It wasn’t a mob movie, but Disney CEO Bob Iger still received an offer he couldn’t refuse when it came to forming ESPN Bet.

Speaking with analysts on the company’s quarterly earnings call Wednesday, Iger said the $2 billion-plus deal with PENN Entertainment to create the new ESPN-branded sports betting service came down to overwhelming economics — and a desire to drive additional reach and consumption on ESPN platforms.

“We believe there’s an opportunity to significantly grow engagement across ESPN consumers, particularly young consumers,” Iger said. “And why PENN? Because PENN stepped up in a very aggressive way and made an offer to us that was better than any of the competitive offers — by far.”

The agreement ends Disney’s long-running reluctance to enter the sports betting space, followed by a lengthy internal consideration with “a number of entities over a fairly long period of time,” Iger said, before settling on PENN.

“We like that PENN is going to use this as a growth engine for their business, and we actually believe and trust in their ability to use this partnership to grow their business nicely, while we grow ours,” Iger said.

Potential Partners

Meanwhile, interest from potential equity partners in acquiring a portion of ESPN also remains strong. But Iger said the ongoing consideration to sell various linear television assets is driven more by strategic considerations.

“We’re not necessarily looking for a cash infusion when it comes to potential partners,” Iger said. “We are looking for partners that are going to help ESPN transition to a [direct-to-consumer] model. That can come in the form of content, or distribution and marketing support, or both.”

Iger’s deliberation in this space is being supported by a pair of former senior colleagues. 

Late Wednesday evening, ACC presidents decided not to vote on adding Pac-12 members Stanford and Cal to its conference, according to multiple reports.

The conference is also exploring the opportunity to add SMU, but wants to gather more information on all three schools, along with what ESPN is willing to do when it comes to potential additional revenue before moving further along with the process.

The conference’s slow deliberation is also holding up the Mountain West’s plans to explore expansion.

SEC Wants CFP Changes

SEC commissioner Greg Sankey wants to reexamine how teams qualify for the financially lucrative, expanded College Football Playoff in the wake of conference realignment. 

This season, conferences will receive $6 million for each team making a CFP semifinal, though it’s still uncertain how much a berth in the 12-team postseason will garner next year.

The original plan was to award playoff berths to the six highest-ranked conference champions and next six highest-ranked teams. “There are elements and specifics of what was decided when we had clarity around 10 conferences that might need to be adjusted,” Sankey said on “Paul Finebaum Show” this week, likely hinting at more SEC representation in the playoffs.

Meanwhile, Sankey said the SEC wasn’t actively recruiting any other schools for further expansion. 

“We have this contiguous group that has a national platform,” Sankey said. “We don’t need to be in four time zones to generate interest on the West Coast.” 

But Sankey wouldn’t rule out expansion in general if the right situation appeared. ACC schools Clemson and Florida State would easily fit into the conference’s current geographic footprint.

The 2023 FedEx Cup Playoffs begin on Thursday — with a total of $75 million on the line — but the PGA Tour is already looking at an even more lucrative 2024 season.

Next year’s schedule, which was released this week, will award the 2024 FedEx Cup champion $25 million, up from $18 million this year. The Comcast Business Tour Top 10 will shell out $40 million after the regular season — double 2023’s amount — including $8 million to the winner. 

In 2024, the Tour’s designated event model is being retooled to increase winners’ payouts to $4 million at three key tournaments: The Genesis Invitational (hosted by Tiger Woods), Arnold Palmer Invitational and Memorial Tournament (hosted by Jack Nicklaus). That represents 20% of those events’ purses, up from the 18% to be offered at what the Tour is calling its other five signature events, which carry $20 million purses apiece.

Waiting Game

Still to be determined is the impact of the Tour’s partnership with Saudi Arabia’s Public Investment Fund. On Wednesday, PGA Tour commissioner Jay Monahan said that the deal is on track to be completed by the end of the year.

“I really don’t think we’re going to see a big change until 2025,” Rob Mougey, the agent of U.S. Open champion Wyndham Clark, told Front Office Sports. “There are still so many unknowns. … What does 2024 look like for LIV? What everybody’s told is that it’s going to be the same as it was last year.”

Meanwhile, a key figure in the Tour’s operations — chief tournaments and competition officer Andy Pazder — surprisingly resigned this week, becoming the second major executive to step down in the wake of the Saudi deal, following policy board member Randall Stephenson, who resigned last month.

Disney took its first step backward in terms of ESPN+ subscribers in its most recent quarter — a concerning sign as the sports media giant deals with an accelerating decline in linear subscribers. 

But the company remains optimistic, partly due to its direct-to-consumer operations narrowing its overall losses.

During Wednesday’s quarterly earnings call, Disney said that ESPN+ had 25.2 million subscribers, down slightly from 25.3 million in the prior quarter. Though statistically negligible, the decline represents the first retreat from a steady growth pattern for ESPN+ since its debut more than five years ago. Average monthly revenue per user from ESPN+ also fell from $5.64 in the prior quarter to $5.45.

It’s more sobering news for the sports media giant, which continues to conduct extensive layoffs. ESPN’s linear reach is down to 72.5 million homes according to Nielsen, down 28% from a peak of 100.1 million in 2011.

But Disney remains bullish on its direct-to-consumer business, in part due to a reduction of more than half of losses sustained year-over-year for a current total of $512 million. Disney is also implementing price increases across most of its streaming services to drive additional revenue.

Overall, revenue for the quarter grew 4% to $22.3 billion, while operating income remained flat at about $3.6 billion. Disney, however, did record a $2.65 billion impairment charge, heavily related to “content impairments” on its streaming services.

“While there is still more to do, I’m incredibly confident in Disney’s long-term trajectory,” said CEO Bob Iger.

‘Not If, But When’

Iger reiterated that the company remains firmly intent on offering a full, direct-to-consumer version of ESPN.

“Taking our flagship ESPN channels direct-to-consumer is not a matter of if, but when,” Iger said. “The team is hard at work looking at all components of this decision, including pricing and timing.”