MSP Sports Capital Transforming X Games From TV Asset Into Lifestyle Brand
MSP Sports Capital announced it bought a majority interest in X Games from ESPN Productions in late October. The global private equity firm, which also owns McLaren Racing and several international soccer clubs, believes there is an opportunity to take what was an underappreciated asset within ESPN’s broad content portfolio and turn it into a standalone lifestyle brand.
“There is a much bigger business here than what’s existed in the past,” said Jeff Moorad (founder and CEO, MSP Sports Capital).
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X Games typically take place twice a year, Summer and Winter X. MSP plans to expand the X Games event calendar with regional majors taking place across the world, along with local events, and reimagine the experiential component of X Games competitions. It will also lean into digital content creation and delivery, a significant shift from ESPN’s focus on flagship broadcasts and their core cable network.
Newly appointed CEO Steve Flisler previously served as Twitch’s VP of original content. He saw how esports properties leveraged storytelling and on-demand services to build rabid fan bases and believes X Games can do the same. “Then you can work to monetize, and invest back into the next stage,” he said.
JWS’ Take: MSP’s investment thesis on X Games starts with the 27-year-old brand’s legacy. For many sports fans, particularly those who are ages 25-50, action sports and X Games are inextricably linked.
But interest in the brand has recently regressed, at least from a viewership perspective. In 2015, the Winter X Games averaged 1.04 million viewers/day across ESPN and ABC; this year it drew 622,000 viewers/day, a figure that includes out-of-home viewership, which was not part of the equation before 2020.
MSP’s first order of business is a brand refresh, “to become more cutting edge in terms of youth culture, making X Games feel younger and more appealing to a wider range of audience,” Moorad said.
That effort is likely to include modifications to competitions, alterations to the brand’s visual identity and changes in the way events are produced. Music will also play a larger role moving forward as MSP seeks to broaden the events’ appeal.
Sponsorship and advertising have historically generated the majority of X Games revenue, and that’s expected to continue. However, Flisler hopes that adding competitions can generate ancillary income.
More events, Flisler said, can also help “build that connective tissue [with fans] so that we can really flex the brand,” although he knows there is a limit to the number of events X Games can put on. “We have to be really smart and disciplined to make the big moments big.”
MSP plans to put forth a steady stream of content in the weeks and months leading up to an event to help build anticipation and excitement for those marquee moments. Flisler said the brand would “stretch its creative licenses and pull from every corner of traditional sports, video games and a lot of other high-production areas” to deliver stories in an engaging and innovative way.
More competitions means more communities will get the chance to see the best action-sports athletes in person. Fans attending X Games events in the years ahead can expect to have greater access to participating athletes—and the facilities—in which they compete.
A busier competition schedule will give X Games more brand partner integration points. It will also result in more content generation opportunities, which can be sold against, and more gate receipts. Flisler said his team is actively working on “building out more ways to monetize the events, specifically through ticketing, hospitality and really incredible” VIP experiences.
MSP will take some cues from esports as it looks to grow fandom and become part of the culture zeitgeist once again. “The way communities gather on Discord. There are [also] live interactive events and a lot of other ways fans can build fan equity and earn their way into experiences,” Flisler said.
One constant will be X Games’ commitment to technology under MSP. Flisler said the PE firm would “double down” on emerging broadcast technology, a hallmark of the property under Disney’s ownership, as it strives to “unlock the velocity and emotion” of X Games events for the at-home viewer.
ESPN is retaining a minority, non-controlling position in X Games. It will also continue to control the domestic linear broadcast rights to X Games competitions for at least the next two years.
Flisler said the ESPN relationship remains “a cornerstone” for the multi-generational brand. But he sees a digitally native target audience and believes much of the value created moving forward will come via partnerships with streamers, OTT providers and other on-demand services, such as YouTube or TikTok.
The latter gives fans an opportunity to interact with the property and expands on the live broadcast experience. “Fresh out of Twitch, and seeing [the revenue models] in that world, and the user generated content world, those are things we’re going to want to tap into,” Flisler said. “It creates a lot of value for the media partners, for the creators, ideally for us and the athletes.”
Speaking of athletes, Tony Hawk has signed on as a brand steward. Skeptics will wonder how the 54-year old fits into MSP’s vision of making the property feel younger. According to Moorad, “[Hawk is] one of those transcendent athletes that has the ability to appeal to multiple generations,” and aligning with the pop culture icon can only positively influence the business.
MSP declined to discuss the terms of its purchase or how much it believes the valuation can grow if it executes on its vision. But Moorad was clear that unlike a typical PE firm, MSP is playing the long game on the X Games. “We don’t have any exit plans at this point. We are long-term with our vision without the typical exit pressure that comes with traditional PE funds,” he said.
Instead, the focus will be on growing the brand and audience. If they can, the belief is revenues will follow.
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