Disney has big plans for the future of ESPN. It seems like not that long ago, we were debating the ethics of the company selling an interest in the network to the NFL or the NBA. Now we are talking about all of the different ways we will be able to stream content from the Worldwide Leader.
It doesn’t mean that talks for leagues to buy a piece of ESPN are gone. They have just been moved to the back burner of the media news cycle. It’s still something worth talking about though, because I don’t think we have hit on what would have to be the biggest hurdle to any league owning a piece of the biggest brand in sports media.
ESPN has a good reputation. Unless you have a political dispute with Disney or one of the network’s talent, you probably don’t have a lot of complaints about the way they cover your favorite sport. An investment in ESPN the network would not be controversial, but investing in ESPN the brand is, well, complicated.
The destigmatization and legalizing of sports gambling across the country has brought with it an economic boom for every team and league in the United States. Ad revenue, marketing partnerships, and data deals have opened up new revenue streams. But sports gambling only works if the leagues keep their relationships with the sportsbooks formal and cooperative.
Caesars is an official betting partner of the NFL. I didn’t mind placing my Super Bowl bets there because while the two companies work together, Caesars isn’t owned by the league. It’s an independent entity and I have faith that neither side would let the other do anything that would compromise its business.
That used to be something ESPN could simply nod in agreement with, but since partnering with Penn Entertainment on the launch of ESPN BET, there are a whole new world of questions Disney has to answer as it looks for a strategic partner. I gamble because I trust the results are pure. I may not always like them, but because I am not terrified of Taylor Swift, I have no reason to believe the outcomes are manipulated.
If the NFL or NBA were to take equity in ESPN, then the perception would be that they have some equity in a sportsbook. Maybe it’s fair, maybe not, but I know that I would always look at ESPN BET’s line movement a little cock-eyed. Can a league comfortably take an equity stake in ESPN if its involvement makes a valuable sector of the business less attractive to consumers?
Last year, WWE executives were trying to convince gaming regulators in multiple states that it was possible to secure the outcomes of scripted matches in a way that would make it possible for casinos to take action on Raw and Smackdown results.
The plan was met with skepticism and ultimately led nowhere. There was just no way the company could convince the states they were trying to persuade that they could guarantee the sanctity of results.
For the WWE, AEW and other professional wrestling outfits, it’s just a bump in the road. They weren’t counting on gambling revenue. Maybe some of those conversations even began with Triple H or someone else acknowledging that the idea is a bit of a hail mary in the first place.
Basketball and football do not have such a luxury. It’s projected that the NBA will take in more than $167 million from sports gambling partnerships this season. The American Gaming Association estimated that the NFL takes in an astounding $2.3 billion per year that way. Gambling may not be as valuable as media rights deals yet, but no one in either league office is dismissing that cash.
Change comes to every business over time and ESPN is no exception. Licensing used to mean putting the famous four letters on restaurants or selling t-shirts, pint glasses, and basketballs with Stuart Scott’s catchphrases emblazoned on them. The company got more adventurous with things like ESPN Mobile and Disney vacation packages, but in the time when all of that was raising eyebrows, no one even considered the possibility that the network’s name could one day be on a sportsbook.
Verizon was the network muscle behind ESPN Mobile. Still, users associated the product’s quality (or lack their of) with ESPN. The same is true of ESPN BET, and I think it’s something Adam Silver and Roger Goodell have to consider.
It doesn’t matter what the realities or details of the deal between Disney and Penn Entertainment are. If you’re buying part of ESPN, you are buying a piece of ESPN BET. As someone that likes to have a vested interest in the games I watch (particularly football), I am going to think twice about betting on a game in the league that could profit if things go “the right way.”
Diversity is a good thing for your portfolio. Disney has known that for years. Outside of the entertainment space, the company also owns stakes in several real estate companies, technology company GoPro and so much more.
The company has slapped the ESPN name on products and events before. Now though, the combination of timing and market could make that a liability as it looks to sell a stake in what used to be its most valuable subsidiary.
Demetri Ravanos is a columnist and features writer for Barrett Media. He is also the creator of The Sports Podcast Festival, and a previous host on the Chewing Clock and Media Noise podcasts. He occasionally fills in on stations across the Carolinas in addition to hosting Panthers and College Football podcasts. His radio resume includes stops at WAVH and WZEW in Mobile, AL, WBPT in Birmingham, AL and WBBB, WPTK and WDNC in Raleigh, NC.
You can find him on Twitter @DemetriRavanos or reach him by email at DemetriTheGreek@gmail.com.
