
Sports Teams Now Run Like Tech Startups: Fmr. NFL Player
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Diverging Reports Breakdown
Sports Teams Now Run Like Tech Startups: Fmr. NFL Player
The NFL loosened its rules with regards to private equity companies and taking minority stakes. It’s very, very difficult for every, you know, big three league. There are also hundreds of leagues that tried to start up and are and are failed. So the reason that there’s a lot of value in these things is they’re so difficult to start. In Europe, in order to make money, you have to give all of the emphasis on winning games. If you looked at an NFL team, they had on average 150 to 250 executives and around 20 to 25 trainers and coaches. Now they have on average 100 coaches and trainers and maybe five or six people running the business. And now you’re seeing returns be a little bit more more on the side of the teams. Does that change how these leagues are run? Absolutely I’ll give you a great example of the impact that it has on the teams and how they are run. It really is a very exciting time for sports. It is a great time to be in sports.
I do want to talk about these eye popping valuations because we were kind of joking earlier this year. I can’t remember who it was, but there was a a big sale in the NBA and everyone said, Oh, my gosh, that is just absolutely bonkers. And then like two weeks later, the Celtics top that out. And then you had a big deal in the NFL. When you look at the valuations and the huge run up that we’ve seen in them, particularly in major US sports. What do you think is actually driving that? Well, it’s it’s a it’s a several things. You know, obviously that all comes down to supply and demand. One is, you know, traditionally the networks had sitcoms and all types of different content that, you know, had a lot of demand. And nowadays, the most important thing that you’re seeing on television that is, you know, quote unquote, TiVo proof is sports. The other thing is, is private equity has been allowed in. And what I would I would also say is that, you know, when I started marketing 21 years ago, the business of sports was almost like a high school or college team. And now the business of pro sports is a professional team. So just a confluence of demand all the way around is driving this. Well, we’ve seen, of course, the NFL loosened its rules with regards to private equity companies and taking minority stakes. You talk about sort of the second tier, if you will, for lack of a better phrase, once you get beyond sort of the dominant sports leagues in this nation. And for the last few years, we’ve seen huge investments coming in to things like lacrosse and volleyball. Pickleball Three by three basketball tournaments, you know, things that I think in the past you would have just you know, they would have been on, you know, ESPN, the Ocho, and now they’re kind of front and center with a lot of money chasing after it. There is a lot of money chasing after it. And the reality is that it’s very, very difficult for every, you know, big three league. There are also hundreds of leagues that tried to start up and are and are failed. And there’s a graveyard of those. So the reason that there’s a lot of value in these things is they’re so difficult to start. But a lot of things have been democratized nowadays because of technology and media and sports is one of those things. So now you don’t just have to be on network to be a successful sports league. Sinclair Broadcast, for instance, just launched a partnership with pickleball, and now they’re able to share pickleball with the world very differently than you would have even ten years ago. So, I mean, what you’ve done over at Parkland, you guys have made dozens and dozens of investments in this space. What exactly do you look for when you are looking for something new to invest in? Well, in sports, you know, the league is very important. So what? You know, some leagues that you invest in, they’re just going to increase in value no matter what they’re, you know. You know, with the NFL being the top of the food chain and I know I’m a little biased because I play in the NFL, but the reality is, is that that is the strongest of all of them. So when you’re in the major leagues, you know, the league itself is important, the market itself is important. And then, you know, then you go down from there, the management, and there’s several factors there. We also do a lot of transactions where we’re advising on the transaction itself. And so a lot of investors, when they’re investing in these things, when you’re looking at private equity, they’re looking for return. But there are people out there and we’ve represented many of them, who it doesn’t matter what it costs and it doesn’t matter what they lose since they’ve been children. They’ve wanted to own this asset and there’s only one of these assets in the world. And and many times when people are buying these things, certainly in the you know, before the last few years they were buying it because it was the realization of a life dream and less so about returns. And now you’re seeing returns be a little bit more important in the equation. Does that change how these teams and more importantly, the leagues are run? Absolutely. I’ll give you a great example when we first started working on deals. If you looked at an NFL team, they had to have on average 150 to 250 executives and probably around 20 to 25 trainers and coaches. If you went to Europe, they would have on average 100 coaches and trainers and maybe five or six people running the business, because in Europe, in order to make money, you have to win games. So all of the emphasis was on the trainers and the coaches. Now, when you go to Europe, there are 100, 150 people running the business and still the 100, 150 trainers and coaches and the people in the US that are running these things are less sort of X athlete who work their way up the system and people who are now MBAs and quants in the same way that you run a hedge fund, the same way you’d run a Fortune 500 business, the same way you’d run a Silicon Valley startup, is how these these sports teams are being run now. Also, what I found interesting, too, about some of the way that teams and leagues are adjusting. I mean, it’s not just about selling what’s on the floor so much or the field, if you will. It’s really also about keeping fans engaged on the off season. You know, a lot of merchandise, a lot of intellectual property. I am curious as to how far you think that can go. Well, the biggest driver is still, you know, media premium, premium sales and then sponsorship the. It just depends on the team and depends on the market, how far you can take the licensing and the other things. But in these past few years, teams are getting extremely creative with that. Also, if you own a building, you might have your main team in there, but you know, economies of scale or I own the building, so let me own a couple other teams that I can throw on that building and add event dates. And then you see other people coming in, Legends, Oak View Group and some of these other operators who come in and are helping these teams to monetize and professionalize the operations in ways that you just didn’t see 15, 20 years ago.