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July 25, 2017, 10:32 a.m.
Business Models

The Athletic, that local sports startup with no advertising, raises $5.4 million and scoops up Sports Illustrated’s former top editor

“The Athletic’s subscriber model allows us to focus entirely on high-quality written content. NO ads, NO auto-play videos, NO clickbait.”

The Athletic, a startup focused on local, subscription-based quality sports journalism fresh out of Y Combinator’s summer 2016 class, has been steadily poaching team-crazed cities’ top sportswriters and raising serious money. But now they’ve gone further: Led by two guys with no previous journalism experience, the fledging company has now scooped up the Sports Illustrated Group’s former editor-in-chief Paul Fichtenbaum to lead its nationwide expansion as chief content officer.

Fichtenbaum stepped down from Time Inc. in a June 2016 editorial shakeup and has been advising startups in the interim. He is one in a series of The Athletic’s recent editorial hires, from national college basketball and football to the Bay Area.

Bloomberg’s Joshua Brustein noted that The Athletic’s cofounders Alex Mather and Adam Hansmann are “following the well-worn entrepreneurs’ credo to zag when everyone else is zigging.” Instead of pivoting to video like MTV News, Fox Sports, and other news organizations have done, The Athletic is doubling down on well-written stories, taking advantage of recent layoffs by online sports news behemoths ESPN, Fox Sports, Sports Illustrated, Bleacher Report, and Yahoo Sports. Instead of treating sports like the cherry on top of a vegetable sundae in the traditional style of newspapers bundling local news content, they’re betting that people will pay more for just top-notch sports coverage. And instead of selling advertising — that’s right, it’s foregoing ads across its websites — The Athletic is relying on loyal subscribers.

The company is profitable in only one of its four existing city-focused sites so far (Toronto, with over 10,000 subscribers) but has attracted attention from investors. The Athletic raised $5.4 million in a funding round that closed last week, in addition to $2.6 million in a winter 2017 funding round. It probably helps that the price tag for consumers isn’t outrageous — a subscription will cost you $5.99 per month or $39.99 a year. Plus, studies show that people are increasingly willing to pay for online content.

As my colleague Ricardo Bilton noted at The Athletic’s Chicago launch last May:

The Athletic’s target readers are the most diehard Chicago sports fans, people who are “used to the idea that if you pay for things, you get good things,” said Hansmann. He said that The Athletic will be able to build a “pretty big” business off of this small but dedicated audience.

The idea that that the site could succeed by intentionally avoiding the scale-for-scale’s-sake imperative gripping other publishers was born out of the founders’ experiences working at Strava, which creates software for people to track their workouts. Hansmann said that Strava “wasn’t trying to be everything to everyone” and, as a result, was better able to serve a specific, much smaller segment of runners and cyclers.

At The Athletic, serving a hardcore audience means not only just covering games and player movements, but doing so in a way that’s steeped in data and analytics. Access is also core to the approach: The Athletic regularly interviews players and front-office personnel, bringing an air of exclusivity to the site’s content. The site’s four full-time writers and five freelancers publish five to eight stories per day. …

“It’s very easy today to be click-driven and produce articles that don’t have a lot of substance or depth and don’t cost that much to produce,” Hansmann said. “But that dynamic is disappointing for fans who want higher-quality content. We’re not about trying to be the next ESPN or something, but finding the segment of fans that care deeply about their teams and serving them with something that’s high-quality.”

Photo of young Cubs fan by Phil Roeder used under a Creative Commons license.

POSTED     July 25, 2017, 10:32 a.m.
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