'Conservative' Matchroom well-positioned to cash in post-pandemic
By Jonathan Rest
Barry Hearn, the UK sports promoter, does not expect Matchroom Live, his company’s new over-the-top subscription streaming platform, to be profitable until at least the latter half of 2022, but is confident it will become a key part of the group’s revenue stream and even an important media outlet for third parties in the years ahead.
Matchroom Live officially hit the airwaves on 6 May and is initially showing archive content for free while sport remains on shutdown because of the coronavirus pandemic. When live sport does return, fans will be able to stream events through a subscription package and pay-per-view options in territories without broadcast rights deals in place.
Following a roadmap released by the UK government yesterday, that could come as early as next month, with Hearn, whose Matchroom Sport owns and operates the Professional Darts Corporation and World Snooker Tour, outlining plans to stage behind-closed-doors competitions in those two sports as soon as legally possible.
With live sport at a standstill, the PDC has experimented with the Home Tour, 32 consecutive nights of live darts, with players competing from their homes. Hearn admitted that while the broadcast quality of the Home Tour “is not up to what I would want”, it has been a success with broadcasters, telling Sportcal in an exclusive interview: “In the land of the blind, the one-eyed man is King. There’s very little competition out there.”
Matchroom Live is, like the PDC Home Tour, an example of the wider Matchroom group’s creativity in an uncertain time.
Hearn said: “These are the most difficult times I have experienced in my professional career. But these are the moments to create opportunities. Sometimes people are too busy fighting to survive that they miss opportunities.
“Matchroom Live is an opportunity for us which in two, three, four years’ time we may look back at and say ‘that was a really smart move.’”
As for the timing, he noted: “We have seen the digital explosion, the rise of Netflix and DAZN. We have been a supplier to those people, because that is the most conservative way to run a business. We are guaranteed massive contracts with the likes of Sky or DAZN or whoever, which guarantees us profitability and sustainability.
“But we are now in a position where having established ourselves at a certain level, we can say we are doing well, but let’s not get complacent. There are territories in the world where we do not have broadcast deals. I’m not particularly strong in the Indian sub-continent and South America. So as we create more events, we have an opportunity to supply our programming through a different route, and that route is direct-to-consumer.”
Hearn said Matchroom Live is a long-term play for the business, explaining: “We have a column in our accounts called the ‘up for none’ column. And this is in the up for none column because we are not reliant on this income, but we thought the best way to launch it in these troubled times is to make all our major archive shows free around the world and let’s build the beginning of a database in terms of subscribers, who want to watch the best fights, the best darts, the best snooker.
“I think we’ll get to 100,000 subscribers globally fairly quickly. It’s small money, but global reach and additional revenue stream to Matchroom, because it’s not replacing anything. It’s something that didn’t exist.”
He continued: “I don’t expect to make any money out of this at all for two years. I’m in no rush. I don’t need the money, I want to do the job properly, so we will add third party relationships as well because there are dozens and dozens of niche sports out there that do not have a platform. We will become their platform.
“We will be looking at relationships with telecoms firms, individuals, sub-licensing deals eventually. But, I repeat, we are in no rush. If we start off with quality content and relationships with other people, there will be a little niche market for us. In the global world of TV and digital broadcast, I only want a very small share of that, because it is a huge cash cow.”
That ability to be patient is strengthened by a robust balance sheet, with Matchroom Sport sitting on around £60 million ($74 million) in the bank. The group posted turnover of £193 million and profit of £23.4 million for the financial year ending 30 June, 2019.
Hearn said those reserves will enable Matchroom to ride out the coronavirus pandemic, which to date has led to the cancellation of only two of the group’s events - golf’s PGA EuroTour and pool’s US Open in Las Vegas in April – with a number of tournaments pushed back until later in the year.
The company has around 600 event days per year, and Hearn said he expects a “pile up” from September onwards where events will have to be prioritised, leading to further casualties.
He said: “My financial year is end of June. We will be down on last year, but not significantly down. Next year, who knows. It could be anything. If we get back to normality I might have a pretty good year. If we are in a lockdown again, I could have an absolutely appalling year.
“We are fairly substantial in terms of cash and profits, it means we are in a position where while we cannot sit out, because we never sit still, we can survive any disaster.”
One significant hit to the books could come from the World Snooker Championships, which was put back from April and is now due to be staged from 31 July to 17 August. That could come at a time when the government further lifts social distancing restrictions allowing all or part of the 890-capacity Crucible in Sheffield to be filled.
On the hook is £2.5 million in ticket revenue.
Hearn said: “You have to take the bigger view, and the bigger view is let’s just do it. If we have to do it without a crowd and we have to swallow the ticket money that is what we are in business for and that is why we build reserves.
“So the players get the same prize money, the same opportunities and the 500 million people last year that watched the championship still get a product, albeit without the atmosphere of a crowd.”
It’s not a picture of financial prudence replicated throughout the industry.
He continued: “I look around at so many other people in business who I know and have always respected and I’m astonished at how little cash reserves they’ve got and how little planning has gone into disaster scenarios, what we might call a rainy-day fund. Well it’s pouring, it’s not raining.
“There are an awful lot of people in our sector bang in trouble, because they’ve either paid out too big dividends, taken too big bonuses or lived a lifestyle beyond their means, and they’ve not got enough reserves to fall back on to guarantee continuity for the most important people in the world, which are the people that work for you, the artists you represent or the sports you control.”
And the entrepreneur in Hearn believes there will plenty of distressed assets on the market for Matchroom to mull over once the pandemic subsides.
He added: “There will be a number of operators especially in niche sports that are struggling. Bigger operators will again represent an opportunity, potentially for us if we have the interest. We have always grown internally through bright ideas rather than acquisitions, but you wouldn’t rule it out because there are a lot of big operators out there who are going to pay the price for perhaps not running the most prudent business.
“I’m a working-class bloke who has always been pretty conservative and it looks as if that was the right position to take at this moment. Other people have expanded faster than me but probably on either borrowed money or lack of proper working capital, which in these days of crisis may result in some opportunities that hadn’t been anticipated before.
“So we’ll keep our powder dry, keep sensible and focus on our own business but not keep our eyes closed to opportunities that may come up in this changing world.”