The AAF surpassed expectations and opened to rave reviews and good viewership totals.
Less than a week removed from the Super Bowl, a new pro football league debuted last weekend with an average crowd size that would have ranked 95th out of 130 teams in major college football. In four games, the eight-team Alliance of American Football drew an average of 19,000, including 11,751 in Arizona.
But that’s not considered bad for business for this new venture. The league averaged 3.25 million viewers Saturday on CBS, better than an NBA game on ABC, according to Nielsen data. And besides, the league’s long-term business play isn’t even based on ticket sales and TV ratings, unlike traditional sports leagues. It’s instead based on sports gambling data and technology that is using football as its public storefront and laboratory.
If it goes the way investors hope, it will transform sports gambling, boost sports viewership and even affect other fields such as transportation and medicine.
“The real place where we make revenue is in the back-end technology and how it can be sold to other partners,” said Charlie Ebersol, co-founder of the AAF and a television producer. “A lot of what this business is about is being an iceberg. You see about 10 percent of what the company is above water publicly.”
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Investors are so bullish on it that Ebersol said it plans to spend $500 million to $750 million in the next five years to get off the ground. The investors include Silicon Valley venture capitalists and MGM Resorts International, one of the biggest casino companies in the world. To help develop the tech, the league also hired a head engineer who previously worked as a software engineer at Tesla, the electric car maker, and Lockheed Martin, the defense contractor.
This is why the AAF might be here to stay, at least for several years, even though alternative pro football leagues historically have collapsed under the weight of huge costs and the heavy shadow of the NFL. Next year, another new pro football league – the XFL – is also starting the week after the Super Bowl and is getting $500 million in investment runway from its founder, Vince McMahon.
Ebersol said he isn’t concerned by that. His investors are in for the longer game, based largely on developing technology that would help sports gamblers bet on quicker, shorter plays. Such technology would be fast enough to allow gamblers to bet on the next play in a football game with a variety of options through an application on their mobile phones. Will the next play be a run or a pass? A first down or a touchdown?
Such “in-game” sports gambling innovation is just getting started after the U.S. Supreme Court last year enabled the expansion of legal sports gambling outside of Nevada. More money on more plays in more states also is expected to intensify viewer interest in more games in more leagues even when the game scores are lopsided, making them more valuable to media companies and advertisers.
“It’s not fully functional, but it’s almost there,” said Scott Butera, president of interactive gaming at MGM, which has an exclusive license for AAF’s sports gambling technology. “What it will do, which is very important to us from a sports betting standpoint, is it will allow almost immediate transmission of data and what’s going on in an event to your mobile device, which will allow us to have play-by-play gambling, which is non-existent today.”
Such speed is essential for MGM. It wants no lag time between what happens at the live event and the time gamblers see it streaming on their phones. The transmission delay between the live event and when a viewer sees it on a TV or phone can take many seconds, giving an advantage to gamblers at the live event who can see it before the rest of the world. This technology would erase that gap. Last weekend, the streaming app was showing live action well before television was by more than a play, Butera said.
AAF players are also wearing technology in games that gather a variety of data that can help MGM automate instant betting odds for next-play bets. Ebersol said this helps the technology’s “predictive casting,” which uses historical data, plus play formation data, including which players are on the field at the moment.
Besides next-play betting, other in-game betting with longer action windows are expected to be a big part of the gambling business, such as how a team might end its offensive possession. Will it be a punt, field goal or touchdown?
“Better data certainly helps to power a greater array of live markets and allows sportsbooks to offer higher limits for live markets,” said Chris Grove, a gambling industry analyst for Eilers & Krejcik Gaming, a research firm. “We think next-play betting is likely to remain a niche activity, even given advances in technology. Where data-rich leagues like the AAF are likely to see more activity is in forms of betting that draw heavily on data, but have a longer action window.”
Grove said there have been next-play markets in Nevada, and there’s no reason the AAF will have a monopoly on better data. It depends on how the tech develops, including what kind of edge the AAF might get from players wearing the tech. Grove said better data allows for smarter pricing, more aggressive in-play markets and new kinds of bets.
Butera said other types of in-game betting for AAF games through MGM are only operational right now in Nevada and awaiting review in New Jersey, where traditional sports gambling was recently legalized. In some states right now, like California, a gambler would have to download the MGM app and cross the state line. The options are expected to grow in the next five years with the spread of legalized sports betting.
Other audience measurements for the first weekend pleased Butera – even in-person attendance, which was expected to be in the 20,000-range.
“The viewership was better than expected,” Butera said. “The attendance was better than expected, and the betting volumes were better than expected. There was a lot of in-game betting, too, which means the next generation is really following it.”
In the meantime, the league’s costs will be considerable. It has more than 400 players and is giving them minimum, non-guaranteed contracts of $250,000 over three years, plus benefits and incentives. To cover rent and costs for using San Diego’s stadium alone, the league’s expenses were estimated to be $185,000 per game, according to its agreement last year with the city of San Diego.
The next games are this weekend, televised by the NFL Network, CBS Sports Network and TNT. The technology behind the scenes will be the star in training, poised for worlds beyond.
“You’re talking about tens of millions in points of data that we’ve figured out how to compress and deliver it in real time,” Ebersol said. “So any industry that needs to take that level of data and then compress it and deliver it instantly can use that application. Obviously, the application out of the gate is the gambling platform, but we’re doing it for a variety of other partners.”
He cited transportation and physical therapy as possible beneficiaries. In the latter, all of the league’s players wearing the technology could contribute data to learn the efficacy of various treatments and products for injuries.
He said various investors have bought into the parent company that includes the league and tech. The investment runway reminds him of an anecdote Hall of Fame coach John Madden told him recently about the launch of the American Football League in the 1960s before it merged into the NFL. The story involved Lamar Hunt, a founder of the AFL, and Hunt’s father, who was informed that his son had lost more than $1 million in the venture.
Hunt’s father allegedly replied, “Well, at that rate, he only has 100 years left before he runs out of money.”
Follow sports reporter Schrotenboer on Twitter @Schrotenboer. E-mail: firstname.lastname@example.org