A graceful exit for a college sports original; inside the numbers from Disney's analyst call; How UFC is driving Endeavor's bottom line and candid Jay Monahan opens up
This is your Morning Buzzcast for Thursday, August 10th. Good morning, I'm Abe Madkour. Thanks for listening to the Buzzcast. A true legend and a mentor to so many in college sports is moving on, and the significance of this can't be overstated. Ohio State Athletic Director, Gene Smith, the longest-tenured athletic director in the Big Ten and easily one of the most influential leaders in college sports, will retire next year. Gene Smith is 67 years old and will step down formally June 30th, 2024. And a search for Smith's successor at Ohio State will begin when the university hires a new president. But let's get back to Gene Smith. He is a true original. He played football at Notre Dame, was a coach, then went to administration and became an athletic director at Iowa State, Eastern Michigan, Arizona State, and then Ohio State, where he has been since 2005, and we all know the success that that institution has had across all of their sports.
There isn't a major issue that Gene Smith hasn't touched. He is clearly one of the most important voices in college athletics in the last 20 years. He actually won SBJ's Athletic Director of the Year two times in 2010 and 2016, the only athletic director to ever win it twice. Smith indicated that he and his wife decided over the summer that this was the right time to move on, and it wasn't all the changes that are running throughout college sports that made him leave. He said he knows it's the right time to move on.
In terms of moving on, Ohio State is a big-time job. Big revenue, big success expectations, so some names that have been floated as possible successors to Gene Smith from The Athletic were the likes of UCLA's Athletic Director, Martin Jarmond, Washington State's Athletic Director, Pat Chun, and Pittsburgh's Athletic Director, Heather Lyke. Now, those three have all worked for Gene Smith in the past, and Gene Smith has an incredible executive tree, but this will be a high-profile search, as Gene Smith to depart Ohio State in June of 2024. And on a personal note, Gene Smith always struck me as a leader who felt it was an honor to serve in college athletics.
Another challenging investor call for Disney's Bob Iger on Wednesday as the big takeaway from the quarter performance of the company will be the overall loss in the company's streaming division and the drop of subscribers to Disney+. First, Disney's streaming operation. It lost $512 million in the quarter, bringing total losses to the Disney streaming operation since 2019 when Disney+ was rolled out to more than $11 billion. Yes, $11 billion, and Wall Street won't like those numbers. Disney+ also lost roughly 11 million subscribers worldwide. They are now down to 146.1 million subscribers. Now, the sports connection to this is that a majority of the decline to Disney+ subs came from India, and the reason is Disney no longer has rights to the Indian Premier League cricket matches, and that caused major defections in subscribers in India to Disney+. Actually, excluding India, Disney+ gained subscribers.
Now, let's focus on ESPN+. For the quarter, the numbers of subscribers were essentially flat. They're at 25.2 million. Last quarter, they were at 25.3 million. So again, pretty flat numbers for ESPN+. Now, the cost of ESPN+ is increasing from 9.99 to 10.99, and that's been a theme that Iger has implemented; increasing costs for the streaming services as the subscriber numbers either soften, flatten, or decline. Now, all of this came a day after ESPN announced a 10-year deal with Penn Entertainment for ESPN BET. That's part of a $2 billion deal over 10 years. We touched on this yesterday on the Buzzcast. Iger said Penn Entertainment stepped up in a very aggressive way and made an offer to Disney that was better than any of the competitive offers out there by far, he said. So that would include any competing offers from DraftKings or FanDuel. Obviously, Penn Entertainment made the best offer for Disney.
Staying with Disney, SBJ's John Ourand reports that Iger did have some good news, saying that ESPN's advertising revenue is up 10% over the prior year, which Iger said speaks to the strength of sports programming, and Iger again expressed Disney's bullish view on the power of sports and its ability to convene audiences, as ESPN's linear ad revenue up 10% over last year. One final note here, Disney will begin to report results with ESPN as its own standalone unit later this year, so that will give all of us greater insight and a view into ESPN specific financial performance that will start later this year.
Speaking of getting a peek inside a company's financials, we get that now with Endeavor, through its earnings report. And earlier this week, Endeavor reported that its revenue increase in the last quarter and had a healthy profit during that second quarter. Endeavor's total revenue for the second quarter was $1.4 billion and its EBITDA net earnings was just over $300 million. So, pretty healthy numbers. Much of this was driven by the sale of IMG Academy to a Hong Kong-based private equity group, that was for $1.25 billion. Now, we know that Endeavor is in the process of closing its $21 billion deal to combine the UFC and World Wrestling Entertainment into a single sports entity. Meanwhile, Endeavor's owned sports properties, that's UFC, PBR, those were a big driver of Endeavor's success. Its sports assets made almost $180 million in profit in the second quarter. That's easily the largest driver of the company's overall earnings.
Just think about that. $180 million in profit for the quarter. The company's profit was $300 million. So, well over half of the profit is derived from their sports assets. The UFC, another big driver of that, because they had more events compared to the quarter last year. It's been really eye-opening just how successful the UFC has been to Endeavor's financial performance. That's why Endeavor is so optimistic about a combined UFC/WWE single sports entity that is still in the process of closing.
Shifting to golf, PGA Tour Commissioner Jay Monahan met the media on Wednesday, and he gave a very personal update on his health and his leadership. Jay Monahan said he took a month-long leave of absence from his position because of anxiety that resulted in mental and physical health concerns, which required medical care and rest. Now, this is the first time that Jay Monahan has stated publicly the reason for his medical leave, and I think to his credit, he admitted the pressure of negotiating the PGA Tour's deal With Saudi Arabia's Public Investment Fund and the player's reaction to that deal contributed to his anxiety and health concerns. He said he realized it was impacting his health, his performance as a leader, and that he needed to step away and deal with it and understand how to deal with that anxiety going forward.
So, obviously some anxiety issues, some mental health issues that Jay Monahan needed to get addressed. I thought these were very open and honest and candid remarks from Jay Monahan, and I know everyone in the sports industry just wishes for his good health. That's the most important thing. Meanwhile, Monahan believes the tour is on the right path to finalize a deal with the Saudi Public Investment Fund, but he admitted whether he's the best person to lead the PGA Tour will depend on the results of that deal. It was the first time I heard Jay Monahan being so open about his regret during the process of doing the deal, and he said he really regretted not informing the players.
There are a number of criticisms about this PGA Tour deal, but the one I hear the most is of course the lack of player knowledge and involvement. That's the one sources tell me they just can't understand, and Monahan fully regrets not bringing in the players earlier. He did sound confident that a deal would get done by the end of the year and he said the PGA Tour is not considering any other outside investors at this time. Bottom line, Jay Monahan is back. He feels better, he's optimistic a deal will get done, but I know a number of people who really question if this PGA Tour Saudi Arabia Public Investment fund deal does close. And that's what we're all trying to get a true sense, of whether that deal makes it to the finish line.
And finally, let's end with this. You don't think the cost of doing business continues to increase and be a challenge? Well, keep your eye on the Buffalo Bills' new stadium and the cost of that facility. We've talked about it a lot on the Buzzcast. Remember, it was originally intended to cost $1.4 billion, then it went up to $1.5 billion just a couple of months later. Now, about three months since construction began, the overruns are already now projecting the project to be closer to $1.7 billion. So, they're already, according to the AP, $300 million over budget. Now, this is significant, because the Bills, they must cover any cost overruns beyond the agreed upon cost of 1.4 billion as part of their deal with the state and the county.
So, this isn't a total shock. We've seen how inflation has impacted these construction projects, and also increased labor and material costs are part of these increases. And yes, it's early in the construction process and these financial figures and costs could level out, but surely being $300 million over three months into construction is certainly concerning to Bills' ownership and something that we all want to keep our eye on in terms of the cost of the construction of the new Bills stadium.
And that is your Morning Buzzcast for Thursday, August 10th. I'm Abe Madkour. Thank you for listening to the Buzzcast. Stay healthy, be good to each other. I'll speak to you on Friday.