May 30, 2024

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The U.S. Women’s Open is underway with a record purse and is part of the basis for bigger media-rights hopes held by the USGA. … Illinois is raising its tax rate on sports betting revenues, and it’s not the first state to do so and likely won’t be the last. … Warner Bros. Discovery president and CEO David Zaslav continues to put on a brave face in the wake of continued uncertainty for the company surrounding the NBA’s media-rights negotiations. … Plus: More on the Commanders, Leeds United, PWHL Minnesota, and the French Open.

— Eric Fisher [[link removed]] and David Rumsey [[link removed]]

The U.S. Women’s Open Has a Record Purse: It Won’t Be the Last [[link removed]]

John Jones-USA TODAY Sports

The U.S. Women’s Open teed off Thursday at Lancaster Country Club in Pennsylvania with a record purse on the line for the third straight year. The $12 million up for grabs this week is up $1 million from last year, when American Allisen Corpuz took home $2 million for her first major victory.

It remains the largest and most lucrative event in women’s golf.

Follow the Money

Prize money for the women’s golf championship has skyrocketed in recent years, thanks to the USGA’s decision to bring on a presenting sponsor for the event. In 2022, ProMedia became the first such partner, helping the U.S. Women’s Open purse nearly double from $5.5 million the year before to $10 million. However, the organization ended the deal a year later. Still, the USGA increased the purse without replacing its primary backer in ’23.

Before that, the U.S. Women’s Open purse had relatively slow growth, increasing by only $1.5 million from 2014 to ’21. From ’08 to ’13, prize money was stuck at $3.25 million each year.

Now, Ally has taken over as the main financial supporter and expects to help the purse continue to grow each year, the bank’s head of sports and entertainment marketing, Stephanie Marciano, tells Front Office Sports. “It allowed us to enter golf at a national level with both men’s and women’s golf,” she says. “But lean in to women’s golf even more and have a direct impact on the purse.”

On Equal Footing?

The $12 million up for grabs this week lags behind the $20 million offered at the ’23 men’s U.S. Open. For comparison, the men’s championship had a $12 million purse in ’18. So, as momentum continues to build around women’s sports, could golf’s U.S. Opens offer equal prize money sometime this decade?

“That’s tough,” Marciano says, noting investment in women’s sports across the industry is still catching up to men’s sports. “I think to expect that type of growth in the next five years is—it’s not impossible—but I think that’s maybe setting our expectations a little too high.”

Rough Start

The increased investment in women’s prize money comes as the USGA prepares to start negotiations for its next media-rights deal, as its current 12-year, $1.1 billion contract—which NBC took over from Fox in 2019—ends in ’26. The U.S. Women’s Open is set to play a pivotal role in adding value to that next deal, and could potentially get an offer [[link removed]] for a women’s-only TV package.

Nelly Korda, who has already won six tournaments this year and is the top-ranked women’s golfer in the world, may figure to be the sport’s biggest star for years to come. But she likely won’t be driving a big viewership this weekend—the 25-year-old American carded a 10 on the par-3 12th hole en route to shooting an 80 (+10) in the first round. She’ll need an especially strong second round to make the cut. Other U.S. golfers who could draw a big audience include second-year pro Rose Zhang (ranked No. 6), who won her most recent tournament, and Lexi Thompson, who announced this week she would retire at the end of the LPGA Tour season.

More States Hiking Sports Betting Taxes, Eyeing Revenue Windfall [[link removed]]

Mark J. Rebilas-USA TODAY Sports

New York definitely raised eyebrows when it implemented nearly three years ago a 51% tax on sports betting revenue, a rate far above most other states that have pursued legalization. But after nearly $2 billion in collected [[link removed]] tax revenue from sports wagering in the Empire State just since online sports formally began there in January 2022, other states are moving quickly to increase their tax rates and garner money they believe has been left on the table.

The Illinois state legislature, after declining [[link removed]] to move on a separate issue around the Bears’ stadium funding, this week approved [[link removed].] a budget that increased the sports betting tax from the prior flat 15% rate to a progressive scale of 20–40%, depending on the level of adjusted gaming revenue that a particular sportsbook generates. That top rate in Illinois is now the second-highest level in the country, trailing New York and an identical 51% in New Hampshire and Rhode Island as well.

Doubling the Amount

But the Prairie State is far from alone. Ohio already doubled its sports betting tax rate last year from 10% to 20%. A bill introduced [[link removed]] last month in New Jersey would similarly double that state’s rate from 15% to 30%. And more such moves are expected elsewhere around the country.

“We believe the [online sports betting] blended tax rate is likely to increase over the next three to four years,” wrote Oppenheimer analyst Jed Kelly in a research note.

The reasoning behind the heightened legislative push to raise sports betting taxes is clear. Consumer interest in sports betting continues to soar—easily setting [[link removed]] new records for overall handle and sportsbook revenue in 2023. New York, meanwhile, consistently is the national leader in monthly state-level betting handle, and operators continue to covet [[link removed]] the ability to do business there—even to the point of reversing prior opposition to the idea.

Those factors have given legislators a clear opening to use increased taxation on sports betting as a means to fund other priorities. In Illinois, the additional funds collected will be used to help support an increased child tax credit.

Operator Pushback

Not surprisingly, many operators have actively resisted the increased taxation. The Illinois budget season was marked in part by an active lobbying and advertising push by sportsbooks opposing the heightened rates. The Sports Betting Alliance—a coalition of major legal operators such as DraftKings, FanDuel, Fanatics, and BetMGM— called [[link removed]] the Illinois move one that will create “worse products, worse promotions, and inevitably, worse odds for Illinois customers—not to mention provide a massive leg up to dangerous, unregulated, and illegal offshore sportsbooks.”

Jason Robins, chairman, cofounder, and CEO of DraftKings, similarly predicted higher costs to bettors in a recent call with analysts.

“In the end, the cost has to get absorbed by the consumer if the government raises taxes,” he said. “So there’s various levers to that. Also, we could lower external marketing, which I think will be partially just driven by the fact that if taxes go up, we’re going to have to create better margins.”

There also has been a material impact to the ongoing tax developments on the stock market. DraftKings stock has declined by 15% in the last week, while shares in FanDuel parent Flutter Entertainment are down by nearly 8%, and ESPN Bet operator Penn Entertainment has similarly fallen by 6%.

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See how [[link removed]] Cisco is “Teeing up Tomorrow” for everyone in the game of golf.

LOUD AND CLEAR Positive Spin

Ron Chenoy-USA TODAY Sports

“We feel very comfortable and have been very strategically focused on making sure we have a robust offering of sports.”

—Warner Bros. Discovery president and CEO David Zaslav, in response to a question Thursday at Bernstein Strategic Decisions Conference about the status of the ongoing NBA media rights negotiations. Zaslav and the TNT Sports parent company have been squarely on the defensive in recent weeks, particularly in the wake of multiple reports that ESPN, NBC Sports, and Amazon are in a leading position to acquire the rights, ending a four-decade relationship between the NBA and WBD and its predecessors.

Despite sagging company morale, Zaslav has consistently sought to put an optimistic tone on the state of the NBA rights talks, also saying following the recent release of company earnings that “we have strategies in place for the various potential outcomes.”

STATUS REPORT One Up, Two Down, One Push

Geoff Burke-USA TODAY Sports

Commanders ⬇ Team co-owner Marjorie Harris said [[link removed]] the NFL franchise won’t be changing its name anytime soon. On Wednesday, a poll in The Washington Post [[link removed]] found that most D.C.-area sports fans dislike or hate the current moniker. “We have a lot of work to do and so that name issue is going to be on the side for now until we can get things going.” The franchise adopted the Commanders name in 2022, after going by the Washington Football Team during the ’20 and ’21 seasons.

Leeds United ⬆⬇ The English soccer club sold a minority ownership stake to Red Bull, which is also becoming its shirt sponsor. The deal is “significant,” club chairman Paraag Marathe tells Front Office Sports, but it would have been more valuable had Leeds earned promotion to the Premier League, which it missed out on by one match. The energy drink company’s sponsor fee will go up if the team is promoted next season. Leeds is owned by the NFL’s 49ers, but Red Bull’s equity is only in the soccer club, and was acquired at the same club valuation as other new investors have paid since the 49ers group completed its takeover last year at a reported valuation [[link removed]] of more than $200 million.

Minnesota ⬆ The state’s women’s hockey franchise in the PWHL won the Walter Cup to conclude the league’s inaugural season. Now, the PWHL will focus on its list of offseason goals [[link removed]] and could explore expansion [[link removed]].

French Open ⬇ The tennis Grand Slam has banned fans from drinking alcohol in the stands for the remainder of the tournament, which goes through next weekend, in the wake of several complaints from players about unruly spectator behavior. Alcohol will still be sold and allowed throughout the grounds at Roland-Garros.

EVENT Huddle in the Hamptons

Summer is officially in full swing and Front Office Sports is headed to the Hamptons. On Aug. 2, Huddle in the Hamptons [[link removed]] will bring together business leaders in sports, entertainment, technology, and media for an afternoon of panels, networking, and racket sports. The perfect way to spend a summer Friday, this invite-only event will begin with a series of fireside chats and conclude with a pickleball tournament. To become a partner or learn more about the event, visit our website [[link removed]].

Conversation Starters The Stars utilized real-time AI tracking during Wednesday night’s Game 4 watch party at American Airlines Center to project NHL players’ movements onto the ice. Watch here [[link removed]]. On Wednesday night, Olympiacos made history by winning the UEFA Conference League, becoming the first Greek team to clinch a European club trophy. Check out [[link removed]] the scene at Korai Square in Piraeus. They say everything is bigger in Texas: The Longhorns will host [[link removed]] an “SEC Celebration” on June 30 to commemorate their entry into the Southeastern Conference, featuring an official ceremony with commissioner Greg Sankey, concerts headlined by a global superstar, and the first opportunity to purchase new Texas gear. Editors’ Picks ACC Attempts to Protect Media Contracts Amid Legal Battle for Its Survival [[link removed]]by Amanda Christovich [[link removed]]The conference has responded to a lawsuit filed by Florida’s attorney general. In Wake of Settlement, NCAA Considering Jersey, On-Field Corporate Logos [[link removed]]by Margaret Fleming [[link removed]]NCAA is in search of new revenue following last week’s historic settlement. New League to Offer Record Women’s Pro Basketball Salaries [[link removed]]by Alex Schiffer [[link removed]]Unrivaled is a three-on-three league founded by Breanna Stewart and Napheesa Collier. Careers in Sports

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