • Turner Sports: Have deals with FanDuel & DraftKings in place.

  • NBC: Signed a strategic equity partnership with PointsBet.

  • Barstool Sports: Launched the Barstool Sportsbook with Penn National.

From Bally’s perspective, they’ll look to have a hybrid relationship where they take advantage of marketing opportunities through Sinclair’s massive 190 station television network — but they’ll also look to integrate live betting throughout broadcasts to create additional streams of revenue.

For Sinclair, a company that has seen their RSN’s dropped by Hulu, YouTube TV, and more, they’ll get to offset a portion of their declining revenue through an $85 million naming rights deal, but it also gives them significant upside should sports betting continue its upward trend.

But is that really a good deal?

I’m not so sure.

(📸 / Casino.org)

After being dropped by carriers like Hulu and YouTube TV, which made up about 10% of their overall distribution, Sinclair has written down the value of their RSN’s by almost 50% in a year — which makes their plan to offset costs through naming rights and potential equity upside make more sense.

There is just one problem though…

What if Bally’s doesn’t end up being a winning sportsbook operator?

By aligning themselves with Bally’s—both through distribution and equity upside—Sinclair is staking their piece of the sports gambling market on Bally’s ability to win a significant share of the competitive marketplace.

In simple terms, if Bally’s doesn’t prove to be a meaningful player in the sports gambling market, Sinclair’s potential 30% equity won’t amount to much more than wasted time and opportunity.

(📸 / Newscast Studio)

On the flip side, Bally’s plan to supercharge their marketing and distribution efforts through RSN integration is still an unproven model.

There are other sportsbook operators attempting similar strategies, but think about this — not only are cable subscriptions declining at an alarming rate, but the average age of a cable subscriber is increasing.

My point?

When you look at it from a target market perspective, especially considering mobile sports betting skews to a much younger demographic, the concept of marketing through legacy sports media is still unproven.

Let’s put it this way — there is a reason people are so bullish on Penn’s ability to capitalize through Barstool Sports.

Even still, despite the uncertainty and headlines, this could end up being a great deal for both parties. From a bullish perspective, pairing a stable retail presence with a concentrated marketing effort through a large sports media portfolio gives Bally’s all the required tools to be competitive.

Ultimately, only time will tell how legacy RSN marketing and distribution will impact Bally’s ability to lower customer acquisition cost and drive customer lifetime value higher.

In the end — if the strategy works well for Bally’s, it works well for Sinclair also.

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Extra Credit

Last night, I posted a thread detailing the inspiring entrepreneurial journey of the founders behind RXBar. If you haven’t read it yet, you should check it out — it’s one of my favorite business stories ever.

Spoiler alert: sometimes parents do know best :)


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