Hey Friends! It’s been a busy few days at the Pompliano household…and I have some (exciting) news to share. Last week, I became a dad! Both mom and baby girl are doing great, and I can’t stop smiling. What a blessing!

Special thanks to all of you who read, subscribe, and share this newsletter. I’m incredibly thankful that I get to do this for a living, especially in moments like this, where working from home takes on an entirely new meaning.

But enough about me…let’s get into it! Today’s main event includes a breakdown of the UFC’s next media rights deal. We’ll also touch on Netflix canceling Break Point, Fox scheduling Friday night football games, and, of course, Caitlin Clark.

Conversation Starters: What I’m Thinking/Hearing/Watching…

1. Netflix has announced the ending of Break Point after its second season. This isn’t necessarily a surprise, as the latest available data shows us Season 1 of Break Point was the 617th most popular show on the platform, significantly trailing Drive to Survive (121) and Full Swing (274). The juicier detail, though, is that Netflix and producers Box to Box films feel like they weren’t given enough access to make the show successful. Man, what a miss. Tennis continues to lose fans, and the men’s/women’s governing bodies can’t seem to get out of their own way.

2. Fox will broadcast a college football game every Friday night during the 2024 season. This creates five straight days of primetime football weekly, starting with Thursday Night Football on Amazon and ending with Monday Night Football on ESPN. Two things are primarily driving the decision: 1) Friday Night on Fox opened up after the network lost rights to WWE Smackdown, and 2) Fox now has more premium college football inventory due to the expansion of the Big Ten and Big 12. But I’m surprised more people aren’t talking about its impact on high school football. The Sports Broadcasting Act of 1961 made it illegal for the NFL to broadcast games on Friday and Saturday nights during the fall. The idea was that it would protect high school and college football as the NFL combined its media rights and became more popular. The problem is that there is no carve out for college football, which is now the country’s second most popular sport. These Friday night games have never been that exciting, so some would argue it doesn’t matter. But with USC, Oregon, and others joining the Big Ten, Fox now has significantly more premium inventory than before, and you shouldn’t be surprised to see higher-quality matchups on Friday nights in the future.

3. Britt Reid’s story has received a lot of attention over the last week, for good reason. The younger son of Kansas City Chiefs head coach Andy Reid has a checkered past — DUI, drug possession, and a gun charge — and he has now been released from prison just 16 months into a 3-year sentence. As a reminder, in 2021, Britt Reid got drunk at the Chiefs facility before driving home and crashing into two cars on the highway, injuring six and putting a then 5-year-old girl in a coma. That girl eventually recovered and is now 11 years old, but she will be dealing with injuries for the rest of her life, and it feels like Britt Reid is cutting the line, again.

4. PGA Tour players continue to voice their opinion on improving the product amidst a multi-year fight with LIV Golf, with Wyndham Clark saying the PGA Tour should only have 100 guys and the bottom 20 should be relegated to a lower division each year. In theory, it’s a nice idea — people have been trying to include a promotion-relegation structure in U.S. sports for decades — but it won’t happen anytime soon. Tiger Woods is still the biggest draw in golf, yet he is currently 916th in the official world golf rankings, and this top-100-based system would have even eliminated Wyndham Clark himself just a few years ago. Everyone wants to see the PGA Tour’s top players play against each other more often, but part of what differentiates the product from LIV is the ability for a guy like Jake Knapp, who was working security at a bar last year, to come up the ranks and win tournaments. It’s important the PGA Tour doesn’t forget that.

5. Caitlin Clark and the Iowa Hawkeyes won another Big Ten title on Sunday, their third straight conference championship. Iowa will almost certainly be awarded a #1 seed in the NCAA tournament, and while we are *very* far off from this being a reality, Iowa making the national championship game against an undefeated South Carolina team would be Disney’s dream, potentially drawing a viewership number roughly equal to the men’s national championship game. Remember, the women’s national championship is on broadcast (ABC) while the men’s national championship is on cable (TBS). That can make a big difference.

The UFC’s Next Media Rights Deal Will Tell Us Everything

The UFC has been on fire over the last few months. It started when the Endeavor-owned company merged its assets with WWE, creating a single holding company with a $14 billion market cap called TKO Group Holdings. And it continued this weekend, with the UFC drawing 20,000 people for UFC 299 in Miami and a gate of $14 million, the 4th highest in UFC history.

“It used to be the four major [sports leagues]. And frankly, what are you talking about? UFC is now, not only major, it’s one of the four majors,” Endeavor President Mark Shapiro said last week. “The ratings on ESPN and ESPN2, apples-to-apples against the NHL, even including the playoffs, we dwarf them…they are just not in our league.”

These results illustrate the UFC’s growth from being called “human cockfighting” by the late Senator John McCain to one of the world’s fastest-growing sports. But even with this success over the last few years, it feels like the biggest news is yet to come.

The UFC is up for another media rights deal next year. Their current partner, ESPN, will have the first crack at it through an exclusive negotiating window. ESPN has been the UFC’s partner since 2019, paying the world’s leading MMA organization roughly $300 million annually, with some additional upside coming via pay-per-view sales.

Endeavor has already said they would like to re-up with ESPN. However, Endeavor president Mark Shaipro also said at a Morgan Stanley conference last week that three different platforms have already approached them about doing a deal.

These three platforms probably include some combination of Netflix, Amazon Prime Video, Apple T.V., and Peacock. Netflix could make a decent amount of sense given its commitment to sports and its recently announced boxing match between Mike Tyson and Jake Paul. Amazon has also committed billions of dollars to live sports rights, and Apple T.V.’s sports strategy revolves around owning an entire league (i.e., MLS).

Still, the frontrunner has to be ESPN. The UFC has been a major part of ESPN+ adding more than 20 million subscribers over the last few years, including 568,000 new subscribers during its first UFC Fight Night on ESPN+ in January 2019.

The UFC also has a unique agreement with ESPN, guaranteeing them a minimum amount each year while allowing them to realize upside via pay-per-view sales. This is clearly important to the UFC, as many suspect they intentionally avoid putting big-name headliners on Fight Night cards so they can save them for pay-per-view buys.

ESPN is also prioritizing premium sports rights. They know these rights — think deals with the NFL, College Football Playoff, SEC, and more — will be crucial in getting consumers to transition from cable to streaming, and they want to lock them up before big tech companies like Amazon and Apple go all in on sports next decade.

That’s why *price* is the more exciting part. The UFC is now one of the world’s more valuable sports properties. Their growth has accelerated since the ESPN deal was first signed, with 700 million fans in 170+ countries today. They are investing a lot of money in the future — the UFC has performance institutes in Las Vegas, Mexico City, and Shangai and will eventually build one in the Middle East. And it’s a sports league that offers content year-round, unlike the other big four sports leagues in the USA.

There are also only a few premium sports rights up for sale over the next few years. The NFL, for instance, is locked up for the next decade. The NBA will soon be locked up, too, and ESPN has already secured a deal for the 12-team College Football Playoff starting next year.

These factors and many others lead me to believe the UFC will land a bigger deal than many expect. ESPN is the most likely partner to make that deal happen, and it’ll provide all of us with some clarity on where the sport stands in the U.S. landscape.

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P.S. I recently started a sports business community on Microsoft Teams. There are a few hundred of us in there so far, and it has become a great place to share different articles and talk through interesting topics. Join us!

I hope everyone has a great day. We’ll talk on Wednesday.

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