Rob Manfred, Commissioner, Major League Baseball
Adam Silver, Commissioner, National Basketball Association
In conversation with: Matt Heimer, Fortune
Adam Silver, Commissioner, National Basketball Association
In conversation with: Matt Heimer, Fortune
Category
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TechTranscript
00:00Gentlemen, welcome.
00:01Thank you so much for making time for us.
00:03I want to credit my colleague Andrew Neska
00:05for not slipping anything about Philadelphia sports
00:07into his introduction of Rob and Adam.
00:11But he did bring up a topic that's on a lot of our minds,
00:13which is sort of the global, growing the game globally.
00:17You've seen the situation where you now,
00:18both of your leagues have tons of stars
00:21from outside the United States.
00:22A guy named Shohei Otani,
00:24I don't know if anyone watched the World Series,
00:26he was pretty good.
00:27Wemby is tearing up the NBA.
00:30It's 25, 28% of your players are foreign,
00:33and the audiences,
00:34or I should say from outside the United States,
00:36those audiences are growing.
00:37How do you capitalize on that for the leagues as a business,
00:41especially since all your teams are here?
00:44Rob, you can kick that off since you're just wrapped a season.
00:47Well, I think the, I point to three things.
00:50Number one, I think it's important to take advantage
00:53of the combination of nationalism and sport.
00:56We try to do that with the World Baseball Classic
00:59by realigning our players to play for their countries.
01:03Secondly is play outside the country.
01:06We'll be going to Tokyo to open our season next year,
01:10along with Mr. Otani again.
01:13And the last thing is a good relationship with foreign leagues
01:17and by good, I mean a relationship
01:20that allows foreign players to come here,
01:22but still allows, for example,
01:24a domestic product in Japan to flourish.
01:27Makes a lot of sense.
01:28And there's something parallel to that
01:29in the NBA as well, right, Adam?
01:31Yeah, I'll begin by saying we stopped calling them foreigners.
01:34Sure, yeah.
01:34That doesn't help.
01:35That's my fault, I kicked that off at the wrong moment.
01:38But yeah, I mean, of course, we're an Olympic sport.
01:41I mean, we were, you know, basketball,
01:43a tremendous platform in Paris.
01:46We were up in Lille for the group stage
01:47for those who were there.
01:49We had something like 140 NBA, NWNBA players
01:53who competed in the Olympics, so fantastic global stage.
01:57I think both of us are media businesses
01:59at the end of the day.
02:00And while we do the same as baseball,
02:02we start our season in Abu Dhabi.
02:04I was in Mexico City last weekend.
02:06We have regular season games in Paris in January.
02:09But at the end of the day,
02:10it's sort of like a group that tours.
02:12Then you ultimately, it's about selling the music.
02:14And in our case, we sell media
02:18to 214 countries and territories.
02:21And we're the beneficiary of new technologies,
02:26combination of streaming services, but then the devices.
02:29I mean, I think in both our sports,
02:32time zone differences historically weren't our friend
02:35when people need to be in front of televisions.
02:37And if you don't mind me, Rob,
02:38we were just talking backstage
02:40about how well the World Series did
02:43outside of the United States.
02:44I mean, all of the US media
02:46largely focuses on the ratings here,
02:48but you should tell your own story.
02:49But it sounds like in Japan and Korea
02:52where your World Series was on in the morning,
02:54obviously with the time difference,
02:55eight o'clock in the morning, whatever it is,
02:57they did the same numbers as they did in the United States.
02:59And they did a huge number in the United States.
03:01Yeah, 19 million in the US
03:03and then 19 million in Japan and Korea combined.
03:05That's correct.
03:07Largely driven by A, passion for the game
03:12and B, players from Japan and Korea
03:15that were relevant during the post-season.
03:17And I'm sure,
03:18and the fact that people can watch on their phones.
03:20Yeah, oh yeah.
03:21Adam, you made an interesting point framing it as
03:23in the end of the day, you're both media businesses.
03:26For a long time, of course,
03:28the dominant media has been television
03:31and television revenue is a big,
03:32has been a huge part of your business models.
03:35That's partly of course,
03:36because live sports is one of the few things
03:38that will get people still consistently to watch
03:41linear television.
03:42But you both know also that
03:43that business model is kind of under stress.
03:45You need more alternatives.
03:46I'd love to hear more about how you're managing that.
03:49I mean, Rob, I know that MLB has been in renegotiations
03:52with some of the regional sports television networks
03:54and it's tricky going.
03:56Like A, how do you handle that relationship?
03:58And B, how do you look at some of these other
03:59alternative platforms?
04:01Well, I think the key for us is that
04:04the traditional platforms still have economic value in them.
04:10We've worked hard with our traditional partners
04:12to try to maintain that shrinking ice cube.
04:17On the one hand, on the other hand,
04:19we have done a variety of interesting things
04:25with streaming platforms in an effort to get a toehold,
04:28start to develop a new model.
04:31I think the principal advantage is that
04:34we have a lot of content.
04:36It's high value content because it is sticky.
04:40People want to see it.
04:41And the streaming services give us great reach.
04:45It allows you to reach places
04:47that we have not traditionally reached.
04:48I think that's really important for the sport.
04:50Sure.
04:51And do people, will people watch it time shifted?
04:53I mean, will people,
04:54even if they know the game's already over,
04:55will they pick up some?
04:57Yeah, we've made a variety.
04:58We've done a variety of things.
04:59All sports have to help people
05:02who can't watch it real time,
05:05condensed games and the like
05:06that are very popular and available on our apps.
05:10You know, we still like that live viewing experience
05:13to the extent we can get it.
05:15Adam, the NBA and the WNBA
05:17just signed a pretty big new deal.
05:19But I imagine with that new deal comes
05:21certain expectations on the product you're going to deliver.
05:25And there were some past partners
05:28who kind of balked at re-upping.
05:29Like how, what did that deal tell you about where,
05:32about the sort of evolving media landscape for your league?
05:34I think what that deal told us is,
05:37one, sort of to the premise of your questions,
05:41that being global provides an enormous opportunity.
05:45I mean, and by definition,
05:46for the most part, streaming services are global.
05:49And so as well, you know, you look at Disney,
05:53of course, with ABC and ESPN,
05:55but then moving to a direct-to-consumer service
05:58with ESPN, Comcast, NBC, and Peacock,
06:01and then Amazon, those are our three new partners.
06:05I would say all three of those companies,
06:07at the end of the day,
06:08especially with the 11-year deals we did,
06:10put a premium on streaming.
06:12I mean, it's clearly the direction things are going.
06:16And to Rob's point, there's still a strong base
06:18in terms of traditional media in the United States,
06:20but particularly the regional business
06:21that you were asking about.
06:23It's, at least for us,
06:24it's largely been a cable-slash-satellite business.
06:28And, you know, as Rob mentioned,
06:30I mean, when, last time we negotiated our deals,
06:32it was called roughly 100 million homes,
06:34and now it's half that.
06:35You know, and so it's not just that
06:38where viewers are going and globally to streaming,
06:41but what's, I think, most exciting for all leagues
06:44is the opportunity that streaming affords.
06:47You know, in essence, of course, it's internet television.
06:49And with that, you can do all kinds of personalization
06:52and customization that you can't do in the prior platforms.
06:57And then once you can do that kind of customization,
06:59I mean, that the possibilities
07:02in terms of endless numbers of feeds,
07:05different languages, different styles,
07:07there's one feed for a hardcore,
07:09one feed for somebody who's just learning about the game,
07:12somebody who wants a more humorous approach to the game,
07:14you're a huge fan of Otani's
07:17and you only just want to follow him,
07:18obviously you can do that.
07:19But then beyond that, sports betting
07:22becomes a big part of it,
07:23other forms of gaming, merchandising.
07:26I mean, that, to me, is putting,
07:28like right now, largely, to me, with a few examples,
07:32but for the most part,
07:34streaming is taking the same productions of games
07:37that might have appeared on broadcaster cable television
07:40and just move it to streaming,
07:41and then it's, you know,
07:42and I think to the extent people are predicting
07:44that fans wouldn't find those games,
07:46they're certainly demonstrating they will.
07:47It's a little bit of a pain right now,
07:49but we'll get there, it'll become more seamless.
07:51But that's early days.
07:53I think what's far more interesting
07:55is how we're going to be able to increase engagement
07:57by talking direct, the same way advertising,
08:01you know, when you think about it,
08:02digital advertising is much more customized.
08:04We're going to be able to do the same thing
08:06with our products.
08:07Adam won't say it because he's too humble,
08:09but I think the unbelievable deals
08:12that he made with his new broadcast partners.
08:15And this was 200 billion over 11 years, is it?
08:1877.
08:19Sorry, gotcha.
08:20Show that whatever's going on
08:23with respect to the decline of linear television,
08:26the fact of the matter is that if you have quality content,
08:29it's an opportunity.
08:31And I think the deals that he so wisely did
08:35are just a concrete example of that.
08:38You were also talking about digital engagement,
08:39and I think a question for people
08:42that everybody across industries has right now
08:44is how do I engage better with a digital native generation?
08:49Not just millennials, but increasingly Gen Z.
08:53Are you finding that there's kind of a direct correlation
08:56on your alternative to television platforms
08:58between digitalness of the medium
09:02and youth of the audience?
09:04Yeah, we do, from a demographic perspective,
09:08our digital products are much younger
09:10than the traditional television audience.
09:13I don't think that tells you so much about the content
09:15as it does about the audience that you're drawing from.
09:19The fact of the matter is there's a lot of things
09:21that you can do on the digital side
09:22that I think are important to younger people.
09:26Enhancements, Adam referred to sports betting,
09:29the gaming overlay, providing merchandise opportunities
09:35which is essentially a second screen opportunity.
09:38All of those things help with the age of the audience.
09:41Speaking of gaming, it occurred to me
09:43in a blast of obviousness that you can't really bet
09:46on a game that is over.
09:48And if you could, I would be retired
09:50and I wouldn't be here right now.
09:51But is there sort of a symbiotic relationship
09:54between sports gaming and the sort of sustenance
09:58of the live broadcast audience?
10:00I realize you don't have to watch a game to bet on it,
10:02but with more people doing sort of mid-game prop bets
10:05and things like that, I mean, does that kind of keep
10:08some of that linear TV audience afloat
10:10or boost the demand for live?
10:13Absolutely, I mean, it's a multiple times more likely
10:18your research is to watch a game if you're betting on it.
10:22So in two ways, one is, if anybody sort of US people here,
10:28if you go to a Super Bowl party, even if it's not your team
10:30and you go in, there's one of those things
10:31when you go in, the boxes and you've got Green Bay,
10:34whatever, you're all in, right?
10:36It's like, that's just sort of naturally
10:38that if you have a betting interest in the game,
10:40even if it's low amount of money, so that's number one.
10:43But so that'll cause you to watch.
10:45But maybe even more importantly, most of the betting
10:48has moved to what the industry calls in play.
10:50So you're not betting like when we were kids,
10:52like over, under, point spread before the game starts.
10:55The game starts, then you start betting.
10:57And you can bet on the outcome once the game starts
11:00and odds change throughout the game.
11:02But you can also bet on various events throughout the game.
11:05You can bet on quarter scores.
11:06You can vote, bet on assists in a particular score.
11:10You know, almost unlimited numbers of permutations
11:13that you can bet on.
11:14And absolutely, that causes enormous engagement
11:17because one easy example is here in New York,
11:20if you're a New York Knicks fan,
11:21and your team is down by 10, you know,
11:25with a minute to go or whatever,
11:26and you're, okay, I'm gonna turn it off
11:29or they're up by 10 with a minute to go.
11:30If you're wagering on different aspects of the game,
11:33you're in it to the very end.
11:35And one of the things, I'm sure it's the case
11:38for baseball too, that we focus on,
11:39it's not just the unique number of viewers
11:42you have in a telecast, but a rating is, you know,
11:45average people, you know, per minute.
11:46And so then the question becomes,
11:48if you can take somebody, you know,
11:50our telecasts are two and a half hours,
11:51so I may have this slightly off,
11:53but let's say the average viewer is watching
11:55a two and a half hour telecast for 45 minutes.
11:57If you could take the average viewer
11:59and get them to watch for 10 more minutes,
12:01it's a lot easier to lift your rating that way
12:03than find people who we also wanna find,
12:06but who aren't now watching NBA or WNBA basketball
12:09and convince them to tune in in the first place.
12:12I think it's one of the interesting things about,
12:15or misconceptions about sports betting.
12:19It, for the leagues, is really about engagement.
12:23You know, you can make, we have a data business
12:26and sponsorship business that, you know,
12:28has been driven to some extent,
12:30but the real hard economics, not that significant.
12:34It is the driving additional broadcast engagement
12:39where the real value is for, I think, all the leagues.
12:41Absolutely. That's fascinating.
12:43By the way, I've been, had the privilege
12:44of asking questions to these folks,
12:45but we welcome your questions too.
12:47If you're interested in asking a question, raise your hand,
12:50we'll send a microphone your way,
12:51and you too can talk to the commissioners
12:54of the MLB and NBA.
12:56So there are, you know, when I was a kid,
12:58betting was kind of stigmatized,
13:00and it was mostly illegal in most places outside of Vegas.
13:02You know, obviously that's,
13:04the legal landscape has completely changed,
13:05but there's still, you know, issues around worries
13:08about players being involved in gambling.
13:09There's worries around gambling addiction
13:11for the audiences.
13:12Like, how do your organizations sort of manage
13:15and safeguard yourselves so that people don't question
13:18the integrity of the game?
13:20Well, I mean, all the leagues, you know, us included,
13:23have specific rules that apply to players and employees
13:27that have the potential for affecting
13:29the outcome of the game, number one.
13:31Number two, legalization has actually made enforcement
13:36and monitoring of what's going on much easier.
13:38We have relationships with a variety of companies
13:41that allow us to monitor sports betting
13:44and all the discipline in our league.
13:46I'm not sure Adam can speak for himself.
13:49Every single one has been driven by monitoring activity
13:53that we couldn't have done during the illegal era.
13:56Yeah, I'll just add, obviously,
13:57there was plenty of sports betting when we were kids,
14:00but what really changed the market dramatically
14:02was the internet.
14:03It disrupted the sports betting industry
14:05just like so many others.
14:06And what I used to say, I mean, you know,
14:08before the Supreme Court overturned the federal law
14:12that prohibited it essentially everywhere but Vegas,
14:15you could go to Google and put in bet baseball, bet NBA,
14:17and there'd be unlimited number of sites
14:19and with little flags of credit cards and things like that.
14:22So it was gray area of the law.
14:24I think to Rob's point, now that it's become legal
14:28and I think we're up to 35 states or so,
14:30the only thing I don't like about that
14:32is I'd prefer a federal set of rules
14:37so that we weren't dealing with various regulations
14:39state by state.
14:40But putting that aside, the issue now is
14:44do you want sports betting to be in the shadows,
14:47illegal, non-transparent, or do you want it to be open
14:51where you can monitor it,
14:52where people put in credit cards,
14:54where you can instantly detect,
14:55just like on a stock exchange, aberrant behavior?
14:58And I think for both leagues,
14:59we ultimately come at it the same way.
15:02If there's just like,
15:03if there's unusual activity around a stock,
15:05if something unusual is going on,
15:06that's a flag to investigate.
15:08If it was all illegal,
15:09you'd have no idea what was happening.
15:11To give you an idea how robust this monitoring is,
15:14there's actually a college coach,
15:16college baseball coach who lost his job
15:19as a result of, he made a bet
15:21while he happened to be a fan in a major league park.
15:24Our monitoring service picked that up.
15:26We turned it over to the college.
15:27He lost his job.
15:28So you think about it,
15:29it's not a player or a coach, one of ours,
15:33but it did, that's how robust the monitoring really is.
15:37And the tech makes the monitoring easier.
15:40Absolutely.
15:41Yeah, it makes a lot of sense.
15:41I had a question off to my right.
15:43Could you just introduce yourself briefly?
15:44Sure.
15:45Jennifer McCollum, I'm the CEO of Catalyst.
15:47And we focus on gender equity and inclusion.
15:51So we love what's happening with soccer and in the WNBA.
15:55But for MLB specifically,
15:57I was talking to my husband about,
15:58how would it be great for New York, New York
16:00to be playing together?
16:01He's like, no, no, no, it's gonna be Dodgers New York
16:02because you know the major market teams
16:04can afford to pay more.
16:07And therefore we're gonna see more and more
16:08of the major market teams in the playoffs always.
16:11And by the way, it's better for ratings
16:12and it's better for revenue.
16:13So I'm just curious about how you feel about,
16:17is it major market because they can afford to pay?
16:19Yeah, I mean, the fact of the matter is,
16:23I've worked in baseball since the late 1980s.
16:26We've been hearing forever
16:28that it was gonna be the major markets
16:30that have the advantage from a payroll perspective
16:32and they're gonna take over.
16:34And I'll be honest with you,
16:35from the perspective of the business,
16:37it's been precious few times
16:40when we have had that major market matchup.
16:43I mean, it's really hard to remember the last time
16:46where you got two big markets like LA and New York.
16:49Having said that, we always worry about
16:55not only the ability of all of our markets to compete,
16:59but the perception of the ability
17:01of those markets to compete.
17:03And it's a challenge for us.
17:06It's the centerpiece of collective bargaining
17:09in our industry and most professional sports.
17:12Because at the end of the day,
17:14what we sell is competition
17:16and everybody needs to have a chance to compete.
17:19Sure.
17:19Had a question up at the top of the room.
17:22Hi, my name is Lisa Sun.
17:23I'm the CEO of Gravitas
17:24and my question is for Commissioner Silver.
17:26First of all, I've been a lifelong NBA fan.
17:28The Lakers paid for my first year of college.
17:31And I'm a Liberty season ticker holder
17:34for the last five years.
17:35So go Liberty.
17:37There's been a lot of questions
17:39around the return on investment for women's sports.
17:41And especially some of the press
17:43that came out over the last few weeks.
17:45How do you respond to the questions around player salary,
17:48continued investment from the owners?
17:50Because my season ticket package went up 3X
17:53for the renewal this year.
17:54And I'm just wondering how you think
17:56about the future of the WNBA?
17:57Well, first, thank you for all your fandom.
18:01Appreciate that.
18:02I'd say, you know, it's a two edged sword, right?
18:05In terms of women's sports.
18:06I mean, so the WNBA,
18:08as much as it seems like an overnight sensation now,
18:11as you know, if you're a fan,
18:12is the 28th year we just completed of the WNBA.
18:16And there's been enormous investment
18:17all along the way from the NBA,
18:20which essentially owns half the league.
18:21And then from independent investors,
18:23by the way, some of whom are NBA owners,
18:25who also invest, who also own the rest of the league.
18:29And it's great.
18:30It's turning a corner.
18:31There's no question about it.
18:33We're going into collective bargaining.
18:34The players understandably want to make more money.
18:36But then as the business grows,
18:38there's a marketplace in terms of tickets
18:40or media rights, as we referenced before.
18:43So the market's going to dictate
18:44that those prices are going to go up as well.
18:46I think the teams,
18:47and I'm sure the Liberty is focused on this as well,
18:50you want to find the right balance
18:51where you're loyal to longtime supporters,
18:54but also at the same time,
18:55they want to grow the business
18:57and demonstrate that there is a true, you know,
18:59return on investment in women's sports.
19:01And what I'm really buoyed by,
19:03particularly, you know, over the last year,
19:06I mean, we started strong many years ago in the WNBA.
19:10We then lost, frankly, a lot of teams along the way,
19:13and we're in the process of building it back.
19:15Now, I'm, I think in part,
19:17because we're in more of an expansion mode in the WNBA
19:21than we are at the NBA,
19:22or more room to expand right now.
19:24I know, you know, and the WNBA,
19:25my colleague, Kathy Engelbert runs the WNBA,
19:28but we're, we do that, we work together,
19:31and our phones are ringing off the hook now
19:34from people who are anxious to invest in women's sports.
19:37And I think that to your point,
19:39it's not just basketball.
19:41We're seeing it across the board in women's sports.
19:42So I think it's incredibly healthy.
19:44And by the way, I think a lot of it
19:46has to do with the internet.
19:47I think that we've disintermediated traditional gatekeepers.
19:51It's not, you know, I said this recently,
19:53I was at an event with Serena Williams,
19:55and she was asked, well, what's happening
19:57where all of a sudden these women
19:58are emerging as great athletes?
19:59And she said, well, women didn't just become great athletes.
20:02It's like, you know, of course not.
20:04It's that what's happened is the traditional gatekeepers
20:07who were in the position to say,
20:08this is what's gonna be carried on our airwaves,
20:11or this is what's gonna be in our, you know,
20:13in our precious editorial pages.
20:15Now it's more expansive, and consumers get to decide.
20:19And it's not just women, but it's led by women
20:22in many cases are demonstrating
20:23that there's genuine interest in women's sports
20:26and the product.
20:27And if you're a Liberty fan,
20:28congratulations on the championship.
20:30We're close to time, so I have a yes or no question
20:32for each of you before we go.
20:34And the question is,
20:35will there be three or more new teams
20:38in your respective leagues
20:40by the time you end your terms as commissioner?
20:43First to you.
20:44He's younger than I am.
20:46Three or more?
20:51Sorry, probably no.
20:53Probably no.
20:54Rob?
20:55No.
20:56Probably no.
20:56Well, that was deflating.
20:57That's my fault.
20:58That's on me.
20:59You picked a bad number.
21:00You should've said two.
21:01I should've just said two.
21:01That would've been easier.
21:02You get pairs.
21:03Let me help you.
21:04Despite that, I'm so honored that we had you
21:06and so grateful for your time.
21:07Thanks for all your insight
21:08and hope you'll stick around
21:09and talk with some of the guests.
21:11Thank you very much.
21:12Thank you very much, Rob.