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EPISODE #10 Ricky Volante
41 Plays1 year ago
David talks with Entertainment and Sports Attorney regarding NIL issues including Corporate/Sovereign Wealth Fund NCAA sponsorship and Corporate/Sovereign Wealth Fund ownership of Sports Franchises.
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Transcript
Introduction and Guest Expertise
00:00:02
Speaker
Welcome to Follow the Money Ball, a podcast at the intersection of sports and money. Here's your host, David Sloan. I'm David Sloan and I have opinions. I also have 44 years of experience as an agent for MLB players that back those opinions up. My guest today is Ricky Volante, entertainment and sports lawyer coming back for his second guest shot on the Follow the Money Ball podcast.
00:00:31
Speaker
Ricky is not only a brilliant entertainment and sports attorney, he is my brilliant entertainment and sports attorney. So Ricky, how are you doing today? I'm doing great, David, and I appreciate the kind introduction. I speak the truth. I speak only the truth.
Private Equity in NIL Deals: Concerns and Corruption
00:00:49
Speaker
So when we spoke last time, we talked a lot about your background and how you got into the business of being
00:00:59
Speaker
uh sports and entertainment attorney now moving forward um there's a few things that i think i'd like to discuss i believe you'd like to discuss them as well and i think the listeners would like to hear them as well um the the first issue that comes to mind is the recent news that has come across
00:01:19
Speaker
uh, the interwebs about, um, private equity firms getting involved in name image and likeness deals, um, with college athletes. I think that is an area that is brought with the potential for, uh, abuse and corruption as is anything and everything involving collegiate sports. And always has been, I'd like to get your take on it and where you see the benefits and pitfalls moving forward in that particular area.
Tech Companies and NIL: Opportunities and Competition
00:01:50
Speaker
Yeah, so I think that there's two different elements that are going on here. So on one side, you have the collectives and agencies that have begun handling or representing matters for college athletes in the name of its enlightenment space. And, you know, there's been considerable competition in that area. There's a lot of tech components to it, especially when you look at companies like
00:02:17
Speaker
open doors and so there's a natural inclination whenever there's anything tech related for private equity firms to start taking notice so you know that could end up
00:02:32
Speaker
in a roundabout way benefiting college athletes because as these technologies get better and better, theoretically, it may increase exposure for those athletes and the ability for them to work with brands if the platforms are able to continue to improve and offer additional services and things like that.
00:02:53
Speaker
On
Professionalization of College Athletics: Rights and Compensation?
00:02:54
Speaker
the other side is the recent news that private equity firms are now looking into doing fundraising with and on behalf of college athletic departments with not too far from you guys, I guess a little bit of a drive still, but Florida State and JP Morgan exploring the possibility of JP Morgan doing a PE deal
00:03:21
Speaker
on behalf of Florida State's athletic department so that they can continue to grow and fund additional operations and more expansive operations. And there's always the possibility that with these things, bad actors can come along. I think that for me, a more concerning and pressing matter being somebody that has worked with college athletes and been a staunch supporter of the rights of college athletes
00:03:51
Speaker
Is how is if these private equity firms and athletic departments do end up working together and doing these, these private fundraising elements that are being considered.
00:04:03
Speaker
how is this not professional sports at that point?
NIL's Impact on Recruiting: Tensions and Agency Roles
00:04:06
Speaker
And why are these athletes not being treated as professional athletes and garnering the complete suite of rights that college, that not college athletes, but professional athletes have? You know, if you do have what could be hundreds of millions, if not billions of dollars in fundraising efforts by PE firms on behalf of college athletic departments and by banks like JP Morgan,
00:04:33
Speaker
Again, I know that there is a convoluted legal argument to be made that it's still in some weird way, maybe not professional sports, but I think from a functionality standpoint, it doesn't hold water today, but it certainly doesn't hold any water for me if you have these PE firms getting involved with athletic departments in that way.
00:04:56
Speaker
But Ricky, why should people who are effectively working two full-time jobs at the age of 17, 18 to the age of 22, 23, why should they gain the benefit of things like workman's compensation if they're hurt?
00:05:10
Speaker
and better insurance and retirement benefits. They certainly don't deserve it. I mean, all of that money necessity, the necessity is that it go only to the coaches and administrators. Isn't that the way that this has always worked so well for everyone concerned in NC2A
NIL as Compensation: Comparing Sports Models
00:05:27
Speaker
sports? He said very sarcastically. And you mentioned that it has, I think the term you use the potential for abuse, perhaps,
00:05:36
Speaker
I would phrase it differently. I would say the inevitability of abuse and corruption. Because if you go back and look at the history of the NC2A, I don't think that you could point out a single year where that particular issue, corruption and abuse did not exist. But I'll climb off of my soapbox now and get back to the main subject here.
Ethical Concerns of Private Equity in Sports
00:06:01
Speaker
Another issue that I'm not sure that people are necessarily aware of
00:06:06
Speaker
um name image and likeness is bleeding into college baseball and college baseball is generally not thought of as a revenue sport but teams are expanding their facilities and also their recruiting efforts and this is becoming a way where it's always been a fight if you will between the colleges and the pro teams that are drafting players because
00:06:35
Speaker
The guys that are first round draft choices and are going to be offered six, $7 million to go in pro ball out of high school. It's not going to be a factor in terms of their recruitment, but a kid coming out of high school who's offered, you know, a couple of hundred thousand dollars, which for an 18 year old kid is quite a bit of money. But when a college comes to them and says, we can do that every year, you're here while you're continuing to play ball.
00:07:03
Speaker
get at least three years of an education and be drafted again after your junior year, that's a very tempting opportunity.
NIL's Influence on Minor Leagues and Realignment: Sustainable?
00:07:12
Speaker
And the way that I know about this is through a relationship that I won't go into in detail.
00:07:20
Speaker
I am familiar with a player who was drafted just this past year, this past summer and did not sign and is actually going to a D1 school and getting a fairly substantial amount of NIL money in order to effectively compensate him for the money that he walked away from. Now, not only does this cause a problem with the colleges and the pro teams, but you mentioned agencies getting involved in NIL money.
00:07:50
Speaker
The Major League Baseball Players Association, hardly a paragon of virtue, has regulations, and I'm using air quotes when I use the term, that govern player agents that say nothing of a material nature can be conveyed by an agent to an athlete to convince him to become or remain a client of that particular agency. How do you feel that issue can and should be dealt with, Councillor?
00:08:19
Speaker
Man, we are conflating a whole bunch of different things together that are all interdependent on one another. Because I mean, even what you just laid out, think about how it could impact one baseball going forward. Think about how realignment in college sports is going to impact
00:08:37
Speaker
the more traditional non-revenue sports in college.
NIL as Indirect Salary: Economic Impacts
00:08:41
Speaker
What if Stanford accepts and joins the ACC and now all of a sudden Stanford's baseball team is going to UVA for a weekend and Florida State the next weekend and all of that. So it
00:09:00
Speaker
you know, we are careening. I think we've, again, I think we've been there for a long time, but even the staunchest of amateur sports supporters, I think would start to realize that we are careening towards a wildly professionalized model where
00:09:19
Speaker
what you're talking about right now, that's going to end up impacting the pipeline of talent flowing into minor league baseball, which, you know, I think we're roughly six years away from the first window in which major league baseball can take another look at the minor league system under the one baseball charter agreement. And what happens if the bulk of again, as you said, beyond those first 30 guys who are going to get that seven figure signing bonus,
00:09:49
Speaker
What if we're in a world where, outside of them, everybody else is going through to their junior and senior year in college? How sustainable are those minor league teams? Does the MLB want to have a single A and a double A layer of players who probably won't amount to much or are exclusively international signings?
00:10:12
Speaker
because everybody's turning down their contracts through the MLB draft because they're getting better NIL deals. And then the other part on the NIL side, you're talking about the amounts that these schools are paying because of the restrictions around compensation to college athletes. I think, again, regardless of what side of the table you're on in terms of college athletes' rights and compensation and things like that, NIL is pulling double duty.
00:10:39
Speaker
NIL is functioning as direct compensation for these players only because of the rules and the restrictions. I think if we were in a world where athletes could be paid directly, college sports would look a lot like professional sports where
00:10:56
Speaker
somewhere in the neighborhood of 60 to 80% of an athlete's income is their salary, and the remainder is what they make through endorsement deals, appearances, autograph signings, things like that. The only reason that 100% of athlete's revenue in college sports is purely on that endorsement side is because they can't be paid directly.
00:11:20
Speaker
by the
Minor League Proposal: Benefits for Player Development?
00:11:21
Speaker
rules. So again, NIL is functioning as compensation and NIL, and that's why we're seeing the big, big numbers that we're seeing in NIL deals because they're overinflated, because it's functioning as compensation too. Right. Well, one thing that you can count on is that whatever solution is available, the NC2A will
00:11:47
Speaker
bucket up entirely and pick the least tenable, least sustainable solution possible. Let me ask you a question. The scenario that you just outlined in regard to players in baseball, skipping, signing with professional teams and going to college, and the structure that that would inevitably create, is that manifestly different
00:12:16
Speaker
from the model that ball has been using since day one. Because isn't that exactly what happens with professional football? The colleges are effectively their minor leagues.
00:12:28
Speaker
Exactly. And I know that there's some elements with football because of the repetitive head trauma and impact and all that stuff that having minor league teams are just more complicated from a legal and an insurance perspective. But yes, what we could end up with, and it's happening in basketball,
00:12:48
Speaker
It's been happening in basketball for the last three years now, where because of entities like the G-League Ignite, and OT, and now the universities coming to the table with these expansive NIL deals, you're seeing more and more players stay in school or some sort of alternative for longer.
00:13:08
Speaker
because they can make as much or more money on those paths and still be on the path to the professional ranks so rather than being a guy that maybe jumps too early into the nba ranks and is gonna sit on the bench and you know maybe get ten
Private Equity and Ownership in Sports: Financial Implications
00:13:24
Speaker
or fifteen minutes a night.
00:13:26
Speaker
he can continue on in whatever alternative he's in, make more money and be playing, you know, 30 to 40 minutes a night, which will only benefit them. You know, as I hope theoretically will only benefit them as time goes on. Now, it is interesting that you bring up football because I forget which coach it was. I want to say
00:13:48
Speaker
I think it might have been the Falcons head coach. Somebody just within the last week said that the NFL needs to explore having a minor league system. And I think it was the Falcons head coach and really, I hadn't heard that.
00:14:02
Speaker
Yeah, and it was because they were talking about quarterbacks, I believe, in particular. And basically, you know, it was kind of all not directly, but loosely tied to Trey Lance and how, you know, a guy like Trey Lance might have benefited from having some sort of minor league structure where he could have come in, had continuous playing time under, you know, the watchful eye of
00:14:31
Speaker
team Shanahan and Lynch in a minor league context and continued to develop rather than what ended up happening. We're now, you know, he's the third string quarterback for the, for the Cowboys.
Challenges in Sports Team Purchases: Valuation and Debt
00:14:44
Speaker
So yeah.
00:14:46
Speaker
Again, there's all kinds of complicated elements to having a minor league football structure, but it was still interesting to me and caught my eye when I saw that, that one of the 32 NFL head coaches just last week said, we should explore a minor league option. Well, and I'm certain that he only did that out of the goodness of his part as opposed to him having the opportunity to have access to better players. That's certainly not his interest.
00:15:14
Speaker
You mentioned the pro teams now and that brings up something that kind of dovetails with what we were talking about earlier in regard to private equity companies. As exemplified recently by the purchase of the Washington, let's call them commanders, teams are, leagues rather, are going to have to begin
00:15:38
Speaker
at least contemplating changes to their rules in regard to the way that purchases and ownership of teams are structured because the big issue used to be the amount of debt involved in the purchase and ownership of a team. And it used to be where baseball only individuals could own teams.
00:16:02
Speaker
They loosen those rules up a bit, but not very much. What's your take in terms of the possibility in the future of our seeing teams not only owned by private equity companies, but corporations and or also foreign entities in getting involved?
00:16:26
Speaker
Yeah, I spoke about this at a conference in London last September and the whole panel we were looking at different elements around sport ownership and things and where we kind of ended up at the end.
00:16:42
Speaker
paraphrasing what my closing contribution was to the panel, which was that going forward with the way that valuations are spiking, especially in US professional sports, but globally, we're starting to see there even the 1%.
00:17:00
Speaker
can't afford to drop $6 billion on an NFL team or on a professional sports team. And those numbers are only going to continue to increase. I mean, we have China and the NBA, their frosty relationship is starting to thaw a bit. And as that happens and viewership starts to increase in China, I mean, a random weekday game that might
00:17:26
Speaker
rate, you know, a million, a million to viewers in the US, you know, something like a weekday game of like the Clippers and the Pacers, like something that, you know, doesn't have a ton of playoff relevance, you know, only one, arguably, you know, well followed team, like again, that sort of game that you have on a Tuesday night in the NBA, the again, outside of the local markets isn't going to garner a ton of attention. In China, that game will get
00:17:54
Speaker
eight, 10 million viewers easily. And because of the demand and viewership numbers that we continue to see overseas in professional sports, especially US professional sports, media rights are only going to continue to increase, which means the team valuations are only going to continue to increase. I mean, I don't think it's crazy to think that by 2030, we'll have a $10 billion sale for an NFL team.
00:18:21
Speaker
We might eclipse that a couple of times potentially because we've got the Seahawks maybe sold in the not too distant future, depending on how the rest of things shake out with the teams owned by the Paul Allen Trust. So you've got the Seahawks and the NFL and the Portland Trailblazers and the NBA.
00:18:43
Speaker
We could easily see, I think, that $10 billion dollar number eclipsed once or twice. And again, outside of a very small handful of people who can do that deal and only take on a billion dollars of debt.
Media Rights and Sports Valuation: Disruption Risks
00:19:00
Speaker
and who can do that deal where you are limited as to the percentage of private equity that you're allowed to bring with you on doing that deal. I mean, we're talking probably less than a dozen people that could do that, or they would even have an interest in doing that. So because of that, I think what we're going to end up having is
00:19:26
Speaker
Number one, we're going to see, and we've already seen it with the NBA and now the NFL has kind of said they're going to explore the possibility too, where sovereign funds are going to have the opportunity to come in on PE deals into professional sports teams. And the NBA seems like it's probably going to be the first league where that happens with the
00:19:48
Speaker
NFL and the MLB, you have certain political components involved that, you know, I think it will happen eventually, but it probably wouldn't be the first or even the second deal where such a situation would happen. And so as a result, we're going to continue to end up in a place where we're either going to see sort of a consortium buying a team.
00:20:11
Speaker
or we're going to see significant debt being used when people are buying teams going forward. And as a result, we're going to see leagues have to, again, tweak their rules because the NFL rule, it was $500 million until 2021, I believe. And now it was doubled up to a billion. And
00:20:30
Speaker
And obviously, I don't have this confirmed from an inside source or anything, but seemingly from what I've seen and heard with the commander's deal, that rule had to get bent for Josh Harris to purchase the Washington commanders. And again, that was only $6 billion. So that number is going to continue to go up. So I think sport ownership is going to have, I think, a pretty dramatic shift
00:21:00
Speaker
in the coming years, whether that be exclusively on the regulation side, on the side of who it is that's coming in and buying these teams or some combination of the two, where, you know, going forward, we're going to see some some pretty substantial differences. And isn't all that dependent on media rights? Because when when these teams have been purchased in the past and then significant debt was involved,
00:21:29
Speaker
My understanding, and again, I don't have this firsthand, but my understanding was that what was leveraged primarily was pledging revenue from future media deals in regard to servicing that debt. So as long as the media money is continuing to flow, that debt service is not really a problem. But if something happens and there's a hiccup there,
00:21:53
Speaker
as you point out, not many companies, not many people, not only in the United States, but in the world really can write that check.
Sovereign Funds in Soccer: Ownership Challenges
00:22:01
Speaker
And haven't we seen sovereign funds and consortium ownership, a type of ownership already occurring in Premier League Soccer, for example, over in Europe?
00:22:14
Speaker
Yeah, I mean, we've got the Saudi sovereign fund owns Newcastle. You know, there is a it is not supposedly not directly connected to the Qatari sovereign fund, but a member of the Qatari royal family is attempting to purchase Manchester United. You have the UAE sovereign fund owns Manchester City.
00:22:42
Speaker
So, you know, I mean, those are some of the some of the most recognizable clubs in the world. And PSG Paris Saint-Germain in France, also owned by one of the the sovereign funds by the by the Qatari sovereign fund, which then also raises an interesting thing in ownership. So there's a
00:23:06
Speaker
There's a rule around mutual club ownership or if a multi-club ownership model. So two teams that are owned by the same group cannot be registered and compete in the same event, which in the United States
00:23:25
Speaker
Not a problem because we don't have events where, you know, like the U.S.L. plays the MLS. Whereas over there you have UEFA, which is the regulatory entity over all of European football. And they host several events, the Champions League, the Europa League and then the Europa Conference. And in each of these three tournaments, for lack of a better term,
00:23:54
Speaker
they bring clubs from around all of the European leagues and they're eligible to participate. That hasn't been too big of a problem, but for example, if it was ultimately deemed that Manchester United actually was being purchased by the Qatari sovereign fund and not by an individual member of the Qatari royal family,
00:24:20
Speaker
and UEFA were to determine that there was substantive control over both Manchester United and PSG by the Qatari sovereign fund, then you would end up in a situation where those clubs would not be able to both
00:24:36
Speaker
register for the Champions League, which is sort of the creme de la creme of tournaments in in Europe. So and those are two teams that are frequently, if not always on PSG is pretty much always in it. Manchester United used to always be in it, not quite as consistently of late. But so and that is dictated by there was a ruling
00:25:04
Speaker
which some have said is maybe outdated at this point going back to the legal side of things. So we could end up in a world where because the sovereign funds have so much money and because the sovereign funds continue to attempt to integrate into historical sports leagues, that we could end up in a world where one of the sovereign funds owns multiple clubs and then challenges the one club you wait for rule.
NFL Family Ownership Issues: Succession Examples
00:25:31
Speaker
So
00:25:31
Speaker
Yeah, we'll see. We'll see. But again, that it's another way in which because of the money that's involved, which Manchester United owned by the Glazer family, which also owns the Tampa Bay Buccaneers, they
00:25:46
Speaker
Pretty much exclusively were able to acquire Manchester United via debt, which again, kind of shows the differences between the NFL and the English Premier League, wherein the Glazers have essentially not put in a dollar of their own money, yet own one of the most recognizable, if not the most recognizable sport property in the world. They were able to do it all through debt.
00:26:11
Speaker
You know, it's that's crazy to me. I mean, could you imagine if Josh Harris had managed to fully debt finance six billion dollars to buy the Washington commanders? He probably would have maybe liked that to be an option, but because of the rules of the NFL, that's certainly not one.
00:26:31
Speaker
Well, Jeffrey Loria kind of did that with the Marlins. They basically gifted him a franchise in exchange for him giving up the rights to maintain a team that was not throwing slides in Montreal. And he came down here, invested almost none of his own money in the Marlins and sold the team for over a billion dollars after he and his mini me, David Sampson, were able to bribe and swindle their way to a new stadium.
00:27:01
Speaker
Yeah, yeah. It's, you know, again, how times have changed, you know, but basically, I guess my thesis that I'm trying to present here, if I if I am trying to present one is, you know, the days of George Steinbrenner, you know, is the is the Yankees. Like, I think that that is going to become a thing of the past because it's simply
00:27:25
Speaker
I mean, again, with the exception of a very small handful of people, which maybe Steve Cohen is actively being the exception to the rule here, that someone is just that wealthy. It doesn't matter to them. So maybe Steve Cohen's the exception of the rule going forward, but I think that
00:27:45
Speaker
Again, we're going to see more like the Broncos, you know, there's about a million and one people that are included in that ownership group, you know, and I know that it was the Waltons were the driving force, but you know, you got a lot of people involved in that ownership group that
00:28:04
Speaker
are very public facing and very involved. And same thing with the commanders. You go back to the name, we'll call them the commanders for now. You've already got Magic Johnson, who's part of the ownership group, saying we are going to look at everything, including what is arguably a really bad name. Yeah. Yeah. Wasn't the situation in Denver driven primarily by the fact that
00:28:28
Speaker
Pat Bolan died and there was a big fight among his heirs in regard to who was going to do what as far as the Broncos were concerned. And these are the sort of things that generally don't come to the attention of the public because when heirs fight over
00:28:49
Speaker
Let's say there's a family that owns a dozen auto dealerships and they're making millions and millions of dollars every year. That sort of thing rarely comes to the attention of the public, but when it's a sports franchise, particularly one that is as avidly followed as the Broncos are in Denver and that sort of thing happens, it's front page news.
00:29:14
Speaker
Yeah, no, I mean you're you're exactly correct. And again, it goes back to how the ownership rules are currently set up in the NFL, which is that there basically has to be a responsible party and they have to have at least 30% of the team.
00:29:30
Speaker
Without that, you were in violation of the NFL's rules and with the way that the Boylan family trust was playing out after his death, after the father's death with the kids, there wasn't going to be that sufficient threshold of any of the children.
00:29:48
Speaker
and they weren't going to be in compliance with the nfl rules and the team you know with the exception of the green bay packers who were grandfathered in and because of their historic nature and the way in which the fans have the opportunity to own part of the team with them being the exception.
00:30:08
Speaker
Right.
Ownership Disputes in NFL: Rules and Control
00:30:09
Speaker
Yeah, with them being the exception, because the same thing was happening with the Tennessee Titans when but Adams passed away. The Adams family trust the way in which it was it was set up, there was the possibility that it was going to happen there, too. Now they were able to work it out. And Amy Adams strong, who's the who is the the owner now?
00:30:29
Speaker
you know, ended up meeting the satisfactory requirements in terms of the percentage that the team owned to fall in compliance with the NFL's rules on team ownership. So that one worked. So you got two different examples. You have one situation where the family couldn't work it out. And as a result, the NFL basically said you guys are going to have to sell the team because otherwise we're basically going to take operational control of the team away because you're not in compliance versus the Addams family.
00:30:59
Speaker
not the family depicted in the television series working things out with the Tennessee Titans.
00:31:09
Speaker
Well, and another interesting situation that has occurred and is continuing to occur is in Baltimore with the ownership of the Orioles. And interestingly enough, the original, not original, but the most recent owner, Peter Angeles was a very, very successful attorney who you would think would have considered the effect his passing would have on the ownership structure there. So doesn't, doesn't the way that that
00:31:40
Speaker
Team structure is set up in advance of an owner's death, have a great deal to do with it because, uh, using the Kansas city chiefs as an example, Lamar hunt on the team and then he died. And now his son, Clark, I believe is his name, um,
00:31:56
Speaker
is the one who owns the team, but he's not going to live forever. And I have to imagine that having seen a success that his father had in terms of how that succession occurred, he must be looking into how his heirs are going to handle it because otherwise they're going to be faced with the same situation in terms of having to sell the team or somehow restructure the ownership of the team.
00:32:22
Speaker
Yeah, I mean a slightly different example, different context, but you know when when Jimmy Haslam was going through all that he was going through with with Pilot Flying J, the Browns moved to have his wife Dee.
00:32:38
Speaker
become essentially the responsible party. So in the event that he had served, you know, prison time, if he had been found to to be criminally guilty of anything with regards to pilot flying J, they did move to make that maneuver so that if it happened, the NFL wouldn't have to get involved on the ownership front.
00:33:06
Speaker
So D is, I think still to this day, I don't think they ever reversed it. D is really the primary owner of the Cleveland Browns. On paper anyway. Another situation like that happened with the Spanos family that owns the now Los Angeles Chargers.
00:33:25
Speaker
Dean, I believe, was the guy's name who owned the team in San Diego. Before they moved to LA, he passed away. And I know there was some, you know, let's call it controversy over who was going to have the reins to control the team moving forward.
00:33:46
Speaker
among the heirs there and they were able to
Growth of Alternative Sports: Media and Investment Opportunities
00:33:50
Speaker
come up with a solution that kept it from going into a full-scale family war and kept that situation quiet.
00:34:04
Speaker
And another issue I'd like to ask about, Ricky, and I'm sure that the people listening would be interested in, what about additional professional teams? I saw something recently online showing that there was something like three quarters of a billion dollars that was being purposed to setting up a professional cricket league
00:34:28
Speaker
I believe it was in India and they were hopeful of growing the sport globally because cricket is popular in other areas of the world and just India. I know it's popular in the Caribbean for one and obviously that got there the same way as it got to India by way of Great Britain spreading it there. So it's obviously popular in England as well.
00:34:56
Speaker
do you think there's going to be much of a market moving forward or leagues like that in regard to particularly what I mentioned earlier, that those expansions, if you want to call them that, are primarily fueled by the media dollars?
00:35:14
Speaker
Yeah, so actually on that panel I referenced in London, one of the main lawyers for the Indian Cricket League was also on the panel. And she did mention their expectation of continued expansion. And this was also part of what I discussed, because obviously I was coming at it. The main reason that I was on the panel was the conversation around
00:35:40
Speaker
alternative models in college sports and U.S. professional sports as well. And so whether we're talking pickleball, whether we're talking the beer pong league that's going, whether we're talking drone racing, whether we're talking rugby sevens or other formats of rugby, whether we're talking cricket and part of with cricket, they also introduced
00:36:04
Speaker
a time limited version, which became the most exciting product in India, which is the second largest market by population in the world. I think we're going to continue to see these ultimate alternative formats in alternative leagues and sports because
00:36:24
Speaker
there is still a desire for people outside of those, you know, again, however many it is, 15, 20 people that can afford an NFL team, or an NBA team, or now what we're going towards an English Premier League team, there is still a significant appetite for the next threshold, next several thresholds of people in terms of overall wealth to have involvement in professional sports in some way, shape or form.
00:36:51
Speaker
So I think as a result, we're going to continue to see alternative leagues, alternative formats, things like that. I mean, there's a professional league of 7v7 outdoor soccer. I know that's going in Asia, that's starting to gain a lot of popularity as well.
00:37:11
Speaker
So those sorts, there's a 3v3 basketball league I think that Baron Davis is involved in in China now. So these sorts of alternative leagues are going to continue to pop up because, again, those next several tiers of wealthy individuals who want to have ownership in sport,
00:37:34
Speaker
They're not just going to go away, they're not just going to say I'm no longer interested, they're going to look for opportunities. And I think that's going to lead to innovation, that's going to lead to other leagues, that's going to lead to other sports, whether or not they're ultimately successful or not, who knows. But I think we're going to see a lot more sport products going forward.
Rise of E-Sports: Investment and Entertainment Potential
00:37:55
Speaker
Well, yeah, it's all about content, isn't it? I mean, the happiest people on the face of the planet have to be the, what are they, the producers or whatever you want to call them that are on the other side from the writers and actor strike right now because football season started. So that is taking attention away from the fact that the scripted
00:38:19
Speaker
programs that people would be accustomed to watching are not going to be available this fall. And even when that strike does get settled still.
00:38:28
Speaker
People you know, these companies want content. There's only so many iterations of of uh survivor the bachelor america's got Disease or whatever. Uh, dr pimple popper. There's only so many uh variations of those programs that that can be put on and it just seems that uh sport is a never-ending source of of these viable options and for a
00:38:57
Speaker
wealthy but not mega, mega wealthy person who's not going to be able to write a check for an NBA or NFL or MLB franchise, getting into a professional pickleball or professional team tennis. They tried to make a go of team tennis a couple of times and it hasn't happened. If someone can figure out a way to make that work, they could get into that for
00:39:21
Speaker
few million dollars as opposed to a billion dollars. And if it really grows and prospers, next thing you know, something that they spent a couple, $3 million is now worth $300 million if it goes over big. So it would seem that not only is it advantageous from the perspective of supplying the streaming companies with content, also the people that own the teams, it gives them a viable investment opportunity. Would you not agree?
00:39:51
Speaker
It does. And again, I think as a result, there's so many different outlets to get your content out there. There are ways to build. It may not be a $12 billion annual revenue league like the NFL, but you don't have to be that to be very successful. And the salaries also aren't
00:40:16
Speaker
what they are in the NFL where roughly 50% of that is going to go back to the players in the form of their salaries. So to your point, you can launch an alternative sports league for under 50 million bucks and if you can
00:40:32
Speaker
Build a sustainable revenue model where you're making a couple hundred million a year that's it's it becomes very successful both economically and you know from a consumer and a fan standpoint we got the fan controlled.
00:40:51
Speaker
Football League, which has now spawned the fan controlled basketball league, which then you've got the the TBT, which is the basketball tournament, which has now spawned the soccer tournament. We've got the Kings League that Gerard Pique launched, which now supposedly there's going to be Kings Leagues all around the globe. You've got the Davis Cup in tennis. You've got I forget Roger Federer's tennis event.
00:41:17
Speaker
the something cup as well. I'm blanking on it off the top of my head that goes all around the globe right now. So I mean, these these alternative formats, I think, are are going to continue to pop up tomorrow. Golf is another one. I think going back to Steve Cohen, they just announced that Steve Cohen is going to be the owner of the New York team in the golf league, which is going to be a one month format of some sort.
00:41:45
Speaker
it sounds like in partnership to some extent with the PGA Tour and then TGL, which is the Golf League. So, you know, we're just going to continue to see more and more of that. And then if there's a way for technology to play a part, then that starts to span the interest or expand the interest of
00:42:09
Speaker
private equity firms that might want to get involved because now it's not a sport investment. It's a consumer product investment, which, you know, that that's how, you know, like I think it's light speed ventures, which was a group I came across a few years ago. You know, that was how they got into the fan control football league because they viewed it as a technology consumer product as opposed to a sport product.
00:42:35
Speaker
Well, look, did you ever think 20 years ago that there would be people hanging to watch other people play video games? And yet e-sports is very big. And that's just an example of something that started essentially out of ether, out of nothing. And, um,
00:42:57
Speaker
I wasn't aware of it until a few years back when I spoke to you about finding sources of investment for some people that were trying to get into that. And honestly, my biggest reaction to it was, you've got to be kidding me. People pay to watch other people play video games as opposed to playing video games themselves. It's one thing that you and I are not out
00:43:21
Speaker
running into each other playing football. We're not capable of doing that, but we could certainly pick up a game controller and play video games.
00:43:28
Speaker
Um, it just, it blew my mind and colleges are giving scholarships for that. So soon enough, the NC2A will get involved in fucking that up too.
UVA's Response to Tragedy: Mental Health Focus
00:43:36
Speaker
Um, before we get too deep, I know there's a couple of leagues, I'll just say real quick, um, that they've tried to house themselves within, um, campus life as opposed to our student life, whatever the school calls it, as opposed to the athletic department.
00:43:55
Speaker
because then the NCAA doesn't have any purview over it. Oh, oh, interesting. I want to ask you one last question because I know you've got to go. I know you to be a fan of any follower of sports at the University of Virginia. I know that's where you grew up and everything. And there was a very emotional reaction last week to them beginning their football season. And I read recently that
00:44:25
Speaker
There's going to be a ceremony this weekend, correct? A memorial for the players that were murdered there last year. Do you have any insight into what that's about and how all of that is going to work its way into the program in the near future and the effect it may have?
00:44:51
Speaker
I don't have any personal knowledge or anything along those lines. My dad is an alum of the school, so I was raised UVA fan on the football side and basketball side. But I mean, it's clearly had a significant impact on the community there, and certainly the athletic department has felt it in a range of ways.
00:45:21
Speaker
Seem to be being used in a good way and maybe being used isn't the right phrase but you know it it does it has seem to have shown a light on.
00:45:35
Speaker
you know, mental health and mental wellness and things like that for athletes. Granted, it shouldn't take something to that extent to have those sorts of resources available to college athletes. But unfortunately, a lot of times it does take something extreme to get those sorts of services really focused on in an athletic department. I'm glad to see that UVA has done it. I hope they continue to do it. I hope that other schools continue to do it because again, this was a rather,
00:46:04
Speaker
extreme example and a tragic example, but college athletes go through a lot all the time. We've seen the reckoning at Northwestern, which I know very different examples, but
00:46:20
Speaker
the level of abuse and hazing that goes on in colleges, it's not something that's just limited to big schools. It's not something that's just limited to division one schools by any means. It happens at the D2, the D3, and the NAI level as well. And this is where I go back around to where we started this conversation around the rights of college athletes and things like that. These are our services that need to be made available to athletes that are at a very,
00:46:49
Speaker
precarious time in life in general, just from an emotional standpoint. And they're under just an immense amount of pressure, both academically speaking, athletically speaking, and just generally in life. So like I said, what I've been most glad to see throughout all of this is how UVA has made more services and made that a focal point for their athletic department and for their athletes.
00:47:17
Speaker
And I hope that schools continue to take these sorts of matters much more seriously than they have because the athletes need it.
Conclusion and Listener Interaction
00:47:27
Speaker
Well, and I hope that they take advantage of the opportunity to address gun violence as well, because between the murders that took place at Virginia Tech and the murders that took place at University of Virginia,
00:47:39
Speaker
To paraphrase the fascist governor of the state I currently reside in, it's almost as if they're trying to make Virginia Florida. With those words of biased wisdom, let's bring this plane into a landing. I appreciate you coming on again, Ricky.
00:47:54
Speaker
And that's it for another edition of Follow the Money Ball with your host David Sloan. To make a comment or a suggestion for a future guest, reach out to David at followthemoneyball.substack.com. Thanks for listening. See you next time.