Gaming the Dope Wars
First I'd like to start by acknowledging the lack of activity on this blog the last six months. I'll put it down to some big changes in my professional and personal life. My plan is to change a few things up around here.
The other day I listened to the No Laying Up (NLU) podcast's interview with long time (and now former) CBS golf commentator Peter Kostis. It's excellent for a lot of reasons that are much bigger than golf. For those unfamiliar, Peter had worked at CBS since 1992, working as a key booth commentator with Gary McCord for many of those years. He also teaches and had a cool cameo in the legendary movie Tin Cup. He was recently canned by CBS (contract not extended) along with McCord in what was a five minute telephone conversation from his CBS overlord. Ice cold.
NLU is probably the most successful independently run golf podcasts around. It's a great startup story. Beginning with some hardcore golf nuts recording in their basement during their free time, later quitting their day jobs, and now touring the world while interviewing the likes of Rory McIlroy, Tiger Woods and recently Peter Kostis.
NLU is the Joe Rogan Experience of the bland and starchy golf media world. These guys have built a huge platform (200k Twitter followers, hundreds of podcasts), and pull no punches. This has gotten them into minor trouble in the past. Which is a common thread for many successful, disruptive media models.
In many ways, the criticisms that Kostis levied at the PGA Tour and network affiliates regarding the strategic direction of televised golf can be applied to almost everything happening right now in finance, media and business. Kostis' scathing criticisms can be boiled down to one over-arching goal:
Unfettered Growth at All Costs (GAAC)
Sound familiar?
This is happening in nearly all major pro sports leagues. And in asset management. The NFL is more concerned about how its image reflects on revenue potential more than the actual well being of players' brains, player's families (looking at you Ray Rice, AP and Tyreek) or common sense. Networks are forced to play by league rules to maintain the 'privilege' of broadcasting events. Step out of line and you're gone. And like the mob's rackets, the price of admission (broadcast deals) inflates at insane rates. To do otherwise would incense the Krafts and the Joneses. After all, you can’t have a down mark on franchise value. Eh, private equity?
In the case of Viacom owned CBS, the bean counters at HQ still need CBS Sports to generate profits and capture market share. Meanwhile, technology advances in broadcasting (shot trackers, drones, ultra high speed cameras, 4K) are also being pushed on the networks by leagues. Eventually this breaks. Kostis talks about the fact that CBS cut down on camera crews and technology to stay in the black. Platforms like NLU have skewered the networks and the Tour for the way this badly impacted the product.
Tow the Line
This is Jerry Maguire's Mission Statement or Voldemort's Curse of the Taboo. The Tour requires the networks to act as Sheriffs to police anything that could deviate from the Tour's misguided concept of Brand. Kostis was chastised by his bosses for not asking a rookie tournament winner if he was happy about winning 500 FedEX Cup points. Meanwhile the kid just won a two year job, an invitation to Augusta, and a fat wad that will at least allow him to fly coach to tournaments. Rich stuff. Applications open to Yes men and women.
The overlords want full control.
Confusion
On one hand the bosses want sterilized C-suite dictated content. On the other, they are chasing growthy business models to engage new revenue streams that are rich in 'young audience' demographics. Kostis claims that the vision of the Tour is to turn broadcasts into a cross between video poker and daily fantasy sports. Imagine watching the U.S. Open on your streaming device, and a pop-up prompts you to bet if whether or not Rory hits the fairway. It sounds fun I guess, I know I’d try it. But what does that mean for the actual product?
Sports gambling is a hot space right now, and when GAAC is your Mission Statement (though it’s Mission Impossible) of course you're going to chase it hard. And hey, there are lots of short term indications it works. Penn Gaming shares have added well over $1B in market cap after paying $163mm for 36% of Barstool Sports in January. We live in strange times.
The Tour is trying to monetize the same demographic that it has repelled through bland product and a Minitrue approach to corralling talented commentators. The content has to match the demo to effectively monetize. NLU gets this. Rogan gets this. The PGA is perfectly aware that golf is a declining sport in a post peak Tiger era. They are desperate, and failing.
Dope on a Rope
Smart devices have become Dopamine Delivery Devices (DDDs). Developers hire psychologist consultants to maximize 'engagement' and more effectively hijack neurotransmitter pathways. This is the 'better' version of the ugly carpets and flashing lights of the Vegas strip.
The stalking horse narratives of new(ish) zero commission trading models include schticky Mission Statements like:
"We're on a mission to democratize our financial system." (Robinhood). Vomit.
Schwab, Robinhood and E-trade are chasing the same demo as Penn Gaming and the PGA Tour. But there is another angle here, and it relates to GAAC. WSJ'S Jason Zweig hits the points here:
https://www.wsj.com/articles/what-the-e-trade-deal-tells-you-about-the-new-investing-game-
You probably knew most of this already. It's all about size. And keeping you in their eco-system through yogababble bullshit, and better Rube Goldberg type dopamine delivery systems.
It's about "democratization" as much as Google buying Fitbit is about "making everyone in the world healthier". Remember, When the Product is Free, You're the Product.
Someone Gonna Get Hurt Real Bad
What do you do when you realize you're trapped in a rigged game? Game the game. Take advantage of stupid TAM GAAC business models that subsidize 'user adds'. Zero commission trading, use it. Understand HFTs are buying your data and adjust your process accordingly. Use the free promo to PGA Tour Live that will surely come once they bundle in their video casino (but have the TV on too to avoid all the popups). Use that UberEats $5 off plus free delivery promo. There are some online apparel companies losing money on promotions to drive new customers. Some of them actually make decent clothes. Try them. That's the right arb.
But maintain your intellectual honesty about the 'deal'. Don't get Stockholm Syndrome. Realize that the Achilles heel of all of these models is customer retention failure. Customer acquisition costs for low fee models are huge relative to per account fees generated. They will try to trap you in their ecosystem with subscription promotions, contracts and stranded funds. Don't play that game.
But realize people will get hurt here. Yes, the 14 year old girl trading TSLA on Robinhood will blow up. Maybe the online apparel retailer goes tits up and you can’t get the same jeans. Dealing with the second one is no big deal. The first is awful, avoid that.
No one likes when their favourite broadcaster gets canned. Or when their league of choice takes their advertising game to European hockey standards.
Find alternative sources for your consumption. Buy NFL Red Zone to remove ads if the cost to value ratio looks right. Rogan can have a more honest conversation with a politician or executive that CNN ever will. Ignore CNBC. NLU will call out the latest cheating scandal that puckers the sphincters at the Tour. That economic narrative that comes with your Ameritrade account? Burn, and do not read. There have never been more free and/or inexpensive sources of engagement. Golf, NFL, economics, science? Check. Better content, much more honesty.
A final thought that came to me listening to Kostis discuss the warts within CBS centred around the fact this was CBS. And golf. The golf events, stories, and narratives they try to shape and bury do not impact elections or economies. Networks have never been as ‘levelled up’ in the fiat mindset as they are now. If you can’t even discuss an off color remark by a Tour Pro, what the hell are you doing listening to their other ‘content’? Gell-Mann Amnesia and all that.