The Billion-Euro Club Has Its First Member 💸

Welcome to the third edition of The Sports Stack! I hope you are enjoying it so far. I would appreciate it if you could share it with friends and colleagues and help this little side passion reach more people. There’s even a £75 Amazon voucher up for grabs (see more details below).

In today’s Sports Stack:

• Netflix’s Q4 earnings report - breaking records.

• Deloitte’s Football Money Report - The Billion-Euro Club Has Its First Member.

• The latest Open AI product release & what it might mean for sport - especially buying tickets.

• What you might have missed in sports business and technology.

🎬 Netflix - Breaking records.

• 65 million total US viewers for NFL Christmas games - the most-streamed NFL games ever.

• In Q4, 55% of all new Netflix signups chose the ads plan, and ad-supported membership grew 30% quarter over quarter.

• WWE drew 5 million views in its first week - double the audience it had on linear TV.

• Netflix projects $18 billion in content spending for 2025, up from $17 billion in 2024.

According to the FT, Netflix added a record-breaking 19 million new subscribers in Q4 2024, ending the year with a record-breaking total of 301 million subscribers. This represents a 15% increase compared to the same period in 2023, which pleased investors.

When reviewing Netflix's Q4 earnings, my predictions about NFL viewership proved insightful but humbling. My projection of 2 million new subscribers from NFL content might have been too optimistic. Netflix executives downplayed the NFL's impact, stating that the games represented only a "small minority" of Q4 subscriber additions. Could this be an intentional downplay to help with future sports rights negotiations? 

As noted in our Christmas review, Netflix’s advertising model is proving to be a significant advantage. In the fourth quarter, 55% of new Netflix sign-ups opted for the ad-supported plan, resulting in a 30% growth in ad-supported memberships compared to the previous quarter.

Why is this important? 

• It might signal strong price sensitivity in the streaming market, with consumers willing to watch ads to save money. 

• We could be looking at changing market dynamics - challenging the assumption that streaming subscribers demand ad-free experiences.

• Netflix's ads strategy is working. Their dual revenue model (subscriptions + advertising) is proving successful, evidenced by 30% QoQ growth.

What will Netflix do next in Sports?

We know that Netflix recently acquired the Women’s World Cup rights, but where will they go next? Ted Sarandos (Co-CEO Netflix) emphasised that while the NFL games were hugely successful (drawing 30-31 million average-minute audiences), the "underlying economics of full-season big-league sports remain extremely challenging. " There are whispers that Netflix might be interested in UFC rights, but let’s see. 

Hot off the press—according to SportBusiness, Netflix has not renewed a third season of ‘Full Contact’, their Six Nations rugby sports documentary. This decision has been described as a review of Netflix's overall sports documentary strategy and a re-focus on its push into live rights.

What do you think Netflix will do next? Let me know in the comments!

💸 Deloitte Football Money Report - The Billion-Euro Club Has Its First Member.

“The 2023/24 season created football history, as Real Madrid became the first football club to generate €1 billion across a single season.”

Key facts: 

• Historic Revenue Growth: Real Madrid's €1B milestone was driven by a 103% increase in matchday revenue and a 20% jump in commercial income after the Bernabéu renovation.

• Revenue Stream Evolution: The top 10 clubs demonstrate a distinct model (48% commercial, 34% broadcast) compared to clubs ranked 11-20 (34% commercial, 47% broadcast).

• Stadium Investment Impact: 11% YoY matchday revenue growth across Money League clubs, with half pursuing major stadium developments.

• Broadcast Market Shift: €4.3B in total broadcast revenue remains flat in domestic markets, while the Premier League plans an in-house media operation for 2026/27.

• Competition Expansion: The new UEFA formats and FIFA Club World Cup create revenue opportunities but raise player welfare concerns, with a potential 70-80 matches per season.

My Thoughts: 

Interestingly, the top 10 clubs generate 48% of their revenue from commercial sources, while clubs ranked 11-20 manage only 34%. It’s not merely that these clubs have better players or more fans; it’s about the advantages of being at the top. Their ability to develop more resilient models based on diverse and regional commercial partnerships, as well as premium sponsorships, is what enables them to achieve this. For example, Manchester City, currently number two on the list, boasts an impressive 65+ commercial sponsors compared to an average of 10-20 sponsors for clubs ranked 11-20.

Stadium investments are a hot topic in football, with multiple renovations and new-build plans being considered across the global leagues. Another key driver is the move towards multi-purpose high-tech venues like the Spurs Stadium in London. These venues enable teams to create additional matchdays and events that increase their commercial revenues. When Spurs host NFL games, they generate approximately three times the revenue from food and beverage sales.

Compared to White Hart Lane, the new Tottenham Hotspur Stadium is a gigantic 62,000-seater ATM. Tottenham make close to £6m ($7.5m) per matchday instead of a previous £1m. (The Athletic) 

I know what you’re thinking; commercial success doesn’t always equal on-pitch success. A topic for another time…

Other clubs who have upgrade projects in design or live:

• Manchester United

• Barcelona

• Fulham

🤖 Open AI continues to advance. What could AI agents mean for sports entities?

This week, Open AI announced its AI Agent, Operator, which can access the web to perform user tasks.

As per The Rundown:

• Operator uses a new Computer-Using Agent model that combines 4o’s vision capabilities with advanced reasoning.

• It can do things like book restaurants, order groceries, and buy tickets to sporting events. (This last one is important)

• Built-in safety features include user approval for purchases, automated threat detection and takeover mode for sensitive data.

It is difficult to predict how these developments might affect sports entities. However, monitoring their impact on ticket sales, merchandise, and other owned digital IPs will be crucial if agents become mainstream and alter how fans and consumers engage with their favourite teams.

It’s not yet clear (as Operator has only been released in the US) how an AI agent might choose which website to purchase from when you ask it to ‘Find available Premier League tickets for me this weekend in London’ or ‘Purchase [insert favourite club] merchandise for my family for Christmas’, but that is where the disruption to a club's bottom line could start.

In the demo below, you can see that the Operator can interact with Stubhub to find tickets to an upcoming basketball game. They also mention that it can browse any website, demonstrating the importance of being integrated & ready for these new AI interfaces. Skip to 11:50 to see how it works.

All of these advancements in AI will continue to shift how fans and consumers interact with sports teams, leagues, and entities. They will continue to move away from browsing and clicking to asking and being given. The advancements in the last 18 months are hard to quantify, leaving the question: How does the future of sports-owned and operated platforms look? 

My Predictions:

• AI agents won’t be browser-based for long. They’ll move to API-based, and front-end systems could become less necessary in these transactions.

• Fans will increasingly sidestep team platforms as AI prioritises convenience, aggregated data, and APIs.

• Due to the demographic of traditional sports fans, we could see a slower adoption of AI agents in the sporting world (outside of betting).

Potential Challenges:

• Sports entities risk losing direct fan engagement to AI-managed interactions.

• Algorithmic biases may favour third-party platforms over official team websites = ‘The AI SEO’.

PS - If you want to watch another mind-blowing example of the power and potential future of Operator, watch this:

🗞️ What else happened last week in sports, technology and business?

• Everyone is talking about The AO animated and The Australian Open’s innovative approach to broadcasting games for free. 

• Bryson DeChambeau’s mega project

• X is rolling out a dedicated vertical video feed for US users | TechCrunch - What will this do to the algorithm? Will X start prioritising video over written content?

• Meta x Oakley - the new content-producing glasses for athletes? 

• The Olympic Esports Games were delayed.

• TGL’s fourth match viewing figures were up 27% over week 3 in a great showdown between Tiger & Rory’s teams.

Thanks for reading!