The Sports Advisors Podcast: Challenger Leagues as Investments
Sign up for the newsletter at JohnWallStreet.com The Sports Advisors podcast is a biweekly roundtable discussion for decision-makers, hosted by their peers, on the stories that actually matter and their second-order effects. It is actionable intelligence from senior operators who have actually built, bought, sold, programmed, monetized, and scaled sports businesses. In the latest episode,The Sports Advisorstalk challenger leagues as investments. The Professional Womens Hockey League announced its first outside investment, a reported $100 million buy-in from Larry Tanenbaums Kilmer Sports Ventures and Ilitch Companies in June. The Premier Lacrosse League also recently closed on a $100 million Series E financing round led by Ares funds and Brooklyn Nets owner Joe Tsai. We discuss the markers of long-term viability, what institutional capital wants to underwrite, where liquidity could come from, and which properties appear best positioned to scale.
Video Transcript
Welcome to episode number five of "John Wall Street's The Sports Advisors."
I am your host, Corey Leff.
Quick bit of context on who we are and what we're doing for those of you who are catching us for the first time.
We know that there's no shortage of sports business podcasts, however, almost all of them fit into one of two buckets.
They either look like our Big Business on Campus or Jane Wall Street's At The Table podcast, where you have a host and they sit down with a high-profile guest.
We're going to release an episode of Big Business on Campus, or excuse me, we just released an episode of Big Business on Campus last week with Clemson AD Graham Neff.
We will be releasing the next episode of Jane Wall Street's At The Table with Arod Corp Chief Business Officer and Minnesota Timberwolves Chief Strategy Officer Kelly Lafieri tomorrow.
You can catch all of our podcasts on John Wall Street's YouTube channel.
The other is far less interesting.
It's simply banter between two journalists, and the reason that's not interesting is because they're simply observers.
They're not actual operators.
And what hasn't existed up until now is a podcast for senior sports media executives that is hosted by accomplished peers across the business.
You have executives on this podcast that are actually sitting in the rooms where the deals are being negotiated and decisions are being made.
And so that's what this is.
You have a roundtable of experienced operators across media, sponsorship, monetization, and technology breaking down stories that actually matter and their second-order effects.
With me today are former Carolina Panthers CEO, former Verizon VP of Sponsorship, and current Encore Sports & Entertainment CEO Nick Kelly; former Washington Commanders chief strategy officer, former ShopYourWay chief digital officer, and current NXTLG Chief AI and Innovation Officer, Shripal Shah.
We have former Learfield CRO, former WWE head of global sales and partnerships and head of international, and current Girigo Advisory founder Jon Brody.
And finally, certainly last but not least, is f- former Fox Sports SVP of Programming, Research, and Content Strategy, and the current Crakes Media president, Patrick Crakes.
All four are John Wall Street advisory advisors and available for consultation.
You can get in contact with any of them by sending a note to info@johnwallstreet.com.
Advisors, welcome back to the show.
Of course, guys, I'm excited to have it.
This is gonna be a fun conversation.
So in the last week, we've seen two startup leagues raise nine-figure deals.
We have the Professional Women's Hockey League recently announced its first outside investment, a reported $100 million buy-in from Larry Tanenbaum's Kilmer Sports Ventures and Elitch Companies.
And then earlier this week, the Premier Lacrosse League announced the closing of $100 million Series E financing round led by Ares Funds and Joe Tsai.
The investments signal that sophisticated individuals believe that the value creation opportunity in tier two and three leagues extends beyond today's financials.
So I think it's important we start with some basic fundamentals.
Let's talk about what investors are buying and why now.
Nick, when, when investors are underwriting these deals, what exactly are they underwriting?
Is it the league IP, the scarcity of live sports inventory, demographics?
I hope it's not future media rights.
Sh- shed some context on that.
Yeah, it's a great question.
I mean, I think that, And look, I will preface in the fact that I'm a big Paul Rabil fan, I'm a big PLL fan.
But look, I, I think a lot of it is, like, like, fan duplication, and what I mean by that is that, like, you look at something that's Some of the Lacrosse League or women's hockey or some of these other, even volleyball, these growing leagues, like, there's a, there's an opportunity for, for owners or investments to make that are gonna hit a fan base or a future fan base that currently isn't, like, basically talked to from the WNBA or the NFL or anybody else.
And, and you also look at the business structure.
You l- you look at somebody like the PLL, you know, the, the whole ownership entity where they own the l- they own all the teams, they own the players, they own everything else, like, that model is a lot more measurable than you look what's going on with all the other leagues where you have a players association, you have all these other things.
Like, when you own, like, soup to nuts, everything from what the players get paid, to what the teams make, to what the, the broadcast is, it's a lot more of a measurable business.
And I also think, too, it's just, like, when you have, like, good leadership, and, you know, I can't speak to the PWHL, but, like, you look at some other places, like, they have leadership in place who understand how to run it.
And I think it's just that, you know, Joe Tsai's been close enough to the PLL for the last five years, for him to make another investment five years later, it, it just further reinforces the fact that, like, he believes in the future of th- of, of this organization.
And I think it's just, you know, overall it's, it's, it, it's always tough because you look at the P&Ls, here's the rights fee, here's the tickets, here's the sponsorship, here's everything else, and I think the hard part about it is, is that when you're four or five years in, you have a good benchmark of where you're gonna be.
The investment at year one or two is way harder than making the investment in year four or five, and I think that it's When they're making the investments in the PLL or the PWHL, they kinda know where it could go.
I think what, what's more scary or more challenging is when you make that investment in the year one and two, where you don't know, you don't know that threshold.
'Cause we've all collectively on, on this call have ha- have had those presentations where we're like, "Our rights media fee's gonna be crazy.
Our sponsorships are gonna be crazy."
Like, you don't know that that's gonna be the case, but when you're four or five years in, you kinda have a better, like, benchmark of where you're gonna be You know, Corey, the w- the way I look at it, is realized, not projected, right?
To, to Nick's point, when you're projecting everything, and I, I've been in, places where we are doing a lot of our, forecasting for the future based on incremental and significant growth in media rights, and Pat can talk to that, with, with great eloquence.
You can't just look at the projected media rights and say, "I see a business here."
You have to look at the realized and the actuals.
And if you look at that for PWHL and, and for what Paul's done at, at, at professional cro- lacrosse league, they have realized in real success.
They have sponsorship revenue that's up.
They have fan demographics that have increased.
They have a diversity of fans.
They have merchandise sales.
You, those are real numbers to point to in years four, five, and six, and that makes investors who are not doing this for, for kicks, they're doing it based on the numbers.
It makes them much more comfortable.
And the other side of it is it's a sweet spot, right?
The other side of it is it's very difficult to get a leadership position or a significant control position in these big four, five, six sports.
So when you look at whether it's love volleyball or you look at PWHL or, or, or lacrosse, these are an opportunity to find that Goldilocks scenario where you are an investor early enough that you can really make an impact, but you have some realized success that you're not just betting on the come.
And I give these, I give both these investments an A+.
I think there's a lot of upside for both of them.
Hey, Corey, one thing I wanted to, just add on to, to, Brody's point is, is the fact is just that you can't, you can be the mo- most successful person in, like, a, the normal business world and buy an NFL team, and you have no impact on the NFL.
If you're a s- a highly successful, successful businessperson right now and you wanted to buy into one of these startup leagues, they want you.
They want your business acumen.
They want your connections.
They want everything else.
And, like, the, the ability for you to drive impact is just way different in a startup league than it is to, to, you know, buy a minority share of the Buffalo Bills.
Love the Bills, but, like, you're not dri- you're not changing anything on the broadcast agreement, anything else.
But your ability to drive influence and change in some of these startup leagues is, is transformational to your investment, but also, too, just, like, to the league itself.
Yeah, you know, I, I, I've done a lot of conversations, sorry, Shripath, and then I'll s- I'll pass it over to you, over the last year or two about advisors, not owners, right?
And if you can be an owner, great, but if you can be an owner and an advisor, you can create greater impact, and that's what I think you're talking about, Nick.
And it's very difficult to make an impact as a minority partner of a major four sports team versus being an early investor to a business that showed some success at a, at a league like PWHL.
But over to you, Shripath.
Yeah, no, I, I think you're both right.
I think one of the big things that Tenenbaum, Ilitch, and, you know, Joseph Tsai, these guys are providing, right, is an access layer, right?
They're gonna help these properties with arena dates, sponsorship relationships, youth pipelines, and broadcaster access.
And in the case of the PWHL, you're getting an option to invest before they reset the rights.
You know, I think it was very smart that the PWHL gave ESPN some equity, so you know it's gonna go up.
And when the average WNBA franchise is at, valued at 427 mil, an NWSL team at 184 million, you look at both of these, at 100 mil, it You say, "Wait a minute, there could be some upside."
So I think, you know, so I think you're, this is a, these are savvy investors, to your point, can make an impact, right?
They're providing immediate access, and they're getting in over, getting in before a major milestone that is already somewhat tipped by having whoever did the advisement early about giving the equity positions to broadcasters in that first round, y- you know, y- you have to assume that the trajectory is gonna go up for the next round.
And I, and I think that, you know, those are key indicators of, in terms of how you look at that.
Yeah.
I, I mean, I- It's not the time, Pat.
Go ahead.
What?
No, go ahead.
But share your thoughts, and then I can follow up.
Yeah, so I wanna validate all of this.
I think that these assets that are being, you know, it is easier to invest in something that's been operating for a while, because you do get some visibility.
I think that the folks that are investing, right, in these kind of properties have been around five or six years.
You know, the- these complement other things they're doing in their investment portfolios.
These are, and for many of these investors, these are, even though they seem like big numbers to us, they're not, right?
They round out other investments in their portfolios.
The big thing is that, crowding into tier two and tier three sports, we're seeing a lot of that, right?
I, these sports are obviously established, and they, they did something smart that I advised that, you know, four or five years ago, I wasn't getting a lot of a cooperation with some of the founders that I was working with.
I am now.
Giving up equity early, right?
Everybody, especially if they're a first-time founder, has this dream of being a billionaire, you know, building their dream and everything else.
I, I suggest that you give equity to get the right kind of partners, and then, you know, you'll get, you'll, they'll help you be successful.
You'll, you'll become wealthy, and then you can work on your next project becoming a billionaire.
It's about success.
Media is a very hard business, right?
And you need as many good partners as you can get, and giving up some equity makes sense.
It's precious, but it makes sense.
I'll also say that these tier two and tier three sports, some of the new ones coming online, they're, they're I see a lot of pitches, you know, every week.
Some of them, you know, obviously I think we're getting to the later stages of this.
They're really slicing the bread kinda thin.
But the truth of the matter is, is that given the decline in entertainment, and how entertainment is being consumed, it's becoming c- more complicated for long-form entertainment.
Discovery platforms are taking a lot of that- Engagement away.
It's going up the demographic change.
We're, change.
We're seeing it all the way up with the, with, with the boomer generation beginning to spend more time with discovery platforms, you know, they're, than they were before.
Certainly in the millennial and Gen Z generations, those folks have solved the what to watch problem.
Sports are becoming more valuable because they're complementary with these discovery platforms, as we talked about in the article this week, Corey.
And it makes sense, right?
F- if you're a sponsor and advertiser is that the economics are gonna flow more and more into live events.
So probably the inventory of live events, which also dovetail with the experiential economy, where people wanna have experiences versus, versus owning assets, which is still alive, very much so.
It makes sense that the pool of inventory across the value and engagement chain would get larger.
The question is, how do you make your revenue mix to make successful?
You know, what were the valuations for the 100 million with these two established tier two leagues?
You know, what, what, what does success look like?
What's the timeline?
Private equity's evolved some on these assets.
They've got longer timelines.
They're not looking to exit in three to five years like they typically are in some cases.
Some of these are passion projects.
But it makes sense that we would have more sports.
The only thing is that your revenue mix is going to have to take into account, if your business plan, it counts on you making $50 million in media rights in four years, you're gonna need to rethink that.
The economics are gonna have to come from running your events.
They're gonna have to come from the need for sponsors to have to reach these segments, right?
These segments are gonna have to be defined, and they're gonna have to be complementary to the other sport ecosystem.
Because media rights are, and what, who gets them, and how much, and how guaranteed they are is evolving.
And, and it's, and, and most of it's flowing up the chain, not down the chain when it comes to media rights.
That's the challenge.
Jon, where do you see these returns coming from?
Because if, if, as Pat said, it's not, it's li- it's unlikely to be from media rights.
You know, which revenue streams, you know, do you see the greatest opportunity to, to, to tap into?
You know, if you, if you go back to kind of the big four and the days of linear television in its heyday, media rights drove the, the properties, and sponsorship, and licensing, and merchandise, and tickets, and live event activation, and all those things were kind of the, the number that put you over the hump, or the number that gave, went from a good year to a great year, or gave you some of those really interesting stories about the health of the game.
In this landscape, even for the big sports, but the NBA certainly showed that you can still get enormous media rights, and the NFL lives in a different stratosphere.
Generally though, in today's world, those other elements, the sponsorship, the licensing, the merchandising, the creativity with content, those become the center of the axis because media rights is about, in many ways, deciding if you want to, get greater penetration or you're looking for short-term revenue, and either one of those should not be what buoys your, buoys your business.
So it is a little bit flipped on its side from the, the days of media rights booming to another degree.
It's about creativity and sponsorship and partnership, and also looking for active investors who are advisors, who can give you some of that additional capital, but also that intellectual capital to help you think differently about your business, not thinking about it as a sport, or necessarily thinking about it as a competition, but thinking about it as a property, an entertainment property, and how do you maximize the opportunity set with partners.
Nick, you wanted to jump in with a question.
I know you had a question for Pat.
Yeah.
Pat, I got a, I got a w- I mean, out of sheer ignorance, like, why does somebody like Fox, like, invest in, like, IndyCar, or why would ESPN invest in the PLL?
Like, what's in it for them to, to, to, to make that investment early?
And then a- also, like, if, when these rights go to market, like, what, what, what handcuffs do they have when they have that investment?
So, so it's a great question.
So look, for the, for all the media companies, their relationships with all their partners have evolved significantly.
The, the top two or three properties on each one of, of, of the media company's, roster, you know, account for overwhelming majority of what they get from distributors and subscribers, right?
So they have massive capital investments in the top three or four properties, right?
Then they have lesser investments all the way down the chain.
By getting equity, they can give a tier two or a, or a lower tier one partner, an opportunity to say, "Look, we're, we believe in you.
We're gonna get access to your business.
We're going to help you run it, and we're gonna give you distribution of some type.
In the future, if, if there's another distributor involved, we'll benefit from that.
But the plan would be probably that you would live here."
So it's, we understand the business.
This is a way for us to invest in a necessary property, right?
That rounds out the, the top three or four properties on our distribution mix, but we can do it in an effective way where we don't have to put cash out because all of our cash flow is going to pay these top three or four properties on each one of our increasingly diversified, right?
For a while there, you know, y- y- you've, you've got three or four priorities, and, and all your cash has to go to that, because of the massive attention those guys, attract.
And, by investing, you gain opportunity to get the stuff that runs at, you know, something else has to be on, and these are high-quality properties, right?
They're just not worth as much as the top two or three, so you bring in equity and bring all of the massive assets that a modern media company has to bear to build them Their venue business, their sponsorship, you sell together, you do all that stuff, and then, you benefit because they bring viewing and you can build them.
A good example is, you know, IndyCar came out of a, a massive World Cup game and did, you know, a huge number, right?
It's like, it's like, it's just basic TV 101, and that benefits IndyCar significantly, and it benefits, the World Cup as well.
So the portfolio approach just requires investing, I think, Nick, these days.
Well, m- let me ask you a question, Pat.
Like, as like a, like if I was like Eric Shanks, and I'm like, you know, "I gave you that number.
I gave you that number because I rolled you in-- I gave you that number because I rolled you into a IndyCar race in middle of nowhere America, off of a World Cup game, and now your, your viewership number this year, because of all the lead-ins that you've had, is up 40%."
When the ri-rights negotiation comes up two years from now, three years from now, why am I gonna bid against myself?
Like, why am I gonna go into that?
I'm an equity owner at this point now.
I've now driven viewership.
I've now driven all these other things.
I know it's a double-edged sword because you're in si-situation of I have equity.
I hope they get a ton of money, but at the same time, it's like I've driven viewership.
Like, where, where does that balance land internally at Fox of like, "I wanna drive it as big as it can get," at the same time of, you know, "I don't wanna like price myself out of the marketplace"?
Well, I think when you're a partner and you own enough of it, right?
Like, you know, I think Fox owns 30% of, of, of the racing business over there overall, and they own parts of the venues as well.
You, it, it, it, it, it works for both partners, right?
Maybe media rights don't grow as much.
I mean, first of all, you know, are, are these media Who, who values these media rights the most?
Is it, is it the partner who benefits from all these other aspects of ownership, right?
So maybe the media rights aren't as high as they should be, if it was an open auction, but the partner gains so much because of the deep relationship.
I think, I think what you're seeing, because viewing is so fractionalized, right?
And, and, and these assets are worth more than ever because they work with these discovery platforms, while entertainment content has, you know, is struggling.
Long-form entertainment content is getting less attention because of it.
It makes sense to be together for a lot of these properties.
They wanna be attached to someone.
And there's this real great question that, yeah, your viewing's up, right, but what are your media rights worth on the open marketplace in three years?
And I would argue that media rights increases are gonna get harder and harder, even if you're doing well, unless you're a top five, property.
Because it's not like the pay TV bundle, which is still paying 90% of all the freight, is, is going to be around, you know, it'll be at 50 million homes, right?
It'll still be around, still gonna be chugging, but, you know, what is it producing, right?
And as it gets more complicated there, you know, certainly there's rights fee increases for the NFL and, and for the Big Ten, but maybe not for IndyCar.
But if IndyCar's partnered with Fox, they don't need all the rights increases because they get so much more.
They get to sell with Fox.
They get promotion inside all of these other assets that They, they get promotion inside the NFL.
They're made a priority.
They're clearly important to Fox, right?
Fox has also NASCAR, which is their strategic racing property, right, overall.
But they have IndyCar.
IndyCar is important to them.
So I think the answer is it's, it's a more complicated question than it used to be for everybody.
And, a portfolio approach that includes ownership benefits both sides.
IndyCar needed a partner like Fox to do this.
For years, they've kind of stood on the edge of really growing.
The partnership with Fox has grown them, right?
And if that tapers media rights 10% in the future, media rights are probably gonna be tapered anyway, because those, you know, that's That, that's just, that's, that's kinda my answer, Nick.
Pat, I, I would just build on that for a second.
And, and having sat in those rooms where you're doing the media rights negotiations, Nick, I think those days are just different now, right?
I, I, I really think media rights is a part of your marketing mix.
It's a part of your growth strategy.
It's a part of your investment strategy.
You know, look at TGL.
TGL had an idea, and they went to market, and ESPN leaned in, right?
And ESPN did things that differentiated TGL for TGL.
Sending Scott Van Pelt there was not on accident, right?
It was not by accident.
Excuse me.
It was a planned move to show value back and to build the property.
Whether it's Fox, ESPN, all of these major broadcast partners are no longer in the room trying to get, you know, as low a, a fee, and the people in, sitting in, in the Park Avenue offices are not trying to get as large a fee.
It's about what is the value creation and sharing that's going on, because it's not about just the rights fee that you're gonna pay.
The NFL may be just a different animal, but generally, the best marketer you have as a property is your media rights partner, and you have to lean in when they lean in, and you have to partner with them in a way where you're not just looking at dollars and cents every day and what's gonna happen on the next media right negotiations.
It's just a different day.
That's a- Yeah.
I wanna bring the conversation back to the economics of it.
And I, I would add one-- I would, and I would add one thing.
I, I would add one thing.
Remember that, for the NFL, the media rights, right, they're, they are what they are, and that's, that's the biggest business.
Their venues run themselves.
But for IndyCar, this is a virtuous cycle by being partnered and owned with Fox, because the real economics for them are at their venue.
They always have been.
So by being partnered with Fox, the real economic growth is at the tracks and in the teams, and Fox is invested in that upside capture because media rights for IndyCar were never going to replace those.
And the way that media has evolved and the experiential economy, the venues and the live events are worth more than ever.
So investing in, in, in a mechanism that amplifies that makes a lot of sense.
So if you left Fox, right, to your point, it's sticky, but for Fox, their investment, they're captured.
They need those venue, they need that property to produce economics.
Most of the economics and most of the margin are not coming from media rights.
They're coming from how they operate the venues and the sponsorship, which you know so well.
So let's bring the conversation back to the investments, in these tier two and three leagues.
We talk about revenue generation.
What are the most likely exit opportunities for these league-level investors?
And I get, Pat, as you mentioned earlier, that it's not the same time horizons that, you know, typical private equity might have.
Are there str- you know, logical strategic acquirers for these properties?
Yeah, I think there are, right?
I mean, there's a typical, you're gonna pass it on to the next PE firm, right?
Then there's, like the PWHL, I think as they scale, they're gonna set themselves up to then go look at local owners who, at, for the single teams, can then invest in, right?
So I think that's there.
And then I think, you know, there could also be a roll-up, right?
We saw the PLL already has, right, did a, did a merge with their competitor.
So I think there's at least three realistic scenarios that could happen in a pretty short time horizon.
So for some of these savvy investors, like Tannenbaum and Ilitch, it's like you get in early, you provide the access, you make the impact, and then you can also potentially have an exit in the shorter time horizon if you wish.
And I think that's something that's really intriguing for them, is like they, they're actually creating the upside, and then they could pass it on.
But, you know, because they already have that local market roots, they already have access to the venue, it's like they can actually shape that trajectory really quickly.
Nick?
Yeah, look, I, I feel like I'm the biggest, like, Tom Dundon sycophant, but like, it's just like you look what he did with like the P- the PLL, or his, the, the, like, not, sorry, not the PLL, the, Premier Lo- Pickleball League, whatever he calls it, Major League Pickleball.
It's, it becomes one of those situations where it's just like when you see the opportunity, and you have scale, like the, the thing that all these owner, the, the, the pro sports league owners have that like you and I, none of us have, is scale fast.
And the ability for them to take it and scale it and take it from what could be the infancy of a league or the infancy of a property and make it big fast and then spin it off, like we can't do that.
But they have that because of their other is- assets that they have available to them.
And you look at, you'll look at like, you know, he had, professional phys- pickleball association, and then he bought Major League Pickleball, and now he's, he just did a raise for like $200 million.
Like, the thing is, is that, like, he was smart enough to know what the scale could be.
He had this, the ability to scale fast.
And then you look at everything he does else, out- outside of all of that, it be- it turns into one of those situations where it's just like these pro sports owners understand how a top five, top six league l- works.
Them applying those principles down to a smaller organization, like that's the biggest thing that, like, is the success and failure of all these, like, infant, like infancy leagues.
I've met, I'm sure we have all met, like multiple, like, you know, CEOs or founders of leagues, and they're like, "Oh, we're gonna do this."
I'm like, "Okay."
But the reality is when you meet one of these guys who's like been at the team side or been like an owner of a- another league, your confidence level's so much higher because they've done it.
They've seen it.
They know how these things operate.
The problem is it's very, very, very challenging, the sports landscape, to come into, as a challenger league and all of a sudden just show up as like, you know, "I'm gonna break the mold."
It's like, no, like you need to take the, the successes that you have on the other big leagues and translate that over.
Yeah, you know what I've learned over the last couple years, Nick, to build on that, working with some of these, investors who are now owners rather than, you know, no disrespect to the Maras, they've done a great job, but they're in the football business, right?
The Rooneys are in the football business.
When, when I work with some of the private equity firms that I've been engaged with or some of these institutional investors, it, it comes back to a singular thing to me again and again from them, and that's data.
Follow the data.
They have more of it.
They cut it different ways.
They understand how it transitions from sports to other investments that they make, and they are always focused on the data.
Now, a data point is the success on the field or the pitch or the court, but that's a very small part of it.
It is always about how you're gonna target your fan, how you're gonna use your capital, how you're gonna take what they've learned from other investments in very different genres and areas and put that same playbook to work, and the thing that I hear again and again as the common denominator is data.
So what's the strongest, you talk about data, what are the strongest predictors of success for a challenger league?
I mean, honestly, for me, if I, if I were a brand, non-duplication.
You look at like the League One volleyball guys, like y- or even like NWSL when they first got started, the non-duplication of their fan base and their audience compared to the NFL or NBA or whatever, it's like you're hitting new consumers that you're not hitting anywhere else from an investment standpoint and a broadcast standpoint.
That, for me, is like if you can find a, a, and you have the data to prove it, that you're gonna hit a new audience, like that's a big deal.
Yeah, you know, I, Corey, I hear a lot, about youth, youth, youth.
And you look at what Blitzer's invested in beyond his, you know, initial foray into big four sports, and you look at some of these really savvy investors, it's, it's where is the youth market going, and youth equals participation, participation equals family, family equals decision maker, and then where you're gonna put your disposable income, right?
So the, the thing I hear a lot is data, and then I, I also hear a lot about how can technology integrate into this entertainment platform.
What are the, the nuggets that make technology a place where people can consume in different ways?
Those are some of the key things that I'm hearing, from the investment community that I work with.
And I think one thing I would add to that of, you know, like churn, season ticket churn, renewals, right?
So, like, if, if say there's a team with 6,000, you know, t- season ticket holders at a 90% renewal rate versus someone at 9,500, this is where the data comes in, 'cause if the 9,500 team's at a 70% renewal, that means they discounted the shit out of their, the delta.
It, whereas the savvy operator's gonna look at, "Okay, they're at 6,000 at a 98% renewal.
We have the data to see that we can increase that share of wallet."
We can then see the book of business.
We're now providing the access so that we can actually scale the, the revenue, you know, from sponsorship relations, and then y- applying technology to, to leverage that data, th- taking that strong core, and then you can already predict with a pretty high outcome where that's gonna grow.
And then you can apply the growth marketing to, to scale around that.
So I think, I think all of that sort of comes into the mix.
And I would say- Can I ask a question?
Oh.
Go ahead.
I, I would say that, it's important, and I think that the investors that have come into this space understand this, to be complementary to, to the big guys, right?
And to use the trends like the experiential economy, the changes in viewing, the rise of discovery platforms that have made live sports and live overall more valuable.
How do you fit into that mix?
Think about it strategically in that sense.
Many founders are very, very wrapped around, "I love this sport.
It's the next NFL," right?
Can't tell you how many times I've been told that.
I tell them to never say that again.
What you wanna do is you wanna say, "I've got a market that is underserved.
It's complementary to these larger trends and ecosystem."
And so an investor is taking a portfolio approach, right?
And these, as Nick said, you know, these segments are underserved, or they're, not served enough is probably the, the way to go.
And, but folks are interested because of the r- the three trends that I, that I hit upon.
So they're complementary, and you can take an investment approach that looks like a portfolio.
I often tell people, my investor clients, you know, modern media, you know, networks, whatever, however your distribution platform is, how you acquire content for that often resembles modern financial portfolio theory, which is why the UFC is worth something to one possible media company and something else to, to somebody else.
They're like, "Why doesn't everybody think it's worth a billion dollars?"
Well, everybody's unique, and they have a unique set of properties, and those unique set of properties create value in a certain way for distributors and subscribers and sponsors and advertisers.
The same approach here, and that's why we see this $100, $200 million kind of expansion happening, right?
It's because there's room in the marketplace for more of this in this area, and these investors understand it 'cause they're using a portfolio approach.
So I wanna How do you know, if, if you're sitting down to write a check, how do you know that there's room?
Like, what do you need to believe or see before you sit down and write that check to, that there is that opportunity, is, is one question I have, Pat.
The other question I have for you is, nobody's talked about media ratings or, you know, tune-in or any of that as a metric.
Are we still looking at media in terms of, you know, success?
So first of all, I think, you know, viewing is, in the initial stages, less important than execution as an operator, right?
Because, viewing is very important, but you also have to kind of build your base.
You're not gonna show up on the scene and do a million viewers.
It's hard to do that for anybody these days on a average minute viewing basis.
But you can operate, and there's lots of ways to engage with the market through discovery platforms.
So you start with that and build it up.
But viewing's important, but we need to understand that we're just not going to be competing with the NBA or Major League Baseball maybe ever.
But that's not what success looks like, 'cause again, we fit in a place that isn't there.
We're not aspirational to replace the NBA.
We're aspirational to find some of these available slots that have, come into existence because of the expansion of live sports and the experiential economy.
We're fitting into that value creation mix.
Maybe someday we replace the NBA, probably not.
So that's number one, right?
Viewing's important, but it has to go into its place, right?
If you're filling up your venue, you've got something that's valuable, right?
And, and viewing, can go up and down for lots of reasons.
You need to work on it, but, you know, we gotta start somewhere, and let's start on executing from an operational perspective.
How do y- how do you know what to, what, you know, how do you know what to invest in?
Well, I think that, one of the reasons why you're seeing capital be committed now to some, some properties that have been around for several years is w- some of the reasons that both Nick and John Shirpa were talking about.
There's an established track record here, right?
So we can kind of see where we're going, and these guys need capital to get there.
So this is a good way, you know, you, we invest $100 million.
Maybe it doesn't turn into $3 billion- But, you know, if it turns into, to, to $400 or $500 million, it's, it's a really good investment for us, right?
And it diversifies- Because, and Pat, because it's part of a portfolio play, to your point before.
It fits into their overall portfolio of investment, rather than taking every dollar and tin cupping to buy the minor league baseball team you've always dreamed of.
It's about the portfolio play for these savvy investors.
Right.
And I think when you do, when it is a portfolio play, it also solves a couple of the key issues, right?
Like right-sized venues with controllable dates.
Like Toronto went from 2,500 to 8,500 fans.
I mean, let's go to the WNBA and you look at, Ted Leonisis and the Mystics.
They had their arena built by the city at, you know, 65 or 8,000 fans.
Caitlin Clark or someone shows up, they can, they can easily flex the date to Capital One Arena, and they have the upside.
Owners that can come in and provide that level of access can actually then help control that growth so those aren't missed opportunities.
And then, you know, two dates at a 20,000-seat arena can become 10 dates, and then 10 dates become 20 dates.
So that ability to have the right size venue at the right time, or the civic credibility to get those facilities then built, become a key part of that growth, as well.
So I think you're looking for those type indicators, you know, as you're thinking about investing, too.
Pat, my big- my biggest question is, like, you talk about, like, guaranteed, like, ratings.
We like, we know what NASCAR ratings are.
We know what, like, the v- the venue, like, attendance is.
If NASCAR were to hit the market because, like, the France family decided to finally sell, like, there's been rumors that, you know, TKO would buy them or Amazon would buy them.
Like, what's a, what's that look like?
You mean, like, what's the viewing, what's the rolls of viewing and its valuation?
No, I mean, in general, like, what's the marketplace look like for something like a, like a NASCAR to- Like, the league The NFL's never gonna hit the market.
But, like, a league like NASCAR could hit the market.
Sure.
Like, what's that look like?
I think it looks like a, an enormously huge, value creation exercise, but it's gonna be expensive.
Because going back to, if you You know, NASCAR races can do 2 to 7 million viewers on an average minute basis across three and a half hours worth of telecast, right?
They have a portfolio of races.
They're set.
They own all, they own most of their venues.
It's the perfect property to acquire because, it, it, it sits in a top five attention-getting, a ma- you know, a top five attention-getting property in an era where attention is nearly impossible to obtain.
And I, by attention, I just don't mean viewing.
It does viewing, but people, lots of people go to these races, right?
It has a brand positioning that's big enough that it's topical among general market.
The biggest problem in the modern era in media is the breakdown of access to general market that the pay TV bundle enabled with 95% distribution.
You were a local team in Kansas City or the Royals playing on a Tuesday night in July, you had access to general market economics.
Today, you don't, and that's one of the reasons why the RSN local rights have struggled.
You're segmented again.
I mean, there's nothing more segmented than a baseball game in July on a Tuesday night.
But the truth of the matter is NASCAR accesses general market and, and as best as anyone can, and that gives it particular value.
So, and the unique ownership structure that the Frances have right now, Nick.
You know, so it's, it's no surprise that people have talked about, you know, possibly selling the property, right?
But it, it's very, very hard.
There's, there's y- It's very, very hard to gain general market attention today, and when you can, the o- the value multiples are extreme.
Guys, let me We're, we're getting close on time here, so I wanna ask one last question and then, and then we'll get to our parting shots.
But we now have dozens of these challenger leagues.
Is there a market?
Is there white space, as Pat talks about, for each of these properties?
Or w- are, are some inevitably going to wash out?
Yeah.
I, there, there's gonna be consolidation, right?
The, the strongest will survive.
The best, It always comes down to me to leadership.
So the best-run organizations will survive.
I, I don't know how many women's volleyball leagues we have.
It doesn't take anything away from women's volleyball.
We have too many, because we have to cut through and deliver to fans who is going to be the penultimate or the ultimate women's volleyball professional league.
But this happens in a marketplace that is developing.
You know, there was a day that people couldn't imagine we'd have Sirius and XM, right?
And, and, and what happened there, you know, we all know for, for our everyday lives.
But what about across sports, John?
So I get the consolidation within a sport, but is there room for volleyball and pickleball and paddle and- Yeah this and that and the other?
The mar- the market's different now, right?
You're not competing for space on the dial.
You're not competing for, the ability to have a linear broadcast partner.
So it Can they all survive?
Yeah, it's all about different degrees of surviving, though.
They can become a super niche sport on a fast channel only.
They could still be around, but are they gonna be profitable?
Are they gonna be investable?
Are they gonna be able to deliver long-term return?
Probably, probably not in most cases, but that doesn't mean they don't survive.
It just means they are super niche, and someone with a, with a passion and a wallet may have to continue to, to fund and, and, and run it.
The, or, or f- or fund and lead it.
The ones that will prosper are those that have the right leadership structure, those that have those special characteristics that get fans engaged, and those that evolve with the times around them better than their competitors.
All right, so let's get to our parting shot, guys.
You have a chance to invest in one sports asset outside the major leagues.
What is it and why?
Srypal, you wanna get us started?
I would probably I, I like the approach that League One Volleyball did by starting with the youth, foundation, and then build the, the pro league on top, right?
Where they don't have to worry about the pro league sort of driving the profits.
I think that's a really smart strategy.
I think there's still upside there.
I think they gotta get to, I think they, you know, as, as J- John said, you have to look at the consolidation in that market, but I think, I think that's still really interesting.
Because they have such a strong foundation there, I think I would look at that, or someone else who's trying to build in a similar business model in a different sport, I would actually find that even more appealing right now.
Nick?
Yeah, I, I, I'm a, I mean, and I'm gonna be a prisoner of the moment, but, like, I'm a huge fan of, like, what Athletes Unlimited is doing with softball.
Like, it's just, like, I saw the ratings for women's college softball.
Like, I feel like they could do a, a little bit of a better job of promoting the fact that they're the pro softball league.
But, like, I mean, it'd be it feels like, like, this isn't like this is the WNBA, this is the women's version of X.
Like, this becomes, like, we are it.
Like, softball is the, like, you know, it is a women's sport.
So, like, I feel like softball f- like, domestically here, like, is, it's such a big opportunity for us.
Good plug, John Wall Street, and actually it's a Jane Wall Street event, gonna be collaborating with AUSL, on the Monday prior to the MLB All-Star Game.
So actually very excited about that.
I'm also very bullish on softball, for many of the same reasons.
It's also, the, the, the, the pace of play is fast.
It's, you know, it's an hour-and-a-half s- game.
It's, like, really compact.
There's a lot of other reasons that I'm, that I'm bullish on softball.
JB, what do you have?
Give us one league you like and why.
Because this is our parting shot, I'm gonna go off the board a little bit, and you probably can't, kick me to the curb till next week, but I bet on the number 96.
And why do I bet on the number 96?
'Cause in 2025, 96 of the top 100 shows on television were sports, 96.
If you get a 96 on a test, Corey, you're doing pretty well.
96 in the program- I went to Arizona, so I never got any 96.
That's how, that's how I ended up at Arizona.
That's how I'm educating you.
Yeah, yeah.
96 is a good score.
But I bet on sports.
Okay.
And I bet on sports because I see how it's gone from being an accoutrement to a CEO's fancy, to a player in the space, to a part of the media mix, to a part of the entertainment mix, to the absolute center cut for consumption and investment.
So I don't have enough data to tell you I, I, I believe in, in women's softball.
I believe in women's hockey.
I believe in professional lacrosse.
I believe in Minor League Baseball.
I don't have enough data on any of those to sit here today and say, "This is the one," but I can tell you sports is the one, and 96 out of 100 doesn't lie.
Weak.
Pat, let's go parting shot.
Give me one property you like.
So I'm gonna give So first of all, John Brody should give the, sports, business State of the Union keynote, um- Mm-hmm because that was fantastic.
Look, I'm gonna do, I'm gonna kinda do 1.3, right?
So first of all, it's not really investable yet directly, but I'd bet on college baseball to emerge as a major force in the spring.
Love, love, love.
And eventually some way, these college teams will be investable in a way that makes sense, right?
And I would invest there for sure.
I'm gonna talk my book a little bit.
I think there's a sport that's totally disappeared that was important to the ecosystem, once dominant important.
I, I think boxing, is due to be reinvented.
There's tons of high-level talent, but the system has been wrong for a long time.
So I d- I think it's due, due to be invented, and I'm talking my book- I like that- a little bit, but- a little bit so yeah.
Stand-up fighting is a, is a winner.
People- Yeah understand it, uh- Sure and they wanna see fighters stand up as opposed to going to the ground.
I'm totally on board with both of those.
Guys, another great episode of John Wall Street's Sports Advisors.
We will be back in two weeks with another roundtable on the sports business through these operators' lens.
You can always connect with a member of the John Wall Street advisory team by, again, reaching out to info@johnwallstreet.com.
And certainly don't forget to like and subscribe on our YouTube page, because you do not wanna miss a single episode of The Sports Advisors.
Until next time, thanks for listening.
