Why ESPN sold the X Games

Mere hours after ESPN sold its majority stake in the X Games, the sports network's president Jimmy Pitaro said the decision came down to resource allocation during the BFD Summit on Wednesday.

Why it matters: ESPN launched the X Games in 1995 but is shifting to focus more resources on growth areas like sports betting, while at the same time maintaining top-tier sports rights that are only getting more expensive.

• "When we looked out and we looked at where we were making our investments and how we were prioritizing, we were a bit concerned about how much time we can continue to dedicate," Pitaro told Axios. "We all have to make tough decisions."

Details: As part of the deal, MSP Sports Capital will now manage the day-to-day operations while ESPN retains a minority stake.

• ESPN and ABC will remain as the X Games linear broadcast partners as part of a multi-year agreement with MSP. The private equity firm will focus on bringing in more digital partners and add athlete and fan experiences.
• "We, of course, want these games to be broadcast on ESPN. We want to maintain an interest in this enterprise," Pitaro said.
• Former Twitch exec Steven Flisler will take over as CEO of the games, and skateboarding legend Tony Hawk joins the investor group as a brand steward.

The big picture: The X Games was an early way for ESPN to cater to younger audiences, which in 2022 have all but eschewed the legacy TV platforms.

• For Pitaro, that means pushing more resources towards social platforms and properties that are not ESPN's.
• "We can't expect that everyone, especially younger people, are going to come to our owned and operated properties. We need to go where they are, which is many of these social platforms," he said, adding later: "ESPN is far beyond just one or several linear networks."

What's next: Along with social media platforms, ESPN is plotting a major push into sports betting, though Pitaro reiterated they will not launch a sports book like Fox.

• "We just don't feel like it's appropriate for us to be creating a book. We're not interested in being a place where people are placing their bets," he said.
• ESPN has been in final talks with DraftKings about a major partnership that would include licensing its brand name to DraftKing's sports book. While Pitaro would not comment on those talks, he highlighted the opportunity that betting presents.
• "The more people that are placing bets, the more invested they are in games, the more likely they are to watch games, and that's great for ratings."