The Athletic Founder Wants to Eviscerate The Newspaper Industry- Or Not The founder of the upstart Athletic told a reporter he wants to make business difficult..

<span class="entry-title-primary">The Athletic Founder Wants to Eviscerate The Newspaper Industry- Or Not</span> <span class="entry-subtitle">The founder of the upstart Athletic told a reporter he wants to make business difficult..</span>

By TSM

The content subscription is the disruptor du jour and around here it has garnered a ton of passionate debate. Netflix, Hulu, Amazon, and Apple to name but a few have all made massive dents in the traditional media consumption world. Spotify, Apple, Amazon, and others have done the same in music. While bathrobe wearing bloggers have been around for a while now in sports, none have had used the subscription model until recently.

Along came The Athletic which was humming along until a massive opportunity to accelerate their hiring with the layoffs at traditional outlets and suddenly the startup became an upstart. On this site and others, lots of people have been sharing their opinions on the potential of a subscription-based sports outlet and everyone has an opinion about the Athletic specifically.

Full disclosure, I am a paying member of the Athletic.

With the rise of Donald Trump, traditional news outlets, the Wall Street Journal, The New York Times and the Washington Post have seen a dramatic growth in subscriptions- specifically online where there was not so much growth before. In Canada, the Globe and Mail has always had a healthy online business.

Yesterday, the founders of the Athletic were featured in the New York Times:

“We will wait every local paper out and let them continuously bleed until we are the last ones standing,” Alex Mather, a co-founder of The Athletic, said in an interview in San Francisco. “We will suck them dry of their best talent at every moment. We will make business extremely difficult for them.”

As you can appreciate, to the extent there weren’t hard feelings before, the fight was definitely on.

So much so, that Mather took to Twitter to, um, clarify his comments:

However, as is often the case you can’t unring the bell.

As a wise scribe reminded me yesterday, Harold Ballard liked to say “there’s no such thing as bad publicity”.

Mather is a really smart dude, I can’t imagine he didn’t know what he said was going to attract a hornet’s nest of reaction and I’d be willing to bet the statement his clarification got the Athletic the exact result they wanted.

Having said that I reached out to many in the business in Canada and got no shortage of responses. Several would only speak off the record so clearly what they have told me won’t be attributed here, (my favorite of which compared the Athletic to a Ponzi Scheme).

Here are the unedited responses I did receive:

James Mirtle, The Athletic:

To be honest, in Canada, we haven’t hired many folks from newspapers… the sports sections were decimated before we existed.

David Shoalts, The Globe and Mail:

Alex Mather and his fellow Athletic founder remind me of a couple of guys I play beer-league hockey with – they’re not nearly as good as they think they are. Mather’s post-Times groveling on Twitter means nothing to me. He’s just the latest blowhard to find out how bad his blathering looks in black-and-white. The one thing consistent about this group, from the two owners to those running the various sites to at least some of those working there, is that they think they are better than everyone else. If they are still here five years from now, I will offer my congratulations. But for now, get stuffed.
However, there was some truth in what Mather said. Newspapers have often been their own worst enemy in figuring out how to survive today’s media landscape. But we’re still here for now.
As to whether The Athletic’s future is as rosy as its denizens think, that is an interesting proposition. Well, at least Mather and his co-founder can say they have absolutely no experience in that outdated form of journalism the rest of us are stuck with.
The arithmetic so far would have me greatly alarmed if I were an investor. While things looked pretty good last spring, The Athletic has now embarked on a path that left far more wealthy companies than it regretting the day they kicked up their expansion plans. Just ask RBC how that first U.S. expansion plan went in the early 2000s. Hundreds of millions of dollars up in smoke. Or Compaq computers around the same time. Both companies, along with hundreds of others, were done in by too much expansion, too fast.
So it goes with The Athletic and its hiring spree in the last several months. They are expanding way too fast and are now eating into the venture capital. In my opinion, there is no way subscription money is coming close to covering their costs now. Take the Toronto site as an example. Mather and his cronies hold that up as The Athletic’s most successful site with 15,000 subscribers. That includes me, by the way, as I still wish the enterprise success despite its founders. While I am sure most of the subscribers signed up at deeply discounted rates, for the purposes of this exercise let’s say the 15,000 paid $50 a year each. That’s $750,000. The beauty of The Athletic, as they incessantly tell us, is they do not have the overhead of us print dinosaurs. There is no office in Toronto – yet – and their only overhead, like the other sites, is made up of salaries and travel expenses. As best I can tell, there are eight full-time employees in Toronto. As long as they all make less than an average of $75,000 a year, that’s great. It leaves lots of money left over for travel and freelancers. But it seems to me the Toronto site is supporting most if not all of the Canadian operation. That means paying recent hires like Eric Duhatschek, Pierre LeBrun, Arpon Basu, Marc Antoine Godin, etc., until the other sites attract enough subscribers to help foot the bill. You cannot convince me enough subscriptions are being sold across Canada right now to do so.
Thanks to the hiring spree, the salary costs in Canada alone have jumped dramatically. I have at least an idea of what some of those names were making in their previous jobs. I can’t see any of them signing for 50 grand a year. There is also a large number of freelance contributors, at least as many as there are staffers, who are writing frequently enough to command significant dollars. At least they should be if The Athletic pays as well as it likes to let on. And six million bucks in venture capital, if that is really what they have, won’t go far unless those subscription gambles pay off in almost every city. Not when your list of full-time employees in the U.S. and Canada just hit 65, with dozens more freelancers. Those numbers mean you have to hire other employees to do the administration. So that means an office, and more overhead and ….
It is the same story in the U.S., only without the big success story like Toronto. Hiring people like Ken Rosenthal and all those other name journalists doesn’t come cheap. Not all of them were laid off and desperate for work. You can’t convince me even a network of sites can support that, not when the best of them still has yet to hit 10,000 subscribers. By the way, just think about those numbers. What would The Athletic people say about a radio or TV show that could only attract 10,000 listeners or viewers? Or a major metro newspaper with that many subscribers?
Ah, yes, the subscribers. God bless all of us who signed up, eh? Just one thing – almost all of us did so for one of their discount offers. Good luck getting every single one of us to sign up again in a year’s time at full price. You might keep some if they’re on automatic credit-card renewal, but there’s a big selling job ahead. In my case, Mather gave me lots of reasons to reconsider my renewal.
So The Athletic, in my opinion, has to be dipping into the venture capital. I don’t think I have to remind anyone what happens when you become beholden to those guys. I do believe there was mention in the New York Times story of one of them talking about advertising. So much for no auto-play ads in a few years, I’d wager. And those unseemly links between the Toronto Athletic and the Argos? Don’t expect that to lessen when the venture-capital folks get more involved.
I also believe this thing is being built to be sold to some sucker for big money. Why else would some of the prominent new hires be offered shares of the company? So, while Mather and his pals are off counting their money the question becomes whether or not The Athletic thrives or goes the way of most rapidly expanding ventures that become the property of equity funds – a crash and burn.

Damien Cox, Sportsnet and The Toronto Star:

Competition is good. Necessary, really, in the media business. In this specific instance, however, I’m not sure it has to be an us vs. them proposition. Certainly, it doesn’t benefit journalists or journalism to have one entity actively cheering for the demise of others, others that employ thousands and have for decades provided employment, income, benefits and careers for so many. Beyond that, newspapers, while obviously imperfect as a business model, have long been checks on the abuse of power, and still are. They have often provided a necessary service for millions and millions. To root for the demise of newspapers, and the loss of jobs for those who work for them, is to actively root for the demise of democracy. I would urge the entrepreneurs of brand new media businesses to respect those existing businesses that have trained those they now want to hire, have been around much longer and still employ many who have accomplished a great deal more.

Bruce Arthur, The Toronto Star:

Like a lot of people, I’m hoping The Athletic succeeds, not least because I have a lot of friends who are great journalists who are working there, and being allowed to do interesting things. And I understand how market competition works. But beyond wondering how trash-talking newspapers is a good strategic move in any way, I’m just disappointed that despite everything, someone who works in media can still fail to understanding the civic value and importance that newspapers have in a civil and responsible society. I mean, look around. The Athletic is giving journalists jobs: wonderful. But it’s not like great writers haven’t left newspapers before, you know? It was just disappointing and, it seems to me, counterproductive.

Paul Woods, Former executive with The Toronto Star & The Canadian Press

I think they are smartly trying to fill a void that is starting to exist in virtually every market. Local sports reporting is dying as the newspaper business struggles to adapt to punishing market conditions. I agree with them that there are tons of sports fans who still want high-quality written content about their favourite teams, leagues and sports. Question is will enough of those fans be willing to pay for it. As a charter subscriber to The Athletic (and I signed up before I was given the option via the Argonauts, for whom I’m a STH), I am a fan of what they are doing and really hope they succeed. They have some outstanding talent in people like Fitz-Gerald, LeBrun and Custance, to name just a few. I expect to subscribe as long as they are around.

So, what are your thoughts on the original post and of course the comments above?

Thanks to all those kind enough to talk to me, or off the record. If you are in the business and want to chat about this you can reach me on Twitter or via email.

Happy Day..

Jonah

COMMENTS

WORDPRESS: 27
  • comment-avatar
    Paul G. 4 weeks

    While not a subscriber, I admire the pedigree of many of its hires.

    Even before the NYT article however, I was surprised by the announcements of expansion and the rapid pace of such. As TSM has noted, bigger and more established companies have been humbled by taking such a fast track. Couple that with a current reliance on investor dollars (as opposed to subscribers) for expansion and day to day operations; and I fear a day of reckoning is in the near future. With all the talent on board, hopefully a bigger plan (takeover?) is in the cards.

  • comment-avatar
    Ron H, 4 weeks

    Paid subscriber & really, really loving my discounted subscription. From what I have seen & read so far, no question in my mind, that I will renew my subscription.

    The pedigree of journalists is outstanding.

    Disappointed to read the arrogance of Alex Mather. Nobody wins if we lose our newspapers.

  • comment-avatar

    No, subscribers are covering the bulk of our day-to-day operations. We’ve grown very quickly because so many people have signed up in a short period of time.

    Only the very basics in terms of subscriber numbers are available publicly, but that’s the truth of the matter.

  • comment-avatar

    […] It is all over professional sports. Heck, look at The Athletic, an outlet whose founder has stated a clear mission: “We will suck [traditional media outlets] dry of their best talent at every moment. We will […]

  • comment-avatar
    Elvis in Oshawa 4 weeks

    So let me get this straight. The crowning achievement of the Athletic is hiring a bunch of unemployed people and then luring Jonas Siegel away from writing game stories for a wire service? TAKE ALL MY MONEY!!

  • comment-avatar
    Anthony 4 weeks

    I cancelled when Mirtle went on a rant against MIB (like the ones he use to do against Carlyle, dissenting voices are and great and should be allowed). I liked the product, but the online ‘we are doing special work here’ stuff gets a bit much at times. Im always of the belief you sit back and let your work do it for you, you dont tell everyone how great you are, let them tell you.

    Like others, im all for everyone surviving, the small towns need local news and coverage, and there’s no interest in The Athletic to open up a Barrie/North Bay outlet, plus, we really should want more opinions and more jobs, not less.

  • comment-avatar
  • comment-avatar
    Mike V 4 weeks

    Shoalts might be the only person in the city that doesn’t think The Athletic TO is already miles better than the current state of the Globe Sports section. The founders comments were unfortunate but so it the complete obtuseness of some print lifers about why they were made at all. YOUR PRODUCT IS NO GOOD!! Saying that they want to pick over your bones may sound heartless but come on, you’re basically stumbling around like a drunk willing to hand over your phone and wallet to any potential thief. I can absolutely see why a new competitor looks at this landscape and thinks “I can beat them at this”. And yeah, you can point to other sections of The Globe with the good work some journalists do there but I’m not of the belief that ONLY newspapers can do any of that and it’ll all go into a black hole if the failing businesses aren’t propped up. They’ll get re-invented into other products like The Athletic. Besides, Shoalts’ paper is also the paper who has a serial plagiarizer as the face of the franchise and the EIC is basically “¯_(ツ)_/¯. I don’t care what she writes” so it’s very much a mixed-bag excluding sports.

    “To root for the demise of newspapers … is to actively root for the demise of democracy” this sounds like a rejected WaPo slogan before they went with Democracy dies in Darkness.

  • comment-avatar
    Justin 4 weeks

    Is anyone actually surprised by this? The worse newspapers do, the better it is for The Athletic. Five years ago, I was really happy with what I was getting in the Sun/Star/Globe sports. Now it’s a joke except for the Sun (who nevertheless have been depleted). I can’t remember the last time I clicked onto Globe or Star sports, I now only read those sections if links appear on social media. Hence why I now subsribe to The Athletic – because newspapers’ product is in the toilet. I’ll be very happy to renew my subscription in a few months.

  • comment-avatar
    bobsyouruncle 4 weeks

    I signed up for the athletic for Leafs coverage. It was quite good for the most part with at least 2 articles (sometimes three or more) per day. I noticed that since they have expanded, the lack of articles for Maple Leafs fans is noticeable. This does make me concerned about renewing my subscription for the following year. Whether or not other fans of their best market also reconsider renewing is something they should fear. You can’t start out with great coverage of the Leafs and then expect the fans to pay for it when you slow down. I hope it’s because of expansion that this is a small blip in terms of coverage…if it isn’t…they might have a real issue.

  • comment-avatar
    Cirroc 4 weeks

    Mather’s rant is so symbolic of these “stats nerds” and what they are doing at the UnAthletic. It’s not enough to discover and apply new stats, you have to prove your manhood by stating how much smarter you are than everyone else.

  • comment-avatar
    Steven 4 weeks

    Lack of minorities and hiring friends, at least in Toronto, concerns.

  • comment-avatar

    Bob, I count about 65 Leafs articles in October so far. With the addition of staff like Pierre and Justin I highly doubt we have slowed.

    Steven, most of the staff in Toronto were not personal friends. I had to introduce myself to many of them. We have made considerable strides as a company in terms of diversity since the early launch days, too.

    As others have noted, the newspapers had dramatically cut their sports sections long before The Athletic existed. It was a large reason I left.

  • comment-avatar
    Steven 4 weeks

    James

    Im not sure that the analytics would agree with your comment about diversity.

    ‘90.1 percent of sports editors are white.

    87.6 percent of sports columnists are white.

    87.4 percent of sports reporters are white.

    80.8 percent of copy editor and designers are white.’
    http://www.nydailynews.com/sports/new-site-athletic-reflects-old-sports-media-diversity-problem-article-1.3458067

    Your founder Alex doesnt agree with you either
    ‘“I won’t spend any time denying that we’re having issues creating a diverse team,” Mather replied. “As CEO I take full responsibility for the makeup of the team.

    “I think you are exactly right on how this happens — we are a startup moving extremely quickly and too often we rely on colleagues of our first few hires. It’s a terrible cycle and I am putting an end to the practice.’

    He even says you guys are/have hired too many friends.

  • comment-avatar
    4X4 Time 4 weeks

    With all the free platform instant news,and if anyone anywhere writes a game changing article on anything in sport, you will hear and and see it right away,I do not see the point of a paid subscription format.
    This guy Mather sounds like he will do more harm than good for this business.

  • comment-avatar
    Pete 4 weeks

    While I think what Mather said was idiotic and certainly not endearing to hear by any prospective subscribers, just once I’d like to see someone stand by what they said as opposed to retracting their comments with a fake apology almost immediately. Choose your words carefully next time before putting your foot in your mouth for everyone to read/hear. There’s some truth behind everything said.

    Anyways, could The Athletic even sustain the influx of talent after “sucking them dry”? I just don’t see how their subscriptions would keep pace with the salaries they would pay for all this talent.

    This also seems like a zero sum game for the industry. People are losing their jobs at one place and ending up elsewhere. It’s not like there is a sudden breath of new talent blown into the industry. Lastly, if I’m not going out of my way to read these people before for free, I’m certainly not going out of my way now to pay to do so. Sorry.

  • comment-avatar

    Steven – those comments were not in relation to our Canadian operation.

    Pete: You’re absolutely right that we need to provide something people very much want to read or we won’t survive. To date we have enough subscribers to sustain our staff for a long time in Toronto. We may remain small, but that remains to be seen.

  • comment-avatar
    Steven 4 weeks

    With all due respect James, I emailed the office, and that was not what they said. I could provide the content of the email if you wish

  • comment-avatar
    Original Mitch 4 weeks

    While it’s true that newspaper sports section are on the rapid decline and that whole industry is likely on its last leg, we don’t really wonder why other than to simply state that sites like The Athletic are taking over. fine. But we don’t acknowledge enough how the consumer has changed over the years and how much that has had an effect on the newspaper industry. All we say is the consumer is going digital. That’s simply one slice of the pie. The fact of the matter is that today’s rabid sports consumer forms their own opinion based on viewing the sport and going to free sites like league sites and salary cap sites. Why does today’s sports fan even need a columnist to wax poetically about his or her favorite team or player? Why on earth would I pay for an Athletic membership when I know more than they do simply by watching and gathering content from free sites? Not to mention I can follow athletes on twitter and get it straight from the horses mouth! The consumer is also way more sophisticated than in the past and we also know the inherent biases of “reporters” covering teams, which is a massive turn off. We all know these days that if a reporter isn’t careful in their wording of their article, they will suffer the consequences, either from angry players or have their media creds revoked by the team. The teams and the leagues control the message now more than ever, leaving me as a consumer the opportunity to form my own thoughts and opinions. The Athletic and other pay sites aren’t different. They are “reporters” treading carefully with the teams they cover because they hang out in locker rooms and want to be friendly with players and staff. In the old days, the media controlled the message. There’s been a massive shift and now it’s the opposite. But its not all bad because now I can form my own opinion!
    Radio is different because its a background white noise for 99% of listeners. Podcasts are personality driven so that has merit.
    Either Jonah or Mike tweeted out that TSN didn’t send a reporter to the WS. Why would they? Is watching a 9 minute Arash Madani “report” really all that useful? Or he is just spewing stuff I can quickly read on mlb.com for example. Utter waste of resources.

  • comment-avatar
    Daniel 3 weeks

    @Original Mitch

    Agree with absolutely everything you said

    I find the stupid reports from the diamond after the game to be incredibly useless and a complete waste of my time. I feel the same way about athlete and coach interviews after the game

    I’ll buy the athletic when the writers are willing to praise players when they are playing well, and then blast them when they are not. Calling things as you see them and not being afraid to hurt their feelings. But at the same time being able to say when a player is over achieving and should be commended

    Honest thoughts and insight… what a novel concept

  • comment-avatar
    Real Tim 3 weeks

    Good discussion. I signed up on the 20% off promo after reading Mike’s interview with Mirtle here last year. The price is right but to be honest I didn’t read as much as I thought I would. The content is not as distinctive as I was hoping for. And now I know why there is so much Argos content, LOL.

    The CEO comments really rubbed me the wrong way. I won’t renew but will check back in 6 months to see what stories they are writing.

  • comment-avatar

    I subscribe to the Athletic, many of the people contributing to it are spectacular. JB is amazing. Pierre LeBrun is amazing. It’s great.

    This is just MY opinion, but based on twitter and even the smarmy posts on here by Mirtle, I’m thinking about cancelling. So condescending, so belligerent.

    I with the site great success, and I’m sure you’re a great writer (I don’t read your articles personally), but you have a long way to go in terms of people skills.

    Bless your heart.

  • comment-avatar
    Tighthead 3 weeks

    Brent – I’m. It going to post my opinion on The Athletic here, because it will just be corrected by Hall Monitor Mirtle.

    RIPTSN Reporters. Farber was the smartest one so firing him was a bad sign.

  • comment-avatar
    Jackson 3 weeks

    I have to ask, be it on here or on twitter, why is James Mirtle so sensitive to any kind of non great reporting on The Athletic? Isn’t this the person who made a career off of reporting not so great things about the Leafs? If he is proclaiming the want for true journalism, why is he policing and shouting down reporting on The Athletic? It comes accross to this simple, uneducated layman as insecurity.

    If your that good, and your content is that good, you shouldn’t need to tell people what to think or why their reporting is so off.

  • comment-avatar
    Original Mitch 3 weeks

    just another point. In my opinion, it isn’t the newspaper industry that is dying, it’s the sports reporting industry that is dying because of how redundant and pointless it has become, whether in a newspaper or behind a paywall. Like I said before, as long as I watch the game and then go to nhl.com or nfl.com, then why do I need to pay for additional content? They have player scrums (pointless because reporters are afraid) and all the stats I need. I already pay so darn much in cable and internet fees! I root for the Athletic because it is jobs after all, but how long can it go before people realize the extra $$ isn’t worth it? If Rogers doesn’t have a complete duopoly over Canadians and can’t charge a criminal sum for cable/phone/internet, does Sportsnet as we know it really exist? Or does it become live events followed by “top 30 plays” on rotation with a behind the scene staff of under 10 people (that staff also working at Citytv to save $$). Same with Bell and tsn? Not picking on Evanka and Ken or any sportscentre hosts, but highlight shows? followed by sycophantic, utterly pointless “reports”? Seriously? Jay and Dan bring something unique. But at the same time, their’s is a highlight show at midnight. If Bell doesn’t own TSN, are these high paying guys with a full crew behind them really getting this gig?
    I guess we can thank Bell and Rogers for providing this content for us, but I would MUCH rather have fair market competition among multiple telecommunication companies with no tsn or sportsnet but a reasonable phone bill as opposed to the current state of outrageous monthly prices I pay.

  • comment-avatar
    4x4 Time 3 weeks

    Jackson – I agree, James Mirtle appears to have very thin skin. Not a good thing in the business he is in.

  • comment-avatar
    Jerry 3 weeks

    longtime reader, first time poster

    the thing that bugged me about the atheltic’s comments is that originally they went on and on about how elite they are. That’s pretty arrogant, especially when so much of their roster was made up of laid off folks. Now they are talking ahout wanting to suck the talent from newspapers. What about the people they already employ? Can’t be a great feeling to know you’re a placeholder until they can lure some bigger name away. See for example, David Alter being replaced by Jonas Siegel.

    I want to support new iniitaives because I want to support journalism and great writers like Sean Fitz-Gerald. The Athletic wants others to fail so they can succeed. I don’t want to support that.