Kenner, Louisiana, rarely makes news. It’s where the New Orleans International Airport is. Our uncle lives there. Typical news around Kenner is a capsized boat, or offramp construction taking too long, or the new ice rink at the Esplanade.
I just laugh when I read this stuff on my phone, 2,000 miles away. It wasn’t like our uncle texted us about it — it just pops up in my feed. Easily, 10x or maybe even 100x more people read this news than the 67,000 who live in Kenner. And every news story includes the embedded Colin Kaepernick ad, without Nike having to pay for it, so it’s now up to 25 million views. Nike added 170,000 instagram followers in the week after their announcement. Their stock price is at an all-time high.
Nike’s gotta love people like the mayor of Kenner, Louisiana.
Everyone’s saying they’re playing politics with sports. And why not? It’s just next in line.
First, we politicized religion. Then, we politicized science. Then we politicized education. Then we politicized the news. Sports, the last bastion, had to fall.
We’d like to take you on a tour of just how big a phenomenon this is.
All over the world, the people who are manipulating the global economy to serve their purposes are using sports as a tool to do it.
Let’s take just 2017 as an example. Here’s the 5 biggest financial transactions in sports during 2017. We visualized them as gears for a reason you’re about to see.
2017 Deal Flow: Moving Parts
Before we get started, it’s worth noting why the Neymar deal is listed at $600 million, when his transfer fee was $263 million. That’s because the total contract payout from Paris St Germain was six hundred — which includes the player’s $53 million annual salary.
Now let’s locate these five deals on the global map, and as we do so, the much, much bigger gears begin to appear.
Paris St Germain is owned by the sports authority of the country of Qatar. At the time of the Neymar deal, Qatar was having all its ports in the Persian Gulf blockaded. The other Arab Sunni countries hated the way Qatar shares the South Pars/North Dome natural gas field with Shia Iran. The blockade was costing Qatar $6 billion in trade every month, and they needed the world’s help.
The $600 million they offered Neymar was just a conversation starter, an ice-breaker, to get everyone’s attention.
And what country gets 19% of its natural gas from Qatar? China.
China meanwhile had its own problem internally. Everyone getting rich in China was moving their money out of the country, beyond the government’s control. $60 billion was leaving China every month. So, as part of its One Belt, One Road sweeping policies, the government made removing money from the country illegal (with exceptions for the cases where it’s “good for China.”)
When that happened, Alibaba’s planned purchase of AC Milan was halted. Instead, a new Chinese buyer emerged, a puppet that nobody had heard of.
The actual money for the Milan purchase didn’t come from the guy nobody had heard of. Instead it came from someone everyone had heard of: a New York investor named Paul Singer, often called The Most Feared Investor in the World. His activism inside Samsung led to the Korean president being jailed. He owns lots of sovereign debt … he bosses entire countries around. He once impounded a navy ship that belonged to Argentina. He’s also a huge, huge player in … can you see it coming? … natural gas.
Wait, there’s more!
Because Paul Singer was also the activist investor who forced the sale of Cabela’s, saying they weren’t selling enough guns. Then Trump was elected, gun sales fell, and the deal nearly fell apart.
Meanwhile, casino money sold UFC, and casino money bought the Rockets. Cousins from the same family. But the Rockets deal wasn’t cash. The Golden Nuggets casinos floated $1.5 billion in high yield BBB bonds to pay for the Rockets (even though the NBA had a rule against debt financing.) Who bought those bonds? We don’t know. We know who sold them though: Capital One, the same company who helped finance the Cabela’s deal.
UFC meanwhile was bought by WME, William Morris Endeavor. A year earlier, WME had spent another 4 billion buying IMG, the talent agency that represents tons of sports stars. WME had decided on a strategy (a very smart one) that in the globalized world, sports stars will make more money than movie stars will.
But WME didn’t write the $8 billion in checks for UFC and IMG.
In both deals, the money came from Silicon Valley’s private equity fund, Silverlake Partners.
And where’s Silverlake’s bottomless pit of money come from? From their investment in …. can you see it coming? … Alibaba.
The real forces at work changing sports in 2017
People who are changing the world are using sport to do it. Why?
Sports Holds the World’s Attention
As much money as it seems is being spent on player salaries and team purchases and sponsorships, that’s a drop in the bucket compared to the real money at stake.
Here’s another graphic that shows what the Fox Broadcast Company was thinking.
The x-axis is fanbases’ political leanings, left/progressive, right/conservative. The y-axis is how politically-active the fanbase is, on average. Fox Broadcasting had failed many times over the years to wrest away viewers from ESPN to Fox Sports. They suffered from a copycat strategy, and hadn’t found a way to differentiate Fox Sports from ESPN. But at some point, somebody upstairs looked at a chart that must have resembled the one above, and realized, most of the big money sports could be ours, if we can do for sports what we did to news.
So well before Donald Trump was elected, and long before Colin Kaepernick took a knee, commentators on Fox Sports started opining that ESPN was bringing too much politics into sports, and suggested that if you want sports to be politics-free, watch Fox, not ESPN.
They criticized ESPN’s coverage of Michael Sam, and Caitlyn Jenner, and Serena Williams vs John McEnroe. They touched on recent history in North Carolina, where the NCAA pulled its basketball tournament out of the state, and the NBA pulled its All-Star game.
To be clear, this kind of thing has been happening in sports forever. Dale Earnhardt Jr — the most popular driver in NASCAR — said the Confederate flag is “offensive to an entire race” and ought to be removed from the South Carolina state house. The state of Arizona lost the Super Bowl in 1990 because they refused to make Martin Luther King Jr Day a holiday. There are hundreds of examples, all around the world, throughout the entire history of sports. Now and then, politics has always crept into sports.
What’s different today is that it’s a business strategy. It’s a calculated attempt to divide sports fans for financial gain.
We often talk about the business of sports as if it’s Big Business. We mention television deals in the billions, attendance league-wide in millions. Stadiums that host a mere 15 games a year cost more than bridges used by a million passengers every day.
In fact the sports business is not very big — only $500 billion, globally. Which is small compared to industries that measure in the trillions. But it holds the world’s attention, and therein, it has influence far beyond its size. Part escape from society, part mirror to society, sports has powerful emotional resonance.
The question is, will sports continue to be a pawn of the geopolitical economy, or is sports strong enough to defend itself, and become what we always wanted it to be — a level playing field, a uniter of spirits, a human drama built on physical grace?