Disney turns to gambling

The top stars in football return to the pitch this weekend in the game’s most talked about competition. That’s right, the Saudi Pro League is back, kicking off on Friday night with Al-Ahli hosting Al-Hazm in a sweltering Jeddah.

Saudi Arabia’s swashbuckling arrival in the global transfer market has been the talk of the football world all summer. Some are unfazed — Premier League chief executive Richard Masters brushed aside any suggestion that the upstart contest posed any threat to the established power structures of European football.

But the Saudi league has already notched up a win off the pitch. This week it sealed broadcast deals in several continents with sports streamer DAZN — something Saudi-backed LIV Golf struggled with from day one.

This week we’re looking at how the Newcastle United — another part of Saudi Arabia’s football experiment — has prospered while US-owned Chelsea has faltered. And we look at ESPN’s big bet on . . . betting.

And for Premier League watchers, you’ve got the chance to play fantasy football against your favourite FT journalists from our DD and Scoreboard newsletters again this year. Just use the league code: nro3va

Do read on — Josh Noble, sports editor

ESPN enters the sports betting fray

The deal of the week is the shock news that ESPN will enter the sports betting marketplace for the first time, partnering with US gambling company Penn Entertainment. As part of the transaction, Penn is cutting ties with existing partner Barstool Sports after spending $550mn to acquire it, handing the keys back to founder Dave Portnoy for effectively $0 and schmuck insurance. 

Portnoy appears to have scored a pretty sweet deal, even after admitting his own behaviour (ranging from allegations of reckless gambling to violent sex, according to reports from the New York Times and Insider) hindered Penn from securing betting licences. But let’s set Barstool aside for the moment.

The bigger move — and ultimately the bigger question — is how the tie-up between Penn and ESPN will impact both parties. For Penn, aligning with ESPN is a matter of expanding its user base. ESPN reaches more than 370mn people through social media and more than 100mn though monthly unique digital views across its sites. All told, Barstool accounted for just 1.5mn sign-ups in three years of co-branded sportsbooks with Penn, according to the latter’s chief executive, Jay Snowden.

That broad potential customer base is a necessity for Penn, which languishes well behind competitors in the nascent US sports betting market. Penn’s sportsbook with Barstool has just 2 per cent of market share, according to Eilers & Krejcik Gaming. Penn is betting a long-term partnership with ESPN will turn things around, committing $1.5bn in cash over ten years plus an additional $500mn in stock warrants.

But what about ESPN? The future for the network (which once called itself “the worldwide leader in sports”) is murky. Bob Iger’s second reign at Disney entails taking a more serious look at options for the television business, including ESPN. 

By launching a sportsbook, ESPN could be adding an identity crisis to an existential crisis. Consider that in 2019, Iger saw sports betting as anathema, telling investors that “we’ll provide programming that will, I guess, be designed to enlighten people who are betting on sports. But that’s as far as we would go . . . we just don’t intend to go into the gambling business”. 

There are already ethical concerns about media companies getting into bed with sportsbooks: Shams Charania, an NBA reporter for the Athletic who also is paid to promote FanDuel, caused a minor maelstrom in June after one of his reports, which ultimately proved false, moved the betting lines around the NBA draft. 

To pan out: sports betting is still an extremely immature market in the US, with incomplete access as more states weigh legalisation and efforts to build a responsible gaming infrastructure remain patchy. That extends to best practices in media. Will the roughly $150mn in revenues the network receives from Penn per year supersede the potential risks of extending the ESPN brand from sports coverage to sports betting? Only time will tell.

Newcastle vs Chelsea: a tale of two takeovers

Chelsea FC has a few problems. One disastrous season and a wild spending spree have left the west London club and its new American owners with a lot to prove.

Private equity firm Clearlake Capital and financier Todd Boehly paid £2.5bn to buy Chelsea last year from sanctioned Russian billionaire Roman Abramovich, still the record for a football club anywhere.

But the spending didn’t stop there. Since summer 2022, Chelsea has splashed out more than €800mn on players, although the club has recouped €320mn in player sales. If a deal can be done for Brighton midfielder Moisés Caicedo then total outlay since the takeover will surpass €1bn. Yet Boehly told the FT he’s feeling good.

Contrast Chelsea’s fortunes with Newcastle United. The £305mn that a Saudi-led consortium paid for the Tyne and Wear club in October 2021 is looking cheaper by the day after it qualified for the Champions League. There teams compete for €2bn of cash distributions from governing body Uefa — but Chelsea won’t be one of them.

Under Saudi ownership and with British financier Amanda Staveley at the helm, the Magpies have spent around €440mn on players, making back less than €60mn in sales. Chelsea, Arsenal, Manchester United and Tottenham have all spent more than Newcastle in that time — a sign of how competitive it is to stay at the top in England.

Only four teams are guaranteed a place in Europe’s top club competition, a squeeze for the so-called Big Six of Manchester City, Arsenal, Manchester United, Liverpool, Chelsea, Tottenham Hotspur.

With Champions League football next year, Newcastle have arguably already made it a Big Seven. Compared to Chelsea, they’ve done it on the cheap, especially considering that the squad was in need of a revamp and struggling at the bottom of the table. Investors may well wonder whether there is value in top clubs and top prices.

That said, making the Champions League doesn’t mean you’ve made it.

Just look at Leicester City. English champions in 2015-16, Champions League quarterfinalists the following season are now playing in England’s second-tier league. The Saudi sovereign wealth fund surely wouldn’t abide such a fall from grace.

Highlights

• Sarina Wiegman is a cool-headed coach on a record-breaking winning streak. As she looks to guide England to victory at the Women’s World Cup, we explore the secret is to her success.

• The decision to host the World Cup in Australia and New Zealand has been debated hotly in the run up, amid concerns that the timezone had robbed women’s football of a fantastic commercial opportunity. But the tournament has captured hearts down under. Here’s our report from on the ground.

• FC Barcelona is merging its media arm with Nasdaq-listed blank-cheque vehicle Mountain & Co. I Acquisition Corp, highlighting the Catalan football club’s hunt for digital revenues.

• Does the Commonwealth Games have a future? The answer, according to this opinion piece in the FT, is perhaps not.

• Crystal Palace recently became the first Premier League team to appoint an in-house creative director. Jo Ellison, editor of HTSI, says it is a sign of the times.

Le final whistle

Definitely worth a watch, Ronan O’Gara giving the most Irish team talk while actually speaking French. #rugby pic.twitter.com/TcVJ5i73FJ

— Joe Naughton (@JoeNaConnacht) August 7, 2023

He’s no Voltaire but Ronan O’Gara knows how to make a point.

A video of the rugby union coach giving a team talk at French side La Rochelle went viral this week, thanks to his combination of Cork-accented French and English swearing.

“L’opportunité est fucking énorme,” he tells the players.

Scoreboard will stick to English . . .