Athlete empowerment; MLS gold rush; Esports naming rights; Gen Z boxing; Tom Brady's Autograph; A torn hamstring
Week 1
Sports is big business. And like all mega-industries, it’s being transformed by technology. “Disruption” is an understatement. What’s happening to the world of sports is more like creative destruction.
Crazy new ideas are changing how sports are played, consumed and managed, driving unprecedented athletic performance, fan experiences and business models. And we’ve only scratched the surface of what's possible. Sports is also an incubator for emerging technologies with the potential to transform how we work, play and live.
There’s a boatload of brilliant newsletters out there covering the business of sports. Skin In The Game zooms in on the business of sports investing, curating the deals, articles, podcasts and people that you should know about.
We also run a regulated angel investing group that connects investors with visionary SportsTech startups. By providing a platform for fans, athletes, brands and entrepreneurs to collaborate and co-invest, we’re helping to shape the future of sports.
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💰 Deal flow
By no means intended as an exhaustive catalogue of transactions – more like a pick’n’mix of recently closed deals that stand out in a busy market.
⚽️ Sports clubs
The New Rush to Invest in MLS Teams — Houston Texans running back Mark Ingram has taken his love of soccer to the next level, acquiring a 1% stake in DC United. The deal values the Major League Soccer club at $710m, up from $60m in 2012.
In a useful update on the state of MLS, Huddle Up writes:
“As the often forgotten major US professional sports league, Major League Soccer has quietly seen average franchise valuations skyrocket, with multiple teams now worth close to $1 billion. For context, the average NHL franchise is only worth $653 million.”
Front Office Sports points out that the MLS has become a major target for athlete investors:
“James Harden is a part owner of Houston Dynamo FC, Kevin Durant invested in the Philadelphia Union, and coach Steve Nash has a piece of the Vancouver Whitecaps FC. Two Seattle legends Russell Wilson and Ken Griffey Jr. own part of the Seattle Sounders. LAFC’s ownership group includes Magic Johnson, Mia Hamm, and Nomar Garciaparra.”
Despite the lack of penetration in foreign climes, some of the United States’ most high profile athletes and entertainers recognise the potential of soccer in their domestic market.
🎰 Sports betting
Action Network acquired by Better Collective for US$240m — Better Collective, a Stockholm-based publicly trades sports betting media group, is buying Action Network, a New York-based provider of sports betting information, for $240m. Action Network had previously raised $17.5m from outside investors, including Chernin Group, RSE Ventures, Bitkraft, and entrepreneur and investor Adam Marchick.
Roundhill Investments observes that:
“The overall market continues to expand with Pennsylvania, Michigan, Indiana, and Illinois emerging as powerhouse states for U.S. sports betting […] The race is on to capture market share and content has proven to be an effective method to engage and attract bettors.”
3 years on from the repeal of PAPSA – which allowed US states to legalise sports betting – the gambling narrative is ramping up as new domestic markets come online.
Several sports media firms are looking for buyers or investors, hoping to cash in on the expansion of online sports betting across the US— names include the subscription sports news site The Athletic and Authentic Brands Group, which acquired the sports magazine Sports Illustrated in 2019.
It seems the the Athletic is no longer in merger talks with Axios, instead pursuing a merger tie-up with the New York Times that would bring its 1m+ paying subscribers on board.
📺 Streaming & media
Overtime Raises $80m From Jeff Bezos, Drake, NBA Stars and Others — the five-year-old NYC-based sports brand and media company raised $80m in Series C funding. Sapphire Sport and Black Capital led the round, joined by Bezos Expeditions, Drake, Micromanagement Ventures (the family of the late NBA commissioner David Stern), Morgan Stanley Counterpoint Global, Blackstone Strategic Partners, PROOF, and Gaingels.
Overtime is something of a poster-child for sports streaming; it initially posted high-school game highlights and other sports videos on social platforms; it later expanded to long-form original shows, merchandising and live events. Now it plans to create a new basketball league featuring top male high-school players – Overtime Elite – that will also function as a high school for roughly 30 rising juniors and seniors who will live in one location and earn at least $100,000 per year as they work toward their degrees. A somewhat bizarre, extremely interesting, and potentially very lucrative social experiment.
A sports media start-up aimed at elevating women’s sports coverage has raised $3.5m and attracted some of the biggest names in the pros — Just Women’s Sports, a one year-old, LA based media platform exclusively focused on women’s sports, raised $3.5m in seed funding. Sports specialists Will Ventures led the round, joined by Thirty Five Ventures, Drive by DraftKings, OVO Fund, Supernode Global and a tonne of athletes including two-time WNBA MVP Elena Delle Donne and reigning league scoring champion Arike Ogunbowale, women's hockey icon Hilary Knight, USWNT World Cup Champions Kelley O’Hara and Sam Mewis, and Kevin Durant.
This follows The GIST raising $1m in seed funding from investors including 3GP Capital, JDS Sports, August Group, Even Odds Investments, and Bettor Capital to build out its women-led sports media platform, off the back of impressive 350% audience growth in 2020.
JWS and The GIST look well positioned to capitalise on increased interest and investment in women’s sports. As The Insider says:
“Just 4% of sports media coverage is devoted to women’s sports – and that’s just not good enough.”
Sports focused AR Startup Lands Seed Round — Startup Quintar believes sports’ augmented reality future could begin arriving next year, and it’s announced backing “in the millions” from sports obsessives SeventySix Capital to develop a platform for rights holders ranging from teams to broadcasters.
FanCode raises US$50m— India-based streaming platform FanCode has raised US$50m from the investment unit of its parent company Dream Sports. The digital sports platform said it will use the funds to create the biggest sports fan platform in India.
Founded by sports industry veterans Yannick Colaco and Prasana Krishnan in 2019, FanCode claims it has an existing user base of 20m. It also has established broadcast partnerships with Cricket West Indies, New Zealand Cricket, the NBA and a number of teams in the IPL. Feels like a giant in the making.
⛓ NFTs & Collectibles
Whatnot raises $50M to let people sell collectibles (including sports cards) —Whatnot, a two-year-old, LA-based marketplace for collectibles, raised $50m in Series B funding led by the Y Combinator Continuity fund, with participation from Andreessen Horowitz, Animal Capital and a bunch of angels.
Their historical focus was on Pokémon cards, but apparently they opened up the site to sports card sellers in January 2021, and it immediately took over as the site’s best-selling category (accounting for “millions of dollars” in sales each month).
Loupe Tech Lands $12M Series A To Connect Sports Card Enthusiasts — Loupe Tech is a live e-commerce streaming platform, built for sports card collectors. It’s just raised $12 million in Series A funding from Forerunner Ventures, with additional investment by Nat Turner and DJ Skee. The company launched 7 months ago and says it already has 50% MoM sales growth, with millions of dollars in sales each month.
The card trading market is projected by one research firm to reach $98.8 billion by 2027, which sounds a little OTT to me but hey ho, the venture industry is built on exuberant market estimates.
🧘♀️ Home fitness
Jay-Z, Pitbull among investors as Denver-based fitness startup CLMBR raises $13.5M — a Denver-based startup that makes an 8-foot-tall vertical climbing machines closed a pretty hefty funding round involving 29 investors, including celebs like Jay-Z, Pitbull, entertainer Ryan Seacrest, tennis player Novak Djokovic, celebrity fashion stylist June Ambrose, and YouTube co-founder Chad Hurley. Founder Avrum Elmakis said:
“Professional athletes and entertainers are typically paid by companies to endorse a product. So, in my opinion, it’s rare to see them personally investing.”
Celebrity angels were rare, but as readers of this newsletter will learn, they're now everywhere.
Liteboxer, the Peloton of boxing, raises $20m Series A — Liteboxer, self-branded “Peloton for boxing”, has announced the close of a $20m Series A funding round led by Nimble Ventures. B. Riley Venture Capital participated, alongside existing investors Raptor Group and Will Ventures. It’s an in-home device that brings gamification, hit music, and a touch of entertainment to a boxing workout.
Content is king when it comes to recurring revenue, and for $29/month, users get access to unlimited training sessions and workouts led by Liteboxer trainers. I want one.
🦄 Fantasy sports
Blaseball developers raises $3m in funding — Games developer The Game Band raised $3 million in seed funding to develop it’s absurdist browser-based fantasy sports game Blaseball. The investment was led by Makers Fund along with participation from 1UP Ventures and Matthew Ball.
“Blaseball is baseball at your mercy. Baseball perfected. Our players are inhuman. They play day and night. Rain or shine. They never grow sick. They never tire.”
You have to give to them – it’s a good pitch.
📖 Required reading (and listening)
We read some brilliant pieces this week. Athlete empowerment was a recurrent theme, but we also dug into smart cities (and smart venues), NFT use cases, post-pandemic gyms, and a superficially absurd – but extremely smart – boxing match.
✊ Athlete empowerment
LeBron James’s Agent Is Transforming the Business of Basketball — Worthwhile read from The New Yorker on Rich Paul:
“With LeBron as his star client, Paul has developed tremendous influence in the NBA. The two men have come to be associated with “player empowerment,” a term that refers to the additional clout that athletes – usually superstars – wield.”
Athlete empowerment is real. Players have more leverage than ever before, and that’s only going to increase.
The Cooperation Economy (Or How to Build a Liquid Super Team) — Great piece from Not Boring’s Packy McCormick on the rise of athlete empowerment and formation of “Super Teams”. The article focuses on the NBA (LeBron teamed up with Dwyane Wade and Chris Bosh in 2010 to form the first player-orchestrated Super Team, winning two NBA Championships in 4 years) but McCormick argues that really:
“This is happening everywhere in the economy - individual empowerment at the expense of employers.”
He goes on to explain the role of the internet in facilitating the formation of what he describes as:
“Liquid Super Teams, collections of individuals, each with their own strengths, powers, and network, who combine forces to achieve goals.”
“Disintermediation” is a word traditionally associated with DeFi, but it’s become a feature of the sporting media landscape as new technologies connect athletes with fans like never before. The growth of Direct-To-Consumer and crushing of the middleman is creatively destructive for sports and a core theme for our investing activity here at Skin In The Game.
🎮 esports
US esports Team SoloMid strikes $210m naming rights deal with crypto trading platform FTX, the largest in competitive gaming history — Slightly complicated by the fact that TSM has been barred by game developer Riot Games from using the FTX name on its jerseys during broadcasts for League of Legends and Valorant, two of esports’ biggest titles. Turns out the sponsorship is in violation of guidelines around partnerships with crypto exchanges.
The TSM and FTX link up is the latest esports naming rights deal announced in recent days – first Dignitas signed a 4 year partnership with digital bank QNTMPAY, then China-based JDG Gaming did a deal with Intel Corporation. Interesting to see startups (scale-ups) splurging sponsorship money alongside giants like Intel.
🏟 Smart venues
New Stadiums Go Far Beyond Sports — A new class of sports stadiums is on the rise, and they offer much more than sports. The Dallas Cowboys (the most valuable franchise in all of sports, recently valued at $5.7 billion), has put down a marker with its $1.15 billion 80,000-seat AT&T Stadium (the largest covered stadium in the world) and the centrepiece of a 90-acre, $1.5 billion headquarters that includes a 16-story hotel, private club, hall of fame, stores, restaurants, and event space.
Getting stadia right is about more than just construction – it’s about integration. In other words, how a stadium relates to the wider urban setting, and the evolution of environmentally damaging metropolises into sustainable smart cities. Sports clubs have a huge opportunity to make their smart venues the nuclei of smart cities.
🏋️♀️ Future of fitness
For Small Gyms, Handling the Pandemic Meant Expanding — This piece makes the point that not only have post-pandemic gyms had to raise their game (“From on-demand video libraries to rooftop classes, boutique workout spots broadened beyond their tight spaces”) – consumer expectations have changed. The pandemic has forced brands to build more customer-centric experiences, and on-demand fitness classes as a shining example of how you can grow a market by adapting to existing consumer habits.
📱 Gen Z
Mayweather-Paul Fight Crashes Showtime Servers — say what you will about the fight (the camp is divided between “cynical social media stunt” and “innovative sporting experiment”), it certainly captured our attention. This was a match without sanction, judges, or a declared winner. But it might just transform boxing by introducing a legion of new fans to the sport – a Gen Z gateway drug to Boxing’s long-overdue renaissance.
🇨🇳 Sports in China
China Plans To Build Up To 18 Football Cities In 5 Years — according to a document published by the country's State General Administration of Sport. It’s part of a big push to make China a strong sporting nation by 2035. The country has only ever qualified once for the World Cup, back in 2002. And at the end of 2020, China languished in 76th position in the world rankings, despite its population of 1.4 billion people.
The past decade has seen several failed experiments to supercharge Chinese football with heavyweight footballers – owners have spent big money to bring in established foreign stars (Carlos Tevez was paid an estimated annual salary of $47m in 2017). This news could be another false dawn – or it could herald the start of a massive investment programme that will bring Chinese football to the attention of fans and investors in the West.
Speaking of which, the FT has a cool piece on “Football’s relentless search for the ‘Asian fan’,” which points out that the concept of the “Asian fan” was prominent in the business plan for the attempted breakaway European Super League.
⛓ NFTs & Collectibles
Tom Brady is launching a new company called Autograph that will sell unique digital memorabilia from sports icons and celebrities — Brady and entrepreneur Richard Rosenblatt will act as co-chairs of the company. Autograph boasts a team with several big business names, including Lionsgate CEO Jon Feltheimer and Live Nation Entertainment CEO Michael Rapino, as well as three of the founders of DraftKings.
The still nascent but rapidly growing NFT market obviously has massive potential for sports. NBA Top Shot recently received a $2bn valuation from NFT tracking site DappRadar, and top NBA clips have sold for over $200k on the platform. Brady’s move to get in on the NFT market is smart and well-timed – one of his rookie cards recently sold for $2.3m, smashing the record for the most expensive football trading card. NFTs hold almost unimaginable promise for him and other high-profile athletes.
Sports Pundit Explains... NFTs with Rich Johnson and Ronnie Levi — SPE does a great job of exploring key trends from across the sports industry, in 15 minutes or less. In this episode (which began life as a Clubhouse chat), Ronnie Levi and Richard Johnson explain why NFTs are not a fad and explore some current applications.
🥇 Sports flashback
The 1992 Barcelona Summer Olympics were special.
The choice of music was inspired (“Barcelona” was performed live at the opening ceremony by Montserrat Caballé, in duet with voice recordings from a recently deceased Freddie Mercury):
And who can forget the Olympic cauldron being ignited with a flaming arrow, lit from the flame of the Olympic torch with an arrow shot by Paralympic archer Antonio Rebollo?
South Africa rejoined the Olympics having been banned for its apartheid policy since the 1960s. And Germany sent one team for the first time in nearly 30 years, with East and West having reunified in 1990.
And then there was the basketball. The admittance of NBA players led to the formation of the United States "Dream Team" of the United States, featuring Michael Jordan, Magic Johnson, Larry Bird and other superstars:
Among so many incredible memories, one stands out. And that is the story of Derek Redmond. It didn’t involve a medal, or even a podium finish. It involved something far greater. The love of a father for his son.
Redmond went into the Barcelona Olympics in great form. He posted the fastest time of the first round, and won his quarter-final. Then came the semis. He started well, but in the back straight, about 250 metres from the finish, he pulled up in agony.
He later said he thought he’d been shot, but in fact, he’d torn a hamstring. Falling to the ground in pain, the crowd assumed that was it. But Redmond had other ideas. He slowly rose to his feet and began to hobble along the track, determined to finish the race. That in itself is pretty incredible. But what happened next was simply beautiful.
A man without official credentials burst onto the track. Officials tried to stop him, but he barged through their half-hearted attempts to subdue him. It was Derek’s father, Jim, come to comfort his distraught son. Clinging to each other, the pair continued down the track to the finish line and as they did, the entire 65,000 strong crowd rose in a standing ovation.
As Derek’s father had helped him finish, he was officially disqualified and Olympic records state that he “Did Not Finish” the race. But he did finish that race. 65,000 people saw him do it. And millions of people all over the world experienced through their TV sets the incredible power of sports to inject courage and compassion into our lives.
Wishing everyone an uplifting, sports-filled weekend. Enjoy the Euros!
Ed
—
Edward Rhys
Founder & CEO / Skin In The Game
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Skin In The Game is an angel investing group connecting investors with visionary SportsTech startups. We provide a regulated platform for fans, athletes, entrepreneurs and brands to collaborate and co-invest. By investing in SportsTech we can unleash the full potential of sports, enriching the lives of people everywhere.
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