U.K. based promoter Matchroom Boxing and Perform Group formed a joint venture, Matchroom Boxing USA, to promote 16 fight cards in the U.S. annually over eight years. Perform Group, which has committed $1 billion to the venture (the largest investment in boxing history), will broadcast the events on its digital streaming service, DAZN. JohnWallStreet had the chance to talk with DAZN SVP Commercial and Partnerships Joe Markowski about the company’s approach to entering the U.S. market, its global ambitions and interest in the NFL overseas.
JWS: Chief Executive James Rushton said his goal was to make DAZN “the largest and most significant sports broadcaster in the world.” Can that be accomplished without unseating ESPN in the U.S. market?
Joe: I don’t think we would say our ambition is to become the number one sports broadcaster in the U.S. We recognize the maturity of the sports broadcast market here and we realize to “unseat ESPN” would require a significant investment and access to rights which currently are not available on the market. We have a defined set of rights we’re working with and we’re very confident we can establish ourselves using those rights here.
JWS: I’ve seen DAZN described as “Netflix for Sports”. Please explain the comparison, as I see Netflix as an on-demand service – whereas sports are watched live?
Joe: It’s an easy way to way to describe OTT, because that’s not a widely-known term among consumers; people have become accustomed to OTT via Netflix. We see it as an easy way to describe our ambitions, which are to be the pre-eminent global broadcaster of sports content via OTT.
JWS: It’s been estimated that there are 10 million boxing fans in the U.S., with 3 million identifying as hardcore fans that spend money on PPV fights. The May 12th Lomachenko/Linares fight that aired on ESPN drew 1 million viewers. Considering those viewers get ESPN with their cable subscription (i.e. it didn’t cost them any additional money to watch), is that the ceiling for subscriptions sold within the first year of the deal?
Joe: We don’t look at it through a 12 month lense, we are making an eight-year long-term commitment here. That is consistent with what we’ve done in other markets. Our primary rights relationships in a market will always be long-term (see: 10-year deal with Japanese soccer league in Japan), sometimes with our hand on the steering wheel – where its’s more than just a broadcast relationship (think: board membership); that’s the case here with Matchroom Boxing USA. Of course, there are KPIs, a CEO and investors to keep happy, but for us the most important metrics are three, five, eight years out.
JWS: For the last 30 years, boxing’s biggest match-ups have occurred on PPV. Your model is based on monthly subscriptions sold. Why does the sport’s business model need to be revamped?
Joe: We see the PPV model as underserving the boxing fan. We recognize PPV costs vary, but we think even at $59.99 that’s inflated for a single night of boxing and we’re going to serve the customer in a very different way. If you look what we did with McGregor/Mayweather, we made that available via our standard rolling monthly subscription mechanism, which includes a free first month. It gives the user affordability and flexibility. From a business model perspective, we want to serve you with enough content, engaging content and a schedule of upcoming content that you see value in and you stick around for it; and our price point, when we announce it in late June/early June, will reflect that.
JWS: There is a perception that while the NBA is a global game, the NFL lacks a following outside of the U.S. You guys carry NFL games (live) and RedZone in several international markets. Do league games draw viewers?
Joe: The NFL has done a wonderful job of internationalizing their business. We carry that content in Germany and it does really well for us there. We carry NFL content in Japan. It does well for us there, but I’m not going to pretend it’s a top-tier sport as domestic content trumps it. In Canada, it’s a jewel in our crown; you can make the argument that it’s the number 3 sport there. As a guy coming from London, that market is growing YoY. I can definitely see growth across various metrics as a fan and as a league partner (Perform Group) of theirs, across various European markets. As we scale, we see the NFL as a key partner in markets far away from North America.
Howie: Perform Group is a subsidiary of privately held Access Industries. The sports media company counts The Sports News and Goal among its U.S. publications. While you can’t invest in Perform Group, there is one way to play DAZN; Dentsu, a Japanese advertising firm that trades publicly on the Tokyo Stock Exchange under the symbol (TYO: 4324). In late March, Dentsu invested in DAZN as part of a deal “which made the service available to customers of mobile phone operator NTT Docomo.” No information has been released relating to the size of the investment or the valuation placed on the company.
Fan Marino: Considering NFL, MLB, NBA and NHL rights are tied up into the early part of the 2020s, I asked Joe what else U.S. sports fan can expect to see on the service upon its launch?
Joe: Our approach to rights acquisition is not going to be in a silo (i.e. fight sports), we’ll make some other announcements soon; this is very much a multi-sport service that will carry premium rights for a number of top-tier sports. Again, we are in this for the long-term; we have engaged and will engage with the big 4. Immediately, you’ll see a broad offering touching on soccer, international sports and domestic content where it’s available.
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