John Madden: Pay Pass-Through
on Tuesday, December 28, 2021John Madden Money Quote saying all costs are eventually covered by the consumer and sports is paid for by fans. John Madden said:
“Sports has always been a pass-through. You pay for something, and then you pass it through to television, you pass it through to advertisers, or you pass it through to season-ticket holders, luxury boxes and then the fans. Then it all adds up, and you take in more than you pass out” — John Madden
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In this quote, John Madden seems to be outlining how the sports industry generates revenue through various revenue streams that work interdependently. Specifically:
- Madden notes that sports leagues and teams “pass through” their product (games, content, IP rights etc.) to different parties like TV networks, advertisers, and fans.
- This passing through allows monetization through mechanisms like TV rights fees, advertising dollars, ticket/merchandise sales, luxury suites and more.
- He suggests that through the various revenue channels that work together, the total money “taken in” from this pass-through model ends up exceeding the original “out” costs to produce and run the actual sporting events and operations.
The best interpretation is Madden is describing the business of sports as a system where content is circulated to and monetized by multiple parties in a way that cumulatively generates profits beyond just the costs of putting on games and running the franchises according to his perspective on the industry’s revenue dynamics.