Apple’s playing ball

Good evening! 

Welcome to The Playbook, a weekly newsletter on the business of sports and gaming. If someone shared this newsletter with you or if you’ve found the online version, please hit the subscribe button below — it’s free! You can unsubscribe anytime.

For those of you regularly waking up to our flagship product, The Signal, our hawk-eyed global coverage of Apple should not be a surprise. We’re in April, and the company’s start to the year has been anything but smooth. Apple's news cycles have gone from bad to worse, from antitrust challenges to declining iPhone sales in China to an ambitious decade-long car project gone kaput. And much like it does for fans in trying times, sport could offer Apple some comfort. 

This is exactly what I’ve been nerding about for the last few months: the whats, the hows, and the whys of Apple’s increased push into sports—live, scripted (such as Ted Lasso) or otherwise. Apple launched its information app, Apple Sports, in February. Even though the app isn’t available in India yet, it could potentially disrupt how sports fans consume information, moving away from a dedicated live scores app to a one-stop destination. 

But live sports is where Apple is looking to go the extra mile. According to The New York Times, the company was willing to pay over $1 billion for exclusive, global television rights to an expanded Club World Cup tournament organised by Fifa, the governing body of football. The month-long tournament, initially called the Mundial de Clubes FIFA, is expected to be played next year in the US, which is also one of the co-hosts for the 2026 FIFA World Cup alongside Canada and Mexico. A potential deal with Fifa, albeit for a once-in-four-year tournament, represents a significant leap. And it may not be a one-off either.

The NBA also presents an opportunity, especially with its exclusive negotiation window with existing domestic rights holders, Disney and Warner Bros. Discovery, having expired earlier this week. While these traditional media giants remain favourites to retain the rights, Big Tech streaming companies such as Apple, Amazon, Google/YouTube, and Netflix might see a door opening. These companies have expressed interest in picking up smaller, streaming-friendly packages that allow them to broadcast a set number of matches (say, the playoffs, the NBA finals, midweek games, etc). Apple already does that with its Friday weekly doubleheader in Major League Baseball. 

That Apple is finding a seat on the hotly-contested sports streaming rights table should hardly be a surprise. While subscriber growth (for Apple TV+) may seem like an obvious explanation, the answer lies in its fast-growing business that raked in $23 billion in 2023: services. By that, I mean Apple TV, Apple Music, iCloud, and Apple News+, among other offerings. With over 2.2 billion active devices (and growing) in its kitty, an estimated 50% of those being iPhones, Apple now has a vast delta to monetise via services. And why not? 

A recent report by Counterpoint Research estimates that Apple’s services will make up a quarter of its revenue in 2025. The segment, per the report, has seen a significant fillip in the last five years, rising from 18% in 2019 to an estimated 24% in 2024. For perspective, all of Apple’s live-sports streaming deals (~$4.1 billion)—Major League Baseball, Major League Soccer (MLS), and the Fifa deal (should it go through)—represent approximately 20% of its 2023 services revenue. Little wonder then that Apple is willing to pay to play. Much like it did with Argentine footballing legend Lionel Messi’s sensational move to the US.

Recreating the Messi effect

By the time Messi joined Inter Miami CF on a two-and-a-half year, $20 million a year contract in July in 2023, Apple had already secured the exclusive, global streaming rights to MLS for 10 years, shelling out $2.5 billion for the package. But Apple too played a part in luring Messi to the US even as he had bigger contracts on offer from Saudi Arabia.

Having already signed the 2022 World Cup-winning captain for a behind-the-scenes documentary series, Apple worked out a deal that offered Messi additional compensation for the number of international MLS Season Passes (priced at $99) sold during the season. The deal has been termed a potential game changer in sports contracting for precisely that reason. But even there, Apple gained significantly. 

According to an analysis by subscription market research firm Antenna, on the day of Messi’s Inter Miami debut in July 2023, there were over 110,000 signups to the MLS Season Pass. That was a whopping 280% spike since the start of the season. His arrival also converted 15% of MLS Season Pass holders to Apple TV+ subscribers, while 37% of those signing up for the pass did not have a prior Apple TV+ subscription. Apple CEO Tim Cook acknowledged the Messi effect in August. “We’re beating our expectations in terms of subscribers, and the fact that Messi went to Inter Miami helped us out a bit,” he said during an earnings call.

This is probably what Apple is looking for with the Club World Cup, an otherwise week-long mid-season tournament pitting various clubs that won continental titles (Champions League, for example). Now, in an expanded 32-team tournament, big European clubs such as Real Madrid, Manchester City, Bayern Munich, and Chelsea have already qualified for the new format, which will also feature clubs from Asia, Africa, North America, and the Caribbean, besides South America. Most of these European clubs (and 12 in all) have loyal, global fan bases. This could double as a funnel not just for boosting subscriber growth but also for expanding the services revenue delta, with football as a potential entry point to the flywheel, and other services becoming a key retention factor.

Piecing together the jigsaw

Apple’s live sports foray has been methodical. The MLB deal it signed in April 2022 gave the company a taste of the broadcasting landscape and its potential to alter it. The ten-year MLS deal took it a little further, affirming its commitment to live sports while also giving Apple a better shot at monetisation with the MLS Season Pass, even as it got super lucky with Messi’s arrival. 

Could it become the destination that most sports fans crave for? Maybe not just yet, even though it has tried to build a destination “where fans could access everything from a major professional league in one place” with the MLS deal. Apple has also been called on to acquire Disney-owned ESPN by Wall Street analysts such as Dan Ives. 

But that's not what Apple is playing for, per Eddy Cue, the vice president of its services division. In an interview with GQ last year, Cue said Apple’s deal-making philosophy for live sports was clear. It had to “influence how to present the game, deliver it, and use technology”. 

The soon-to-be-announced Fifa deal could be its first major global test in that regard.

⚡️Quick Singles

🏏💰📈: The Board of Control for Cricket in India (BCCI) is reportedly considering increasing the remuneration for domestic cricketers, according to CricBuzz. The move could involve doubling the fees for domestic cricketers to help them earn at least around Rs 75 lakh to Rs 1 crore annually. The move, if and when implemented, would dovetail BCCI secretary Jay Shah’s warning to centrally-contracted cricketers to prioritise domestic red-ball cricket. 

🇸🇦💰🛢️: Fifa has tied up with Saudi Arabian oil major Aramco as a “major worldwide partner” till 2027. The three-year deal will include key Fifa tournaments such as the Men’s World Cup in 2026 and the Women’s World Cup in 2027. Saudi Arabia is also the sole bidder for the 2034 World Cup, which it will almost certainly host. Besides Fifa, Aramco has sponsorship deals in other sports such as Formula One and cricket (via the International Cricket Council). 

📺⚽️🤝: English football club Manchester United is reportedly in discussions with Disney for a multi-million dollar documentary series deal, per The Athletic. The series, per the report, would focus on United’s glory years under Sir Alex Ferguson. The series is also expected to feature Ferguson and several players-turned-club ambassadors who played under him. The dotted line is yet to be signed, with United pushing for “improved terms” rather than the “low seven-figure” sums that Disney recently offered the club.

🇯🇲🥇🏆: The world’s fastest man, Usain Bolt, has been named as an ambassador for the upcoming T20 World Cup in the West Indies and the US. Bolt began his sporting career as a cricketer in his native Jamaica before switching to athletics and sprinting. His illustrious Olympic career began with a gold in the 2008 Beijing Olympics before he retired eight years later at Rio, again with a gold. Bolt’s compatriot and former West Indies legend Chris Gayle is also an ambassador for the tournament.

🇮🇳♟️🏆: Following 17-year-old D Gukesh’s historic win at The Candidates in Toronto, India will likely bid for the hosting rights of World Chess Championship match between the Chennai lad and China’s Ding Liren. The championship could take place in November this year, and could return to India after 11 years. Back in 2013, Chennai played host to the Championship clash between India’s Viswanathan Anand and Norway’s Magnus Carlsen. The host country for the summit clash is expected to be decided by June.

📖 Weekend Reading

Top Chinese Swimmers Tested Positive For Banned Drug, Then Won Olympic Gold  [The New York Times]

Cool, mature, and unflappable: The mentality that helped D Gukesh win The Candidates [Hindustan Times]

That’s all for this week. If you enjoyed reading The Playbook, please share it with your friends, family, and colleagues. Please also subscribe to it (for free) if you haven’t already.

You can reach out to me at [email protected] with any feedback (good, bad, or ugly), tips, and ideas. I'd love to hear from you!

Thanks for reading, and see you again next Friday!