UP497 'Buy It or Build It': Simon Denyer on the Billion-Dollar Sports Media Playbook

As co-founder of Perform and DAZN, Simon Denyer has spent the last twenty years at the intersection of sport, media, and technology. Last week he brokered an innovative new relationship between La Liga and Disney+ via his new company PEAK Sports Media. 

This is a conversation about the big picture of sport's relationship with the major digital platforms, from YouTube and Netflix to Amazon and Apple. 

Unmissable.

Sponsored by Leaders in Sport

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Their flagship event, Leaders Week London, returns from 29 September to 2 October, with The Summit taking place at the Allianz Stadium in Twickenham. 

They'll be hosting the most senior executives in sport from 54 countries, including over 100 brands. We'll be there, and you should join us. 

Visit leadersinsport.com/UP for more information and use UP15 for a 15% discount on your Summit passes.

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Transcript

Simon Denyer: 0:00

if you want something big, you've either gotta buy it or you've gotta build it. So simple as that. so Len and Access have bought some really big things we know how to do this. gonna do this, it may as well be us. Right. And it was that kind of conversation

0:17

That is Simon Denyer, who is someone I've been wanting to get on the, Unofficial Partner podcast for a long time He is talking there about Len Blavatnik and the setting up of DAZN, uh, which is a central part of his cv. But this is a conversation that goes far beyond that and it talks about many of the big themes that are running into the sports media conversation at the moment. So just some background on. Simon he founded perform with Ollie Slipper, uh, to initially build websites for sports media platforms. That evolved into a data and betting provider for the industry, one of the biggest B2B platforms in the industry. Then DAZN. Emerges from Perform as the first global sports streaming service. He exits that works with CVC on their investment strategy and also with LEM Blavatnik on various projects and then he sets up Peak Sports Media, so the way into that, and we start by talking about the recent L Liga Disney Plus deal, which Simon and Via Peak brokered. So. Lots there and we cover a whole range of different things. If you're interested in the media side of sport where it's been and where it's going, this one is unmissable, I would say don't often say that, but have a go see what you think. This episode of Unofficial Partner is sponsored by Leaders in Sport. It's that time of year again where thoughts move to West London in the four or Autumn as it's properly known, And it's the flagship Event. Leaders Week London returns from the 29th September to the 2nd of October with the two day summit taking place at the Allianz Stadium in Twickenham. They'll be hosting many, many senior executives from across sport and 54 different countries represented, including a hundred brands. Myself and Sean will be there representing Unofficial Partner as ever and we have a deal for you. Visit leaders in sport.com/up for more information and use up 15 for a 15% discount on your summit passes. That's not a bad deal. Might use that myself.

Simon Denyer: 2:30

That is literally starting this weekend. So if it, if whenever this is going out, you know, in the next week or so, let's start with something topical as opposed to when did you first get into sports media? And I start talking about when I was doing a paper round at 15 or something. So

Richard Gillis, UP: 2:44

yeah.

Simon Denyer: 2:45

that could get a bit boring for everyone.

Richard Gillis, UP: 2:48

Set it up for me then. What, just give us a bit of context on it and what is Peak? So Peak is Peak a JV with La Liga?.

Simon Denyer: 2:55

Yeah, so Peak is a new company, um, that we set up a couple years ago. And yes, uh, the LIGA is a JV partner and we're kind of taking over the management of all of the, um, the Liga global rights we've been doing for the last two years. Strategy valuations, research planning, coming up with new options for the league to consider. And we're just now, also in the last few months, starting to take over selling as well in certain markets.

Richard Gillis, UP: 3:21

So it's, it, it Peak is a sort of, is it owned part owned by ocho, your core business? Is that right? And then,

Simon Denyer: 3:30

So the rest, it's very similar. The rest is just owned by three of us. So the rest of us is owned by me, YPO and, and Bruno Jacobo Ali and Bruno Roger who were, who were

Richard Gillis, UP: 3:38

right?

Simon Denyer: 3:38

So we, we are kind of the management shareholders. We wanted to do something together, kind of poster own. We were the three we've worked together on the more, let's, I mean, obviously I've worked with a lot of people over

Richard Gillis, UP: 3:51

Yeah.

Simon Denyer: 3:51

20 years now of perform and dis zone, but this is a pure commercial beast. It's about basically doing strategy for rights holders, especially the big, um, leagues in Europe and America right, what are we gonna do about the next 10 years? Um, and we've all learned a lot from the last 10 years. And obviously DAZN has been a big part of that learning

Richard Gillis, UP: 4:12

Yeah.

Simon Denyer: 4:12

learned a

Richard Gillis, UP: 4:13

I.

Simon Denyer: 4:13

from the last 10 years. And so is the market because of Dione, it's now, you know, one of the biggest right spenders. But what are we gonna do about the next 10 years? What are we gonna do about the streaming platforms? How are we gonna get them properly engaged in our sports? And by our sports, I mean our leagues that we work on, we only work, uh, for leagues. We all decided we wanted to work for leagues in the kind of final stage. We've done B2B, we've done D two C, and we thought, well, let's actually do advisory work for leagues. And we are not really, I mean, we do sell, so we do end up doing deals, but we're not like a classic agency with a huge catalog and a hundred thing. We're not banging on your door saying, I've got a hundred things to sell you. Which ones do you want? We're basically

Richard Gillis, UP: 4:53

Yeah.

Simon Denyer: 4:53

by project, cycle by cycle saying, right, what are we gonna do about this league? We've just done, for example, peaks just redone all of the Syria betting rights, uh, in Italy and worldwide because there was an issue with the, with the incumbent. So they'll bring us in and they'll say. Actually, what are these betting rights worth? How do they work? How much money should we be making from the domestic betting operators and the international betting operators? And then we will do a evaluation. We'll do research, we'll do strategy. And in the case of sir R, that might take us two months. And at the end of those two months, they'll say, okay, we agree with you. Can you help us run a process to go sell this together with us? So in the case of Serial, we actually did sell the rights, the betting rights in the last month for the new season. so we do do sales, but for me it's, you know, I used to work at IMG many, many years ago, I don't even know now, pre, pre performed 20, 30, 20, 25 years ago. And selling was about selling. Uh, and it's not a criticism of IMG, it's how everyone was doing it then. It was basically

Richard Gillis, UP: 5:59

Yeah.

Simon Denyer: 5:59

who it was who you knew. Launches at Riva, sell, sell, sell. Whereas now it's I, we just think it's completely different, which is there aren't that many people left to sell to. They've all merged and the new ones that are around are generally streamers and they're very sophisticated and they don't necessarily wanna buy all 3 83 8 of your matches. So you've gotta come up with a strategy. That can keep the traditional sports broadcasters firmly in the mix because actually their revenues are not, their rights budgets are more or less sustained at what they were. They, they're still there. So you don't want to turn down that money. You want to keep the sports broadcasters going. and they're doing a great job at going, the revenues are still flat. Some of them have actually added subscribers the last few years. But clearly you've gotta think differently if you wanna work in that world and also bring in the streamers. So

Richard Gillis, UP: 6:51

Yeah.

Simon Denyer: 6:51

Peak does. Peak basically says, we understand that we've all worked for D Zone, we launched a zone all around the world. We can. And what is D Zone? Is D Zone a sports broadcaster or is it a streamer? It's basically both. It's kind of ended up like Sky now, plus a bit of Amazon Prime. we actually understand what they both need and we can also value what they both need to try and figure out a solution. And that's the way we believe rights holders can still get growth

Richard Gillis, UP: 7:16

sorry, there's something that it, it reminds me, we had a conversation with Peter Hutton about cricket and, you know, and, and TV rights last week. And one of the things that he said, obviously from, I, I asked you about his time at Meta and what he, you know, before and after what he learned going in and he made the point, which I think echoes what you're saying is that actually when you see sport come in the door, they're selling to a, a sort of an imagined buyer that they want to exist. And actually meta Facebook, Google, they're not playing that game. They're playing their own game and it's a different relationship and it's quite a tough learning period. But we have been saying that for quite a long time, haven't we? We've been sort of trying to second guess what. Amazon, Disney, apple are doing in sport. And you know, the meta thing, I'm just wondering what we know now and how, how it's shifting.

Simon Denyer: 8:08

yeah, I think we know, I think we're at a really, I'm, I'm actually quite positive, so I, someone asked me some questions on a podcast a year ago as, to whether I was bullish or negative and all this kind of stuff about sports rights. I, I think we're in a great place. We've basically had this amazing era where linear sports channels have grown and are now fully optimized. And they're, yes, they're past their peak in terms of subscriber penetration, but they're, but they're still pretty smart of finding ways to keep the revenue, um, at more or less the same level. you've had this kind of phase that's been going since. It's basically it from a European point of view, it's a bit different in America.

Richard Gillis, UP: 8:44

Hmm.

Simon Denyer: 8:44

amazing phase the last say seven or eight years where Deone launched in 2016, and then Amazon Prime started doing proper sports in Europe from 2019 Premier League deal tennis deals. Then the Champion league deals, you've had those two in Europe alone. Deone is spending about 2 billion, Amazon spending about 500 million. So that's two and a half billion of completely new money that has come in. And yes, in some cases they've substituted uh, other pay TV revenue, but they've definitely brought growth to the market. They've brought new subscribers on and now what's about to happen is even better. You've got those two firmly ensconced and needing to continue buying that sports content. And you've definitely got Disney Plus and you've definitely got Netflix and now you've obviously got YouTube Paramount Plus maybe Apple tv. That's a lot. That's a lot of operators, right? And you've got people like Warner Brothers owning Max and they own Eurosport and they own t and t. So well, you add all those together when what are they are, they're all streamers right now, even, even Paramount. And, and, and HBO is really a streamer because of Max. So you go, there's like another five or six of these guys coming. This is a really good time if you know what you're doing and your rights up to, um, the test. And the test is, do you bring new subscribers onto their platform, number one. if you've got, if there, if there's already a lot of people on that platform like Netflix, actually bring people in regularly to have an appointment of view, to increase engagement levels to help them sell advertising? If you do all of those things, you are absolutely fine. If you were the kind of content that just filled out a linear sports channel, you have to play certain times of the week, but, but hardly anyone was watching, obviously you, you, you're gonna have some problems. But the majority of the mid to higher tier sports bring a large amount of customers and revenues with them onto these new platforms. So think, um, the whole, the whole market right now is just really getting going and I think this Disney, um, deal. In the UK that you're asking about because it's not, it's a Disney plus deal when, you know, we all worked in the

Richard Gillis, UP: 10:53

Right.

Simon Denyer: 10:54

We always spend, we all talk about espn, espn,

Richard Gillis, UP: 10:56

Yeah.

Simon Denyer: 10:57

who were, um, the biggest sports broadcaster by right Spend in the World. I think D Zone is probably about the same level now, just over 3, 3 and a half billion. I'd say kind of D Zone and ESPN are the biggest spenders. If there's 50 billion of right spend in the, uh, in the whole world. kind of, the big two are, are, are those two ESPN and Zone, but they're only like three, three and a half billion each. And then you kind of go, well, what are Disney gonna do next? And I think it's really fascinating what they're doing in the ESPN markets of North and South America. Obviously they're doing, uh, they, they've got their channels, they're great sports channels, and they're putting some of that sports content now into Disney Plus in Brazil and South America in the us. Um, and now you can see in Europe, in the more advanced o TT markets of, uh, UK and Nordics where they don't have SPN, they don't have a channel, they're now buying small amounts of premium sports content to kind of put it into their family entertainment offering. And it makes complete sense because. I think Disney Plus is a platform that has a huge amount of content. It, it gets, it does very, very well. When you look at kind of, it has a, it has a large, um, it actually has a higher percentage of viewing than Prime and Netflix on things like movies. But it doesn't have a stronger base in kind of documentaries and drama that Amazon and Netflix have built up. So while they're building that up, well, what else can we do? Well, we know sport pretty well. We've got all these guys around the world who, who've worked in sport. Why don't we put a bit of live sport into the platform? So they've done this champions, the Women's Champions League deal across Europe. That starts with a new season in October.

Richard Gillis, UP: 12:32

Yep.

Simon Denyer: 12:33

then, and then they've done this deal, which is just for Disney plus in the UK initially, where they're gonna take one kind of, uh, premium match every Saturday night and deliberately do it at a kind of a consistent slot. Every single Saturday night to try and obviously bring families, around the television set in the old fashioned ways. We used to, to watch a game, but it's on Disney plus. And if you watch a game on Disney Plus, and obviously UK's a great market because you've got real Madrid and Barcelona and you've got a lot of interesting players there, and especially young players, that creates this kind of regular frequency again, then people see, well, what else is on Disney this weekend? Oh, to late after this finishes, or tomorrow morning, let's watch that new movie release, or let's watch that new drama. um, when you look at these streamers, that's, that's what they're looking for. They're, they're looking for, in the case of Disney, obviously they're looking to add some subscribers, but they're definitely looking to increase engagements. Um, whereas someone like an Amazon or a Netflix is a little bit further ahead of them in terms of penetration, they're still looking for those two things. Plus they're looking to sell some advertising now as well. So you've got quite an interesting, when you are modeling those guys, engagement frequency advertising, it's quite a nice, interesting worth.

Richard Gillis, UP: 13:52

So in terms of of how narratives pick up, you know, in terms of, you see a Disney come in for La Liga and people start to project onto that and they start to extrapolate in their own way, which, and, and one of the questions is always, the sort of foot in the door argument where you're saying, well, actually they're getting in at a low cost level and they're trialing it, and then they're obviously very advanced. data analytics will tell them and give them the feedback in terms of what's working and what isn't. Then you get to, oh, is it leading to a big purchase? And it all this, this story always ends with the Premier League, right? You know, rights. But I don't necessarily mean to point it in that direction, but is the future just a series of smaller and smaller deals where the market is fractured and, you know, we're all gonna be sort of balancing subscriptions? Or do you see a sort of, like you say, a more of an old fashioned rights deal where you come and buy a ma a you write a very big check.

Simon Denyer: 14:49

Well, I think this, this deal in the UK with L Liga, which obviously is in the overall scheme of things, is, is relatively small. It's not, it's not like one of the biggest l liga market. It is a little microcosm of what I think will happen in other markets, including domestic. Whereas, um, the sports broadcasters, so with, there were four people interested in those rights, and two of them were, let's call them sports channels, and two of them were kind of o OTT platforms. at the end of the day, you understand what they all need, if, if, if I, if I had just said all four of you bid and I'm trying to get to a hundred, they all would've bid 80. Right? And we would've horse traded like in the, like, in the good old days and got to 90 to a hundred. But actually we didn't do that. We said, hang on a second, we've got four people interested. Do they all need the same thing? Right? So is there a way to get more than a hundred. actually carving this up a bit and what the sports channels needed the overall offering of liga. So a, a good volume of matches every single week, and a good quality so that they can have the liga fan on their platform, the hardcore LGA fan, on their platform, and they can use it to fill out their, their schedules, obviously, over the weekend and fill out, because they've all got their own ot. So there was a sports channel, two sports channels who needed that. And, and Premier were the incumbent and, and they put forward the best offer. also Premier were also as the incumbent. Were also, let's say, probably the most flexible, saying, well, if I lose one match. Even if it's a good one in the overall scheme of things, is it gonna make a massive difference to my subscriber base? And obviously we know that because we've been playing this game for years, so we'd already modeled that and said, if you lose one match, it doesn't make a huge difference. So instead of you paying us 90, why don't you just pay us 80 and then we'll go get 40 from someone else and suddenly we're on one 20, whereas we could have been on 90 to a hundred. So I'm just using those as index numbers,

Richard Gillis, UP: 16:39

Yeah. Yeah.

Simon Denyer: 16:40

They're not the, they're not the real numbers, but that's the way our mind think, our mind thinks, which is, if you can find a way that the sports channel can maintain its subscriber base and not pay much more than it already was for right? But we can carve out something that's really valuable to someone else, like a Disney for the reasons we just discussed, then suddenly you can find growth. And that's what happened. And, and I think that is what's gonna happen. To answer your question in the major domestic rights. So where these streamer platforms are gonna get really interesting for all of us. Because we work across a lot of these domestic leagues, and is that they are not going to come in and replace Sky or Can Plus or Movie Star, but they, they are gonna come in and they're gonna want, if you look at a, you know, a big football league in the main major domestic markets of like uk, Germany, or Spain. are talking about a significant number of people who like you've suddenly got 15 to 20 million people in that domestic market who are interested, right? And of that half of them say 10 million, 15, 10 to 15 million, watching almost every weekend. They're not, they're, they're not all watching the same game. have two or 3 million watching the big game and the rest is spread out over the rest. how many things are there any major country in Europe where you can have 10 million people wanting to watch it and let's say 5 million of those are actually willing to pay something meaningful. And then you get to a market like UK and there are 5 million people paying for Skyport. There's 4 million people paying for TT. And even in a market like Spain, you've got D and Movie Star both on 3 million Soju, those six. Not only is there 20 million people interested, 10 million people who would watch it live. There's like 5 million people in these countries who are willing to pay quite a lot of money. So if you are a paid for SVOD platform, you have to engage with a domestic lease. There is nothing of that scale that plays every single week. You might be able to release, if you are Amazon, a James Bond movie once every five years, if they ever sort out who the next James Bond is. And that could pull in 20 million people once. Right? And it's every five years. There is nothing comparable to domestic football in the domestic market. So they can't afford, they, they're not gonna stick up their price points. So if, if the average price point for an SVO is anything from say five to 12, 12 euros, they're not gonna suddenly increase that to like 25 to 30. they aren't interested in the whole league, but they are definitely interested in something from the top leagues or

Richard Gillis, UP: 19:19

And the, the, the risk of that fragmentation is what I'm just wondering in terms of whether there's a sort of intangible. In terms of the league's relationship with its fans and whether there's a piracy risk there in terms of if you are, you know, okay, I'm paying over here for Sky or whatever, and then I now resent buying others to follow the same, my team, you know, I'm a Spurse fan for my sin, so, you know, trying to track them around is, is a job and you just sort of either give up and some people say, oh, sold it. I'll just pirate the, the rest of it. And one of the downsides of that, that strategy is of that fragmentation is, is sort of irritation and piracy, I guess.

Simon Denyer: 20:02

I think it depends. Well, most of these leagues in their domestic market already have two, well, all of them have two broadcasters already.'cause they all have a no single viral, so, so the regulators

Richard Gillis, UP: 20:12

Yeah.

Simon Denyer: 20:12

said, we don't want one broadcast having all the games. It, it varies by country, but basically they all have a, they have that kind of rule. So actually the way I look at it is historically. You know, there's been a primary sports broadcaster and a secondary sports broadcaster, and now I don't think you are necessarily adding a third broadcaster. I think you are just adding a major entertainment OTT platform competing for something off one of them and maybe

Richard Gillis, UP: 20:40

Right.

Simon Denyer: 20:40

replaced. So, so actually, if it was you and instead of you having to have and TNT, you had to have Sky and Prime, it's probably better for you. You're gonna save money'cause you've already got Prime, but you're probably gonna keep TNT'cause of Champions League and other stuff on there. So, so it, it depends on the market, it depends on the situation. But these large entertainment streaming platforms. Generally have a lower price. Well, they definitely have a much lower price point and they generally have high penetration. So the chances of you having to pay incremental cost is, is, and if you do, it's relatively marginal compared to D Zone. If D Zone launches in a territory and takes a load of rights, then you are gonna have to sign up Toone scratch and pay the full price. Um, whereas that's not the case if it's on Netflix Prime or, or Disney Plus, if you've already got it.

Richard Gillis, UP: 21:28

And from the, just just to round this off on the other side, so I've, I'm always interested in the sort of the home of strategy, you know, whether it's the home of boxing, TNT home, trying to build a home for rugby, and, and whether that goes against, that que the, the market now, and I'm, I'm, what is the value of a home for and how many sports can sustain a home? Yeah.

Simon Denyer: 21:53

I think the home of is still a great strategy if you are a second tier sport and by second tier sport, there's a lot of very good second tier sports. So I, I just think football is so sophisticated and so huge in terms of, I mean, if you take the, the, the biggest sports, um, the set, let's say, let's call them the tier two sports in the uk right? Which is, they're not tier two. These are major sports that you and I talk about every single day and

Richard Gillis, UP: 22:19

So rugby, cricket.

Simon Denyer: 22:20

Yeah. So, so the, the top ones would be 10 tennis of fans, it's tennis, rugby, cricket, motor sport, and then golf roughly in that order, right? They're all earning between them per sport. They're earning between 150 and say two 50 each. So, so even when you have a really well organized sport like cricket, so, so cricket is probably the highest, uh, uh, cricket is not the biggest of those ones I just mentioned, but it's the biggest earner as is Formula One, interestingly. But, and that's because there is really only one cricket package. It's the e CCP package. And for the e CCP package, so many different formats of cricket under one deal. the deal that the ECB did a few years ago that Tom did with, um, sky, it's, it's, they, they kind of own cricket. And so, so Sky

Richard Gillis, UP: 23:07

Yeah.

Simon Denyer: 23:07

the home of cricket. There's an occasional way series like the Ashes that obviously leaks on t and t, but Sky can quite rightly say we're showing all the short forms we're showing county, we're showing all the home tests we're the home of. And that's a brilliant deal for ECB to do with Sky because they can basically bring the whole fan base in one deal. And the same for Formula One. Where you have kind of problems is sports like rugby and tennis, which, which, um, I'm very involved in, which are actually bigger. They have bigger followings. in tennis for example, the rights are very fragmented.

Richard Gillis, UP: 23:39

Hmm.

Simon Denyer: 23:39

Wimbledon doing a great deal with B, B, C, and then you've got a TP and WCA and all the other slams and the ITF. So by the time you put all that together, everyone doing their own deal tennis probably only gets to like a hundred million, even though tennis has got more fans than cricket. I think when you get to these second tier sports, uh, and, and, and I second tier, these are major domestic sports in a country like the uk, but it's the same in every other country. It'd be basketball if we were talking about Spain. it's, yeah, a home of makes sense if you can deliver it. So. The deal. The deal that the ECB did with Sky is brilliant. The Formula one deal, sky is brilliant. It's the home of sport. Like tennis is much more fragmented. Uh, and it hasn't managed to find one home. We did put the a p and the WTA tour rights together and, and run a combined process so that Sky is now the home of the tours. But they don't have the slams like they have the majors in golf and in the case of golf, sky have had to put that together themselves. They've had to buy the tours and buy the individual majors to become the home of golf you know, aggregation of these rights and home of. Is great when the rights holders can deliver it. Otherwise, for someone like Skye or when I was obviously launching D Zone, was hard work because you are like going, we wanna launch D Zone in Japan and we wanna launch D Zone in Germany. We wanna be the home of whatever it is a baseball or international football or domestic football. So we are having to go right still by Rights deal to try and piece all this together to kind of get that proposition. So for someone like a Sky or aone, which is a, you know, a major sports broadcaster one of these tier two sports, I think home of still has a very good place. When you come to like Champions league, domestic leagues, like that, they're just too big. They, they, they need to be spread around a bit. It,

Richard Gillis, UP: 25:22

Because no one per, no one firm can afford them or want to pay that

Simon Denyer: 25:26

yeah, so I, well, I, I think they could, but I'm not sure that then is in the consumer interest because then they have significant pricing power over a large number of people, which is why the regulator, this is why the regulator gets involved. So it's a combination of market forces and also the consumer, which is why that no single ended up appearing in most markets.

Richard Gillis, UP: 25:49

It is funny, you mentioned tennis there and, and that's, I'm surprised that tennis is at the top of that list and I dunno why, but I know it's obviously a popular sport, but it's, it's, that gets you to sort of what's happening in tennis and the WTA ventures, which I know you are involved in. And then you get to the question about what CVC are doing and their sports co

Simon Denyer: 26:10

Mm-hmm.

Richard Gillis, UP: 26:11

and that's, you know, every second conversation you have around, you know, the place is, what is it, what is it trying to be? It feels like a moment, which I dunno if it's too far, but is it testing the relationship between private equity and sport? You know, if they get this right, others will follow and copy it. I don't know. There, there's quite a lot I think seems to be hanging on this. What do you think? What's your, your view? What, what's the ambition?

Simon Denyer: 26:38

I've definitely learned, if you look at like, well, especially all the stuff we did at Perform, if you get something right, you, you then get a very good market position. You get strong credibility, you get strong momentum, naturally people look at that and tend to replicate it, which is what happened with Perform and, and everyone, IMG in front, everyone started to wanted to be a digital agency and a, uh, a betting aggregator or whatever it was at the time. So I, I think. CVC have obviously done a lot in sport, far more than anyone else. So it is inevitable that that flags at other private equity companies who then say, hang on, C, B, C aren't stupid. They've got a good collection of assets here. They're looking at, um, managing them in a more coordinated way. Should we be doing more of this? So, so it, doing something right does attract more attention and more competition, but it doesn't mean you shouldn't do it, right. You gotta, you gotta do, you've already got a head start. You should maintain your head start by doing things properly and, and, and maintaining that momentum. So I think, I think that's applies to any sector you come to, let's talk about, so let's talk about tennis ventures first and then we can come

Richard Gillis, UP: 27:42

Yeah.

Simon Denyer: 27:42

you were asking about sport. So, so there's what's happened in tennis and I, I've been involved in it quite a lot the last three or four years. Um, there were, there were discussions three or four years ago about merging the commercial entities of the a TP and the WTA tour. didn't happen, um, for various different reasons. So, um, we decided, uh, uh, with the WTA to create WT a venture. So WT A said, okay, well, the merge is not happening. would've liked you guys to be. Um, helping commercialize our sport better. So that's what, that's what ca that came about from that. It was originally us a gr a group of people like me and CBC saying, guys, if you put these two commercial rights together, you're gonna be able to grow revenues a lot stronger off a lower cost base, the distributions to the tournaments, and then the prize money for players is obviously gonna be a lot higher. We are business people, let's talk about it. It wasn't possible, um, three or four years ago. So that's why we decided to invest in WTA a'cause, wt a liked kind of what they saw and said, well, can you just do that at WTA a level? Um, so we've been involved with WTA, I've been involved personally with WTA for. A long time'cause I did the original WTA perform deal 10 years ago. Um, so I know everyone there well, but it was more, this deal was more about putting in some capital so they could invest properly into digital, um, so they can invest in their own kind of production post the, uh, perform zone deal ending and also creating, uh, in, in the typical kind of CVC style, saying. We need to actually separate the commercial side of this business. We need a team of people that all they think about every single day is driving user engagement and all the major revenue streams and running off a relatively small team. There's only like 30, uh, I think, sorry, it's about 50 to 60 people in WT Ventures off a relatively small team, we can manage a lot of revenue and our job is to drive those revenues and those profits to, to create bigger distributions for the sport. So that's what we've been doing the last, um, two or three years setting up WT a ventures with, uh, Marine and running it. They've done really well. They've had a great couple of years, um, partially because of the success of WTA Ventures. the mergers come back on the table because it's like, well actually wt A ventures are doing a really good job. And it's a really simple structure. Yes, CVC are in there helping and with some equity, but actually having one vehicle running everything commercial, you know, there's a lot that comes up in a board meeting of a generic sports federation to do with really complex issues to do with and drug testing and massive geopolitical issues involving huge governments and countries. Or, I once called Andrea and said, how are you? Andrea said, I'm fine that the players need more yoga mats. Let me just sort out the yoga mats and I'll call you back. Right. Just stuff like that, they have to deal, you wouldn't believe the stuff they have to deal with. And you're trying to talk about a massive merger. So you kind of go, actually, this has worked really well. Why don't we now at doing a tennis venture? So the, the parties involved, the, the a TP, the wta, and obviously all the big thousands, they are now progressing forward. Um, and there's more discussions in New York the next few weeks. I think it's a, it's a classic example where sometimes you need a couple of outsiders. You've got people like us on the WT side and obviously on the, um, on the, on the thousands, there's a few thousands owned now by some pretty serious heavyweight investors or very wealthy individuals.

Richard Gillis, UP: 31:17

You mean the sort of te the the thousand series, the 80, the,

Simon Denyer: 31:20

There, there's, there's three or four of them now owned by private equity or

Richard Gillis, UP: 31:23

yeah.

Simon Denyer: 31:24

family offices, right? So all got m and a people, they've all got CFOs. So actually, uh, just a few things have changed. It's not just the fact that WT Ventures has gone quite well. The thousands have also looked at it and said, okay, there's something in that. Let's get this back on the table. So that, that is an example where, private equity, whether it's at tournament level or at tour level. Can obviously make a difference because you, you do come into it loving the sport and respecting the sport, but you do come into it as a business person. You just say, I don't understand. Sorry. Why are we doing it like this?

Richard Gillis, UP: 31:57

Yeah.

Simon Denyer: 31:57

you have a certain level of influence, you can say, I don't think we should do it like this. Can we make a few changes? If we do this, it will make things run more efficiently. It'll make the revenues grow quicker, it'll get, it'll get the distributions up. So, so private equity can, um, make quite a big difference to a sport just through kind of structural changes and kind of a bigger focus on the commercial and financial side.

Richard Gillis, UP: 32:22

so that model, again, if you use CVC as the example, you know, formula One, hugely successful financially for CVC, you then they then go to rugby and rugby is a different story and people, you know, there's a whole different set of challenges and that hasn't been, you know, a, a success as far as I can make out. is Formula One a sort of misleading. Indicator of that because I can see that, you know, again, with my sort of fairly basic knowledge of private equity, but there is an element I can see a centralizing, uh, tendency. I can see a sort of reduction of cost. I can also see a sort of operational effectiveness in certain areas, back office areas. Again, I, you know, I'm, I, it, it all makes sense. But then you are in a, just a world of acronyms and different bodies and groups, and so it four one doesn't feel quite the same.

Simon Denyer: 33:15

Yeah, for me, I don't think this is necessarily a question about private equity or, well, I know what the question is, but for me it's not so much an issue of whether it's private equity or CBC or whoever. For me, it's private ownership of sport is quite an interesting question, right?

Richard Gillis, UP: 33:28

Yeah.

Simon Denyer: 33:29

so I, there are. A handful of sports that are not privately owned. They are owned by the teams, but they have very strong leaders and very high levels of revenue. So they are very commercial as a result, right? So N-F-L-N-B-A, LA liga, premier League, people like that. Um, and then you have these sports like Formula one U-F-C-W-E. Even if you take a smaller level like the Matam sports, like snooker

Richard Gillis, UP: 33:57

Mm-hmm.

Simon Denyer: 33:58

like grown unbelievably. And so well, what are they doing that's different to a federation run sport? The, what they're different doing differently is they're privately owned and someone's in charge. One person is in charge

Richard Gillis, UP: 34:08

Yeah.

Simon Denyer: 34:09

long they're in charge. So if it's case of Bernie, who's in charge forever, if it's a case of someone else, they might only be in charge for five years, but they're in charge and they are gonna go for it. And if you wanna fire them at the end of the period, you can fire them. There's no election, right? At the end of the day, it's a privately owned company. The shareholder can do what the hell they want. And there is something about. Those sports that have had, uh, that are privately owned gps. The other one, obviously there is something, know, there is a, I've worked for private companies and public companies where the only people on my board are business people and shareholders. It's a lot easier than running a sports federation or a sports league. So it is all, it's a lot easier to grow when you're privately owned and you are very, very commercial. So I think the Formula One case study is obviously an amazing one, not just in the CC era but in the Bernie era before that. And also even in the Liberty era, post liberty have also done some amazing things post

Richard Gillis, UP: 35:01

Yeah,

Simon Denyer: 35:02

it's nothing to do with any one of those three owners. It's to do with the fact that during that whole lifespan there's always been one boss and one set, one shareholder, and they've just got on with, that's very difficult to do.

Richard Gillis, UP: 35:17

yeah, yeah, yeah. I was wondering what you thought of the Club World Cup. it's a D zone. It is a way into a D zone question, but D Zone is really interesting. I find it a very, it's fascinating to me because you've been sort of learning in public almost, you know, and, and over that period of time. And I'm interested in your view of, of what went right, what didn't, what, you know, what mistakes you would've done, what would've done differently, all of that. But when you look at the club World Cup, what w what was your sort of first response?

Simon Denyer: 35:45

so I think it's a, it's a really interesting, it took everyone by surprise, but it's actually a really bold move to kind of the next step of D zone, which they, they've obviously been looking at for a year or so, which is how do they drive up? penetration D zone is, um, there's kind of like three phases of D Zone. And this is, this is the way, by the way, HAI Shai tells a story like this when he, I, I deal with Shai quite a lot and, and, and saw Len recently. They will tell the story like kind of there was this launch period of D Zone where we needed someone who knew what they were doing in these countries with these rights holders who could get all the rights together, get the teams together and just charge, right? And that, that was me and my original team. That's what we were good at when we launched in Japan. No one saw us coming. No one saw us coming. We, we managed to get a couple of locals, major local rights, including the local soccer league. called up all of the people. The major international rights who we knew were undervalued and who we knew were very frustrated, and they all agreed to a deal without a process in complete confidence. So suddenly the day we announced it, we already had 10 sets of rights done and off we went. So there was that kind of first five years of D zone, was, if you like, my skillset, knowing the market, knowing these countries very well, knowing and obviously knowing enough about tech and digital in order to be able to put the team together to launch it. the last, um, four or five years Chi's period been about now optimizing that by around with the funnel, making sure that the people are interested, get through the funnel, making sure they subscribe, making sure the prices, uh, uh, are set at the right level to get, to get to cashflow positive, and obviously getting churn down. So he's been very, very good at that stuff, like actually optimizing the work. But they haven't launched in too many new territories or done too many new things. They've just done an amazing job the last four or years of improving the tech, improving the product, improving the revenues. And that's, that's a huge amount of work. And they've done an amazing job. So the question was, well, what are they gonna do next? Right. And I

Richard Gillis, UP: 37:46

Yeah.

Simon Denyer: 37:47

people, people just assume they would launch in more countries. And I think this club World Cup thing took everyone by surprise. And the idea, which is which it, you know, a lot of people have asked me about it, and obviously I wasn't involved at all in this one. But the idea is, well, we zone a very good getting a lot of money out of very hardcore fans, but what they need is they need more people coming in the funnel now. They can either just buy those people and lose them, or they can buy. month of content and suddenly get a huge number of people to register. So if you do get a hundred million people to register, um, and 5 million of those end up one day becoming a subscriber on one of your platforms, that's a billion. That's about a billion of lifetime revenue. Right? So, so just that alone makes sense if it works, and I'm not saying they got a hundred million registrations and 5 million subs, but mathematically that is, that works when you look at their lifetime value. But why they were quite smart is they also thought, well, that's the reason we're doing this. But also how about we do some more in the meantime to let's sub-license some of the rights. Let's get a load of advertisers and sponsors on the platform that haven't been on it before. So I also think they probably generated three or 400 million of direct revenue from stuff like that. well

Richard Gillis, UP: 39:06

Hmm.

Simon Denyer: 39:06

the subscriber benefits. So for them it was the first time they've done something where they went after other revenues first, and then the subscriber revenue's gonna come in in the medium to long term. So I think it's kind of, it is this kind of phase three of Deone. Deone has got this amazing platform that has got. You know, it's like the aggregator of digital sports content all around the world. It's got to now find additional, um, content, additional users, additional revenue streams. that's what it was all about, and I think they did a really, they did a really good job of it. I think the only market that was disappointed because we were just generally a bit, it's great that Chelsea won, but you could see in the news flow, the British we're all just a bit snobby about this stuff and they, they

Richard Gillis, UP: 39:49

Yeah.

Simon Denyer: 39:49

really hard the day that the day the tournament started, I was meeting Ollie Slipper, who was obviously the founder of the company with me for a

Richard Gillis, UP: 39:58

Yeah.

Simon Denyer: 39:58

At the Fire station by Waterloo Station and we were having a both having a beer before we went, before we got on our different trains is where the pub we used to go to when we had an office there. And I mean we were just literally laughing. I'm not joking. We sat aside and we had two beers and every single bus that came past was disowned, disowned dis. And we were trying to talk about something else. We were trying to talk about our kids. We were trying to talk about our new business vendors. He was trying to talk about pitch and cricket and I was talking about, and we just couldn't stop laughing because everyone is like there in our face. But you never would've thought. You know, 10 years ago, let alone three years ago, the D Zone would be buying buses in London. They tried really hard in the UK to get us bricks to engage, and we were a bit snobby about it. But if you look at the, um, if you look at the social media and the news coverage in other markets around the world, the big, and I'm talking big markets in Europe, south America, uh, north America, you in Brazil, it was absolutely massive. Um, and they would've would've generated a huge amount of revenue, contexting.

Richard Gillis, UP: 41:00

It is a funny that I, I funded D Zone, brand or people, the way people talk about, it's quite interesting and, and the way it's reported, because it's quite often, oh, they're still losing money and Len Blavatnik has spent, you know, this amount of money and it's sort of, I don't care about LeBla, you know, I just, he can, he's got, he's a rich bloke. He can spend what he likes, I suppose. But there's a, there's a always a question of when is it gonna break even? When is it gonna make money? That's, that's been a part of the story and I don't know, is that a, a UK. Sort of lens on that. But it's certainly also in sort of stuff like New York Times and the Wall Street Journal's coverage, it's, there is a sort of underlying what, what's happening, why are they doing this and why is it not making more money? And also, so the sort of caveat to that is, well that's price question presumably, and I don't wanna pay any more money.

Simon Denyer: 41:52

Yeah, I think they have to be careful. You can't on, on any product, whether it's to zone or someone else. You've gotta be careful what you do on price before you start losing subscribers. If you lose too many subscribers, then obviously your revenues go down, not up. But they're very shy, is very good, and all the team are very good on that stuff so that they know what they're doing. I think on the bigger story, look, um, if you want something big, you've either gotta buy it or you've gotta build it. So simple as that. So, so Len and Access have bought some really big things like Warner Music and stuff like that. Um, and in this case they, they did already own the majority stake in a really interesting company, which at the time was performed. It was publicly listed and it was a combined decision of the management at the time. Me, obviously as part of that and the shareholders, uh, saying, we've got this thing, it's a great performer's, a great company. It was becoming a market leader in the B2B space, but there is this huge opportunity, we have all the tech where they were already the biggest streamer in sport, but we're just doing it on a B2B best. We have loads access to rights, loads of access to all the tech. We know how to do this. gonna do this, it may as well be us. Right. And it was that kind of conversation and, and I think when you are looking at it from a investor point of view. You know that this is gonna be capital intensive and it did require a lot of capital and lend support and access is support for zone is, is unbelievable. And that when people criticize it, uh, even though I, you know, I don't have anything to do with them now, it's like, how can you criticize someone for investing in a company they believe in and creating a company that recently was valued at 10 billion from not Zero because per it was performed, right? So you did have a crew of people who knew what they're doing, some technology and a valuation of say, a billion, but you still have built it from a 1 billion company to a 10 billion company. And yes, you have to put some capital in to get there, that's one way of doing it. Or the other way of doing it is just wait around for someone else to do it and then you have to buy it for 10 billion. um, so it's like, it depends. There's different types of investors and, and like Access or Lend, they're really interesting investors. They, they think like private equity because they want returns, but they can be bolder. Um, then private equity can, um, because it's, it is a one man's money, and I think they should be, you know, it's, it's, what they did is so brave and they've been so committed, and I'm really pleased. It's kind of worked out well for them. Now they've just gotta get through this kind of next phase. And I think the interesting thing for them in the next phase, coming back to the other streamers and, and some of your earlier points is I think they're in actually a really good place because, um, the other streaming platforms are clearly not trying to build a competitive sports bundle. So, D Zone's competitor still remains the, like, the sports channel bundles of Can Movie, star Sky, espn, the, the other streamers are clearly, definitely with Amazon Prime. Amazon Prime. Just want. Small volume, they've, they've tried different things, but it's very clear now they want small, high quality pieces of content within Prime. Disney want to do the same as per these deal we were talking about earlier. Within their main, with their main pack. They're not trying to create a separate sports pack. I can't imagine Netflix suddenly tearing up all of their pricing and creating Netflix sports when everything's all in one price. So if those three guys in particular, plus others in the future want a little bit of premium sport within their pack. Then someone's gotta buy the rest of it. Right? And someone's gotta buy the other games. And Deone are in a great place to do that. They, they have, they've created a global business. They are a volume business as well as they do want premium sport. They also, but they also want volume. They are for the more hardcore sports fan in the markets they're in. So I actually think DeZone have built themselves into a position where they're for a rights holder. I now work for rights holders. They're the perfect compliment to someone like a Disney or an Amazon Prime. And actually, if you look at the markets where, Germany was the first big market. Amazon bought the Champions League package. It was great news for us.'cause basically suddenly we, we were negotiating Champions League when I was working for D Zone, and suddenly Sky just disappeared. So Sky had the Champions League, all of it, and they just disappeared overnight. And then suddenly Amazon had one match, Andone had the rest. So for D Zone, that was great news and I think for the whole market. Yes, there's more to look forward to, but if you really look back at the last five or six years in Europe, I just say thank God for Amazon and thank God for, there hasn't really been anyone else doing anything different and bringing in any, any new money in, into the whole of the European market other than those.

Richard Gillis, UP: 46:33

Yeah, we did a thing with, the guys at Live score about convergence and, you know, the betting sport, the media and betting convergence thing. And there's a question here for you,'cause obviously you've been, it's, you've been central to this. I'm really interested in the aspirations initially of, when I hear that the, that there are people who say, right, it's complete convergence. That's what's gonna happen. It's gonna be the betting firms will be buying rights and there will be no difference between, you know, what would've been sky and sky bet in back in the day or, you know, whatever it is. And now I look at, so ESPN's adventures in betting in the States, and again, the, the line is that actually the duopoly at the center of it have done all the, have got all the wallets. And it's not a gold rush. It's more of a honey trap. There's less opportunity there than people thought. And you've got this question about, okay, if the ESPN brand BA all didn't work. Pen then went into ESPN. there's a sort of opt out, you know, coming up and there's a question mark over that. So if the, as you say ESPN brand, there's probably no better or stronger sports brand in the, in the world if that isn't working. I'm wondering what your view of that argument is and whether or not that was overblown and actually it's not gonna be convergence is is sort of, you have to tone it down a bit.

Simon Denyer: 47:52

I, I don't necessarily agree that with convergence of betting and sports broadcasting, I think, I think, um, there's been, there's been one good example of it, which was Sky owning skybet. They did a brilliant job of driving subscribers to Skybet. Uh, that was a time where I knew the people that were running Skybet really well, we were providing them with a lot of their content. And, and you could see the influence that if Sky Sports and Skyport News in particular really got behind something, you could see it driving traffic to Skybet. so I, I think that is a really good example of where it has worked. But I don't think there's been many, many more, and I don't think it's really critical. I think, um, the people see it as two different things. So I have one or two platforms that I watch live sport on. I, I also have three or four apps that I bet on. And for me, they are just mobile apps. They're obviously not TV apps. So my viewing experience, like most people's now is connected tv, right?

Richard Gillis, UP: 48:52

Yeah.

Simon Denyer: 48:52

I, I, I want the best viewing experience for my life sport. So that's on a connected tv. That is not a great place to stick a betting app or betting functionality. It's really clunky. You, you know, if you get logged out and you have to put your password in, how complicated is that, right?

Richard Gillis, UP: 49:08

Hmm.

Simon Denyer: 49:08

you're suddenly trying to do an accumulator with five different bets whilst on your remote control. It's just not gonna happen. So I think the market, you take somewhere like the uk, which is obviously the most mature inplay betting market and one of the most mature sports broadcasting market, it works perfectly well that I am watching something on TNT. On my connected TV and on my mobile. I have a theory on this game and I think it's gonna go this way. So I'm just gonna do a little bet builder with my daughter and play around with it. And we're just gonna put a silly little bet on and see what happens. That's perfectly fine to be sitting, I'm just doing, sitting there whilst talking to you, putting a quick word. It's completely normal behavior, and if you try and make me do it any other way, it doesn't really work, um, from a functionality point of view. So, the great news is for broadcasting, especially OTT broadcasting like D Zone and, and Disney Plus is, these guys have got into the home, right? They're not, they're, yes. If you're on the train and you're late home, you wanna watch a Champions League match on your phone, you can. But you don't want to be watching on your phone. You wanna be getting home in time so you can watch it on your big TV with all. So, so the great thing that's happened, especially in the last, the, the hardest thing when we launched his zone was getting into the living room. Once you're into the living room, it, I mean, no one's gonna turn once you're in the living room. It's like any other tv. So it's, it's like a, it's a big tv, it's a communal experience. You have a couple of mates over, you have your kids over, whatever you're doing. It's great. very different to me, just putting on a quick bet and building it. So I think, um, people feel that they should try and put these things together. And there are, there's, there's lots of people doing it in America. There's still people trying to do it here. Zone, try, uh, try to build a betting app as well that works with the broadcast. So there's no harm in trying it, but I don't think it's a must have that betting companies are gonna end up merging with sports broadcasters. I think they can, they, they work quite well together in a commercial relationship as, as they are already at the moment.

Richard Gillis, UP: 51:03

And it, and presumably it sort of hits. A very, very valuable advertising market. I mean, what, what proportion of, so when you are looking at the rights and evaluating, you know, a set of rights, where does betting advertising come into the equation? What sort of proportion would you then be at attributing?

Simon Denyer: 51:20

It's still, uh, rela, although it may appear to you to be quite a large piece of the inventory, um, you, as a viewer, it's a, it's still a relatively small part of the revenue. So if we're building a model, if we're, if we're advising a

Richard Gillis, UP: 51:35

I.

Simon Denyer: 51:35

on the domestic rights and we're saying this is how much revenue the broadcaster is gonna make, if they acquire this set of rights, you are talking max, uh, maximum 10% from advertising overall. And let's say betting is 30% of that max. also depending on the country, you may not even be allowed to advertise in game in a lot of countries like Italy still at the moment, you can't advertise around, uh, live sport. So it, it, it's kind of from zero to 3% of the overall mix. So it's, it's not as big as you realize. Um, and I, and I think that's the thing that drives in play betting, is yes, they want live sports. On TVs tv.'cause that then gets people picking up their phones. Um, that's the thing that drives the big turnover moments at the weekends when the people are watching the big football matches. That's, there's almost like two businesses, if you're an inplay, bookmaker, there's that marquee events. Millions of people watching something, huge surge, whether it's a Premier League game, a World Cup game, Cheltham, something like that. It's a huge surge. You can make a lot of money in one weekend if you get it right. And then there is this kind of long tail, which actually adds up to quite a lot of Monday to Friday of just horse racing, tennis, loads of other sports around the world, which is, which is where people get into and play betting. Sometimes they just wanna have a bit of fun. People used to play poker at night, so instead of playing poker one evening, you've got a couple of mates around, well, let's just bet on the darts. And you, you might just spend. hour watching a little bit of darts or a little bit of tennis, and between you betting 50 pounds and seeing what happens. the other piece that's really interesting if you're an Inplay sports player, because it's very competitive going after the Premier League turnover or the World Cup turnover or the Charlton turnover. But if you've got a good product, a good Inplay product, you'll then automatically i'll, if I'm wanting to bet on something like that, like the darts, I know which betting app I'm gonna, because I just know they do all those other sports really well as well.

Richard Gillis, UP: 53:32

It's interesting, I was listening to George Pine talking about TGL, you know, the new pe the, the sort of Gulf television product. and betting was quite, I was surprised at how high up his list of reasons for liking this new format betting was. And I, I sometimes wonder what private equity sees when they see that sort of the betting question in sport and whether or not it's higher up their agenda than is quite often sort of

Simon Denyer: 53:58

Uh, think, yeah. Yeah. I mean, when, when we are looking at as, as either peak when we're looking to advise a league or as a CBC, as a private equity company, a sport that has a second or third main revenue stream is really interesting because if. 90% of your revenue comes from tv. That probably means that 80% comes from domestic tv, se 70 to 80%. Then you've got international tv, and then you've only got a tiny little bit of sponsorship. Another, if you've actually got a sport that actually is quite interesting to the, to the betting community and the betting operators, you've got a material second revenue stream, and sometimes it's actually bigger than sponsorship. So you suddenly, you've got selling content to TV companies or streamers, selling content to betting companies, usually via one of the aggregators, like Genius or Radar or Stats perform. And then you've still got sponsorship. You might also have some hosting or some, uh, event revenue as well. So when you are looking at a sport, you like that kind of diversity one of. On the board. Well, both two of the sports are on the board are volleyball and wt revenue base is actually really diverse. They, they make, they don't make all their TV money from one country. They make their TV money from a whole load of different, uh, countries. They have a very strong betting business. In the case of volleyball world, they have a very strong OTT direct to consumer business, and they've got sponsorship and they've got event hosting. So when you actually look at the top level PL you go, this is a really diverse business. So there's a little bit of risk in that bit and a little bit of risk in that bit. But overall, it's a much less risky sport to run or advise or invest in.

Richard Gillis, UP: 55:33

And just as a, uh, it's interesting that, so just a slight build is if I was, so you take a sport and turn it into a betting sport, you know, or I wonder what that process is.'cause I can, you know, tennis again is one that is quite, and golf, they're quite high up in terms of people's, you know, as betting sports. When I look at something like women's football, that WSL or whatever, you know, a league would be how, and your, you know, your point there is really interesting about diversifying revenue streams. And if it's not all gonna come from a big media rights deal, is not gonna be all, you know, sponsor. It's gonna be a bit of it. Presumably if I'm a, just again, back to your, if I'm privately run, if I'm a business person, I'm looking at betting and saying, this has got to be part of the equation and I don't know how it fits in and how you capture it without it leaking out just to the betting industry. So I don't quite know what a betting data deal is, I guess is my question.

Simon Denyer: 56:32

mean, you, you can capture it. I mean, we, the one we just did, the, the, the peak just did all this work for sir r and, and you, basically, the way you capture it is you, you look at how much revenue is being turned over on Sir R Football in Italy, obviously, first of all,'cause that's where the biggest market and in all the other major markets around the world. then you go, well, how much of that is in play? Right. And you'd be amazed. It's like sometimes it's 90%, so you go, well, hang on a second. If 90% of it's in place, it's not on the, uh, it's, it's, it's, it's not just on the outcome. It's, it's different things happening. It's accumulators, it's, it might be a correct score, but it might also be number of shots or something like that. So these are all things that require data, and these are all things that are enhanced by having the live video stream. So when you look at a sport like Sir, and 90% of its betting turnover is in play, then you know that the betting companies need to have the official data feed and they need to have, ideally the live streaming as well. And that's the basis. Um, so you look at the revenue, you look at how much of it is in play, so you filter it down there. Then you look at, well, if I do a deal with a genius or a radar, how are they gonna go to market? What then proportion of the market can they get? So who's got the best sales team? Who's got the best market share? Who's got the best coverage? then once they've captured the market from all the book makers. much am I gonna let them keep, and how much do I get as the league? So that's, that's how you value it and you negotiate it. And that's the kind of typical work that we do for a rights holder. And yes, yes, you are losing margin, you, you're filtering off little bits through the way, but it still adds up to quite a significant amount of money if you are a, if you are a big football league, or if you're a big football league or a tennis tour, or the NBA or NFL. There are, the, the thing I'll say about new betting sports is, as with anything, not just betting, it is very, it's relatively easy to create a new product does something, everyone was doing better, and suddenly the world changes. very different to completely changing behavior. So, so if you were already betting on Tottenham Hotz on your way to the match. a betting shop years ago, it's very easy to convince you to do it on an app, right? It's, it's'cause you're, it's just the same thing, just a lot easier for you to suddenly bet on something that isn't Tottenham hot score. Every satellite, it's something completely different on the other side of the world or it, you're not gonna suddenly start doing that. So I think when you have a new sport, whether it's women's sport or any new sport, to be realistic. You are not just gonna overnight change people's behavior and they're suddenly gonna start betting, even if you make it attractive from a betting proposition point of view, people are already in their habits and habits take a hell of a long time to change.

Richard Gillis, UP: 59:17

So the, the goal is not, well, is the goal to make I'm not a better, so is the goal to make me a better, is that, is that part of the equation? So in terms of, if, I dunno, what proportion of sports fans bet was it? 20%, 15%.

Simon Denyer: 59:30

Uh, yeah, I'd say it's about 20%. Yeah. It depends on the country. It's, in the UK it's probably like 20, but in a lot of markets it's less than 10%.

Richard Gillis, UP: 59:38

So I mean 20 years of, bet 3, 6, 5 advertising and, you know, I'm not, I'm still not betting. So the advertising hasn't penetrated me. It's not part of my behavior. My mates do, I don't. But if I then so is part of the equation saying, right, okay, we need to get me and people like me. And I always wonder of whether fantasy is actually a, a sort of gateway drug, if you like, into betting and that that framing

Simon Denyer: 1:00:06

fancy. Especially in the US when, when typical sports betting wasn't allowed. Fancy is a great way. Especially when betting isn't possible. Fan is a great substitute that can then lead to betting as it did in the us. But if you can bet and you enjoy betting, necessarily mean you do fancy.'cause fancy may not be as exciting'cause it's a season long commitment of something you've gotta do properly and you don't necessarily win much. Whereas betting is a kind of instant, um, risk and reward. And

Richard Gillis, UP: 1:00:33

right.

Simon Denyer: 1:00:33

willing, you are willing to take a risk on 20 pounds and this is a bit of fun and wow, it worked and now I've suddenly got 200 pounds, right? And what a great night. You know, Saturday night's now just been transformed or I've lost 20 pounds. Right? So I think there's, there's a lot of differences. I think what. In that example of BET 3, 6, 5 and advertising, and they have been around 20 years. They were the first ever client that took all of our streaming services, and they've got the best in play product they always have done. They're an amazing company. not trying to convince every human in the UK to become a better, they're just making sure that the people that do bet continue to see them being proactive, continue to realize they've got the best product, continue to realize they've got the best prices. Uh, in the same way that if you don't drink Heineken, it doesn't matter how many, or let's say you don't even drink beer, right? It doesn't matter how many times you've seen a Heineken advert, I'm never gonna drink Heineken and I drink beer, right?

Richard Gillis, UP: 1:01:26

Yeah.

Simon Denyer: 1:01:26

so, so it's same in any sexer. There's a certain amount of advertising you have to do, people will move to a different brand within your sector. It

Richard Gillis, UP: 1:01:35

Yeah.

Simon Denyer: 1:01:36

everyone, everyone in the world's gonna start.

Richard Gillis, UP: 1:01:39

I, yeah, it's, it's a sort of mental availability argument, isn't it? It's that sort of Byron sharp line of that where you have to be fright like Coca-Cola, you, you, it has to be there because when you are in the market, that's, it's in your, your sort of choice set. Well, in terms of the, how promiscuous are they between products? Again, as a non-beta, this sounds like a naive question, but I'm wondering how is it, is it a product question or a brand question? These that, you know, in terms of why I go with one over another.

Simon Denyer: 1:02:08

So it used to be about, I'd say it would've been product and price. So, so if someone's, if someone's a, a regular gambler, they'll probably have two or three apps and they know that one has got an interesting way of doing accumulator or one live stream, something that they like to watch. So you'll know that because you've used them all, you know, every month or so. Um, and then there's obviously people that are just price conscious and, and actually they'll say, this is a really important bet. I'm convinced it's gonna work. This is gonna be great for, well, which one's got the best price? Well, that's, it's four to one on that app and five to one on that. So I'm gonna go on the five to one. So it used to be just about product and price. Um, but increasingly now it's more about K yc, which is, um, the regulations are so tight on these guys now, the bookmakers that they have to do full, kind of know your clients. So they, so I can't suddenly decide to set up a paddy power account. I can't say it's five minutes before the rugby starts. I'm gonna put this bet on paddy power. I've got a great price. because now in the more advanced markets, vettings gone through an evolution. It's kind of gone bang a little regulation opens up, everyone advertises, everyone acquires those customers. It's a little bit of a charge, which is kind of where Brazil is at the moment or maybe the us and then it kind of slows down a bit. The customer acquisition costs come down, the marketing calms down a bit, and also the regulator looks at it saying, hang on a second. That went a bit too fast. The regulator then starts saying, depending on the politics of the time, we're gonna deliberately slow this down a bit and we're gonna make sure these people are not problem gamblers. And we're also gonna make sure the book makers are checking who is setting up accounts.'cause we wanna check two things we wanna check. There's no money laundering going on, and we also wanna check the affordability. So. If, if I want to set up a new account here in the uk, other than the ones I've been using the last year or so, they would want to see my bank statements. They would want to see my payslips they would want to check that you can afford to bet the amount you're planning to bet and they, if they don't think you can, they will actually set a limit on you. So that's when betting has gone through the whole cycle like it has here in the uk. the kind of big issue. It's, you can't just suddenly decide to open up an account. It's quite heavily regulated now and it's, it's to protect the consumer, which is the right thing. It's just made it quite cumbersome from a product point of view.

Richard Gillis, UP: 1:04:24

Right. Yeah. Yeah. Well, I'm conscious of your time. I've got one more question, if that's all right. Just, I can't let you go without talking about YouTube.'cause every time, again, we mentioned LinkedIn earlier, and on the occasions that I click on, everyone is, seems to be promoting YouTube as a, as the sort of answer to all questions relating to sports media. I guess it's, I, we did a thing with, uh, the EBU in Breta lava earlier in the year. And we had Thomas, uh, grace on from YouTube with Mark Oliver but the room was full of. Public broadcasters, you know, the EBU audience. And it ended with are you ever gonna pay anything to anyone or is it, you know, are we just gonna be putting our stuff on YouTube and what's the deal and is it gonna change? We started this conversation, you know, talking about the platforms and your role, but we didn't mention YouTube and I can't let you go without just what, what's your sort of view of YouTube and as a, obviously it's, it's become my television. I'm sitting in front of it and, you know, it's just one of the things that I watch now and I'm interested in its relationship with, with, with sport as everyone is. But what do you advise your clients to do?

Simon Denyer: 1:05:30

So I would say they are firmly in the, the four. Um, earlier we were talking about subscription economics and subscription vds. So we were

Richard Gillis, UP: 1:05:38

Hmm.

Simon Denyer: 1:05:38

Netflix Prime, and Netflix Prime and Disney. But, uh, for me as like sitting in strategy meetings with the management team at Peak it, YouTube is in that for, so we, we, we spend more time talking about those four than, than anyone else. And obviously our clients make a lot more money off the Zone movie star. So, you know, you spend more time talking about those four than you do any of the other broadcasters that are already paying quite a significant amount of money over to rights holders. but obviously it's, and those are the four that are most interesting at this point in time. But things change very quickly, like the Paramount and potentially Apple thing that everyone's talking about at the moment. I think the four that make most sense commercially is Netflix, prime Disney, and then you've got this YouTube thing, but it's different, it's different economics and it's not subscriber economics. So subscriber economics flow through. a lot of money really quickly.'cause when we talked about that flow of money earlier, you are saying there's 20 million people interested in a league. There's 10 million that will watch it on a regularly, 5 million of the winds pay four or 5 million end up paying, but they're paying like 25, 30 euros. So that's a hundred million a month, right? Boom, that's a hundred million a month. Just come from nowhere. And that's why domestic rights often end up being worth about a billion because a hundred million a month is about a billion. So when, if you are using that high level theoretical example I used earlier, you quickly get to a billion YouTube to get to a billion, it's, it's almost impossible because you'd

Richard Gillis, UP: 1:07:00

Mm.

Simon Denyer: 1:07:00

you'd have those 10 million people watching something live, which is great, but their only revenue stream is to serve ads to you. And they're very sophisticated in the ads that they serve. And they can only serve so many ads within a certain number of windows where you have a match. And that a hundred million I just talked about probably only adds up to about 10 million. If you're doing it on advertising economics. So the difference between subscriber and actually that's right because remember you asked how much money do you make from advertising? And I said 10%. there's, the advertising economics are literally 10% of subscription economics. But YouTube have something which obviously no one else has, and it's just sheer scale. So I, I was looking at the Nielsen, um, Nielsen, US video consumption rates in the US it's just completely bonkers. The whole of linear TV put together is 18.5% of video consumption or the whole of linear tv. is 8%. Uh, Disney is 5%, prime is 4%, which is interesting'cause Disney's a little bit bigger than Prime. In, in, in the us YouTube is 13%. So YouTube is bigger than Netflix and Disney or Netflix and Prime put together, and it's actual revenues from advertising. Just YouTube advertising is bigger than the whole of Netflix, right? So forget about the rest of Google and all the other stuff they're doing. Just YouTubes. Ad revenue. Revenue is absolutely mammoth. And it's because they have so many people, so much time and they're selling ads across content that generally doesn't cost much. It's usually free. Right. So it's an unbelievable business model and it's a bit like the, the discussion you said you had with Peter earlier. Our job is not to tell YouTube how to give us money. Our job is to find out how we can give YouTube content that makes money that they're willing to share with us. That's the reality of it. And it's very complicated'cause they're part of Google. It's a huge company. Um, they do pay over money. They do pay. If you have a load of content on YouTube, they will pay you a share of it if you're the official rights holders. And that's a lot more than you can say about meta Facebook, Instagram, and people like that. TikTok, drive me mad because it's very difficult to, you can put a little bit of a sponsored message in there, but we've got clips all over Instagram that's driving huge amounts of traffic. They don't give us a share of anything. So. will say that YouTube have got two things going for'em. They are absolutely massive, far bigger than anyone else from a video consumption point of view. they do know that they need to pay content owners money. just the, the content owners that make the most money are the ones that create the most traffic, and they're often influencers. And that's how Casa TV started in Brazil. Ka Kazi TV is not a sports broadcaster. It's a person. It's literally a guy that's a crazy Brazilian commentator that had a huge following and then he became a sports broadcaster. So if you want to make more money off YouTube, which we do for our leagues, you've gotta think more like an influencer and less like a league to drive the traffic. And we're doing a load of projects with them where we have sports that have free to air carve outs or free to air obligations. I think they're a great solution. Um, because free to air is definitely not pay. TV is delivering that and we're being topped up by streaming. It's, it's flat. Obviously pay TV free to air is not flat. It's in decline. Right. So the free to air budgets are going down. So we have to get free to air content onto YouTube and we have to find a way to make it work for them. The second thing that is an argument for another day, which is a big beef of mine, which is more people in the UK are, there are more, there's more consumption of Netflix. In the UK now than there is of ITV. Um, and it's more or less the same as B, B, C, right? So why isn't Netflix? I know you have to pay to get Netflix, right? I'm not stupid. I know there's a technical definition of free to air, but Netflix is in more homes than BBC and ITV is. And because most homes just have connected TVs and most homes fire up Netflix every other day, and not many people fire up the BBCI player or IT vx other than for major tournaments or things like that. So I also think there's, there's a, there's a lot of work to be done to bring YouTube to the table, more for live sports, free to air. I also think there's a bit of an argument to be had with regulators around the world on, well, when is Netflix gonna be considered free to air? It's in a more or less every home it's being used the more than any other viewing platform. So why can't we put our free to air obligations on platforms like Netflix as well?

Richard Gillis, UP: 1:11:28

From the, from the regulator's point of view. Putting interesting, to put you in the seat of the regulator and see what you would do with that challenge.'cause you're right, and the, the, the regulation is always out of date with the market. That's always gonna be the, the, the issue. But one of the things I came away from EBU is just,'cause we talked about what is the, what is free to air in the YouTube era is the title of our panel. And there is something that the national broadcasters do that YouTube doesn't. And I'm, I'm trying to sort of get to it. There is a specific role that they play and there's a relationship that you have locally, but

Simon Denyer: 1:12:05

For

Richard Gillis, UP: 1:12:05

Yes.

Simon Denyer: 1:12:06

not. If you're 15.

Richard Gillis, UP: 1:12:08

Yeah,

Simon Denyer: 1:12:09

If you are 15 and you follow, um, a guy, a guy or girl on YouTube who finds you the greatest goals across Europe every single day and is, is is literally doing, let's say it's a Euros and every single day they're finding these amazing, funny little clips. If you are 15, that's far more important to you. They're gonna drive more traffic than the 15.

Richard Gillis, UP: 1:12:32

Yeah. Yeah. There's a same, there's a guy, I mentioned this in the last podcast, but there, there was a one reading of the Oasis moment, the concerts at Wembley, you know, they're just incredible scenes. Is, is it's people of my age, was nostalgia for the monoculture. You know, they, there was a mo that, that time was a sort of the last moment where everyone was seeing everything at the same time. And we don't do that anymore. And, you know, that's, that's never gonna come back. But it's, it's quite a sort, it is quite a nice sort of, uh, framing of

Simon Denyer: 1:13:02

I

Richard Gillis, UP: 1:13:02

what was going on.

Simon Denyer: 1:13:03

changed. Mu mu music's, there's a lot of parallels in music and sport things. Things seem like they were simpler than when you turned up to an OAS content and bought a ticket on the door. You didn't have to sit there on this dynamic pricing, trying to figure out whether you could get in or not.

Richard Gillis, UP: 1:13:15

Yeah.

Simon Denyer: 1:13:16

I, I do think with. Uh, the thing music and sport have in common, the oasis thing has in common with all of our sports is it doesn't matter what happens with technology or it's not even social media. It's like technology, ai, the metaverse, whatever it is. You are never gonna replace the feeling of walking out to see your favorite band live or your favorite football team or being at Wimbledon for the first time or whatever it is you are into, right? It could go down to something quite niche. So I think the live event business, um, and the, and the viewing of that live event business is got no concerns whatsoever because the more time we have available,'cause technology's gonna automate our life, the more we're gonna wanna use our spare time on things that are real. And the things that are real are the buzz of a football match. Buzz, your, you can't

Richard Gillis, UP: 1:14:05

Yeah, if we, if we've got a job. So there, there's that, you know, there's the sort of AI question the, that, that assumes that, that we have a sort of luxury of, uh,

Simon Denyer: 1:14:18

time. Yeah, we can

Richard Gillis, UP: 1:14:19

exactly. Yeah. Yeah. For, you know, they'll come to podcasters eventually. But anyway, Simon, thanks so much for your time. Really enjoyed it. Come back soon. It really, uh, there's so much to talk about Right.