RedBird Capital’s Gerry Cardinale engaged in a wide-ranging, onstage interview at SBJ’s Intercollegiate Athletics Forum in Las Vegas earlier this month. The whole interview is worth a look. But I picked out four of his points that really stuck with me.
1. Sports’ best growth prospects are in college
Cardinale had a simple message for the audience of college administrators and athletic department officials at the event. The college business is undervalued, he said, and he is looking to help navigate schools and conferences through the chaos.
“Everything that I’m seeing starting to develop in the college ecosystem I’ve seen for 30 years,” said Cardinale, who was intimately involved with the launch of enduring sports brands like YES Network , Legends and On Location .
Cardinale’s pitch is that he can bring the same expertise to college business that he has used to become one of the most respected sports business investors over the past three decades.
“I’m a huge believer that capitalism, private capital, can be a catalyst for real positive change,” Cardinale said, before referencing challenges colleges are experiencing with name, image and likeness. “You’re not going to put the genie back in the bottle. This is coming, and this is going to come like a juggernaut. There’s going to be a lot of people flinging money around it. I’m always trying to temper this down a bit and say, ‘Hold on, let’s be thoughtful about this.’”
2. College media rights is ripe for growth
Cardinale identified several areas where the college business can grow, from stadium renovations to hospitality around the College Football Playoff. But I want to focus on one area: media rights.
The problem, of course, is that college media rights are fragmented — each conference negotiates its own media deal with national media companies. Cardinale said the college conferences would have much better standing if they pooled their resources. “It’s not going to happen now, but I could see the trajectory if we could get all the conferences together,” he said.
That is no easy task, since the contracts all end at different times. The Big Ten’s media deal runs until 2030, the Big 12’s ends in 2031, the SEC’s runs until 2034 and the ACC’s is up in 2036.
“We have great relationships with all the media rights distributors,” Cardinale said. “Let’s get in a room with the media rights distributors and say, ‘All right, how do we bring everything together, get these contracts back to co-terminus, and let’s go create a more unified rights-based media product.”
3. The RSN flu is likely to affect the rest of the sports business
The problems with some regional sports networks could be viewed as a bellwether for the rest of the business. Cardinale referenced Mark Cuban ’s decision to sell the Mavericks to the Adelson family as an eye-opening move that leads to questions about whether the sports market is overvalued.
“Look at the RSN dislocation, and look at the next media contract,” Cardinale said. “Are we ever going to get to the point where our current trade is worse than the last trade? What would happen in the NFL if the next NFL team to sell got less than $6 billion?”
Over the summer, a group led by Josh Harris bought the Commanders for a record-high price of $6.05 billion.The problem is that while Cardinale still sees a lot of enthusiasm around buying into professional sports, it’s becoming harder to develop a business plan that works.
“I keep hearing the facile notion that it always goes up,” he said. “You guys are students of history. That’s not sustainable. That’s never been the case. … This is fascinating to me because this thing is exploding and there’s no foundation for doing it the right way. And now it’s the Wild West with all this money piling in, so I think all sports is overvalued.”
4. Get ready for the Great Rebundling
It’s no secret that the pay-TV business is in distress, due to a big acceleration in cord cutting and cord shaving. But Cardinale is seeing signs that the pay-TV bundle is stabilizing, particularly among sports fans. He called the bundle the best one-stop shop for sports.
“The demise of ESPN was greatly over-exaggerated, people,” he said. “The average fan is not going to subscribe to 18 different streaming services. The rabid fan will, but the average one won’t.”
It’s worth noting that when ESPN reported its financials for the first time this fall, it showed a $2.9 billion profit on $16 billion in revenue — gaudy numbers that would make most legacy media companies jealous.
John Ourand can be reached at jourand@sportsbusinessjournal.com. Follow him on X @Ourand_SBJ and read his weekly newsletter and listen to his weekly podcast.
