May 15, 2020

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Apple acquires a VR company, the IOC’s tab for the Olympics delay arrives, the NBA courts fund investors, and Wilson bounces back as the league’s official basketball.

Apple’s VR Move May Emerge in Sports

Photo Credit: Richard Mackson-USA TODAY Sports

Apple has acquired NextVR in a move that could aid its push into sports broadcasting. A purchase price wasn’t disclosed, but a previous report placed the value of the company at approximately $100 million.

NextVR supplies content to a variety of VR headsets and has deals with the NBA and other entertainment networks. Apple generally does not discuss the purpose or plans of its acquisitions, however it’s safe to assume this will assist its development of virtual and augmented reality software and content.

VR technologies could play a part in broadcast rights for sports in the future as consumer habits shift and leagues ponder how to reach fans who prefer to stay away from stadiums post-coronavirus. Apple has had ongoing conversations with the Pac-12 to acquire the conference’s exclusive broadcast rights when its current $250 million deal with Fox and ESPN ends in 2024.

Apple has nearly $200 billion in cash on hand that could help it secure broadcast rights as many major deals expire in the next several years. Such a move could help differentiate Apple+ from other streaming services, however the landscape is quickly changing and several other technology companies, including streamers Google, Facebook, and Amazon, also have large cash reserves.

Olympics Delay to Cost IOC $800 Million

Photo Credit: Ian Walton for OIS/IOC Handout Photo via USA TODAY Sports

The price for delaying the Tokyo 2020 Olympics is becoming more clear. International Olympic Committee President Thomas Bach said he expects the organization to bear costs of up to $800 million.

Bach said $650 million would be set aside to put on the games in 2021, with another $150 million going to support International federations and National Olympic Committees, which have seen revenues dry up without action this year. If the Olympics are canceled next year, it’s been reported the “economic damage” would be $42.1 billion.

The IOC burden does not count costs incurred by Tokyo organizers or the Japanese government. The postponement has added more than $2.7 billion to the original $12.6 billion budget for the Tokyo Games.

The ramifications of the delayed games extend beyond lost revenue for athletes and national sports bodies – networks airing the events and advertisers, including those with planned product launches, stand to take a hit.

NBCUniversal was in the final year of a $4.4 billion deal with the IOC for the U.S. media rights. While Olympic broadcasters don’t make the bulk of their payments until the games air, the network will miss out on profits. NBCUniversal said it had sold more than $1.25 billion in ads around the Tokyo Games, and had planned to launch its new Peacock OTT platform around the events.

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NBA Partners With Investment Manager to Offer Stakes in Teams

Photo Credit: Daniel Dunn-USA TODAY

Dyal Capital Partners was reportedly courted by the NBA to build a fund to acquire stakes in NBA teams. How much the firm is attempting to raise for the effort is currently under wraps.

Dyal is a division of investment manager Neuberger Berman and has $23 billion in assets; it raised its fourth and largest fund of $9 billion last year. As franchise values continue to surge near $5 billion for top teams, the move indicates the NBA is seeking to broaden its investor base. The league suggested creating an investment vehicle for this purpose last year.

Other investment groups have also popped up in recent weeks seeking deals. Billionaire owners have seen the businesses that built their fortunes suffer and as a result, a larger number might look to sell at least portions of their teams to free up some cash. At least one minority stake is available, as the San Antonio Spurs ownership group is looking to take on a partner, according to reports.

The NBA is the latest league to consider private equity. MLB changed its ownership rules last year to allow funds to be part of ownership groups, leaving the NFL as the only league that prohibits the structure.

Wilson Bounces Back as Official NBA Ball

Credit: Christopher Hanewinckel-USA TODAY Sports

The NBA announced Wilson will take over as the official league ball beginning with the 2021-22 season. Wilson supplants Spalding, which has been providing basketballs to the league since 1983.

Along with the NBA, Wilson will supply the WNBA, G-League, 2K League and Basketball Africa League. Wilson is also the official ball of the NCAA and FIBA – as well as the official football of the NFL. Wilson returns to the role after serving as the first official ball of the NBA, starting in 1946.

Terms of the deal were not disclosed, but it does add the most prominent basketball league in the world to Wilson’s hoops portfolio. Nearly $214 million worth of basketballs were sold in the U.S. in 2018 and there are more than 450 million basketball players in the world.

While players, including Kevin Durant, seemed upset about the switch, the Spalding relationship also spurred angst when it deployed a synthetic ball in 2006. Wilson said it will keep the same specifications as the current ball and even source the same leather.

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Join us on Friday, May 15th at 1 PM EST as Tim Rebich of Varsity Partners, Sue Thaden of From Now On, and David Millay from EngageMint join Joe Londergan of Front Office Sports for a discussion on how teams, leagues, and brands can maintain strong connections with fans at home and in-venue as live sports look to regain steam.

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Thursday’s Answer:

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