I collaborated with Ekta Sharma for today’s piece on the growth of women’s sports.

Ekta is a Sports Business Analyst at Futures Sports & Entertainment. As part of her mission to promote women's sports, Ekta also writes Sportsaboveall — a blog about sports tech and women's sports.

If you have any feedback, ideas, or suggestions for future editions, send me an email or drop me a message on Twitter @Ronenain!

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The Catalysts for the Growth of Women’s Sports

Women’s sports are on the verge of hitting escape velocity and exponential growth — recent developments suggest women’s sports are becoming more relevant in the industry, especially from women’s basketball:

• For this past NCAA Women's March Madness edition, ESPN sold out advertising inventory for its second consecutive year, closing ~100 advertisers — up from only 22 advertisers in 2022.

• On average, around 9.9 million viewers tuned in to the 2022 NCAA Women's Basketball Championship game (up 103% YoY) — a record for a women’s game.  

• Student athlete compensation (NIL) for women’s basketball players grew by 186% in 2022, per SponsorUnited.

The rise in demand for commercial opportunities and the increased interest in the content demonstrates something fundamental is changing in women’s sports — but why?

A Visible Inequality

In March 2021, college basketball player Sedona Prince posted a video on TikTok showing the unequal facilities provided for male and female college basketball players.

The video went viral, and brands such as Dick’s Sporting Goods, Orangetheory, Tonal, and professional athletes like basketball superstars Stephen Curry and A’ja Wilson, joined the conversation to express empathy towards the apparent inequality and to show their support for women athletes. 

And it worked – the gym issue was addressed thanks to the buzz created on social media.

However, some evidence indicates mainstream sports media has consistently undercovered the women’s side of the industry:

• According to Zoomph, during the second half of March 2021, the top 14 sports media companies posted over 5,100 social media posts — but only 98 (about 1.9%) were about the NCAA Women’s Tournament.​ 

• In 2018, UNESCO reported that women’s sports receive only 4% of total sports-related media coverage.

Social media spotlighted the inequality of women’s sports and helped spark positive conversations for change.

Still, limited exposure impacts its commercial potential. Hence, more substantial changes were needed for women’s sports to grow.

More Eyes, More Likes

New niche media companies supporting women’s involvement in sports — e.g., Just Women's Sports (JWS), The GiST, and Togethxr — emerged in the last few years to provide extensive coverage of women's sports. 

These organizations strive to provide the coverage they believe is lacking from traditional media — e.g., player news, match details, analysis, women’s leadership, etc. — to meet the growing demand for inclusive coverage of women’s sports. 

And the movement is gaining momentum — companies like The Gist and TogethXR have received backing from Trailblazer Venture Studio, and JWS even raised $6 million in funding.

“We saw a massive opportunity to tap into an audience that was extremely underserved by traditional media,” said Haley Rosen, Founder and CEO of JWS. “The on-field product was great; women’s sports needed better coverage and smarter marketing to break into the mainstream.”

An Inflection Point

Women's sports have historically struggled to attract viewers, land sponsorships, and get enough exposure. 

However, social and niche media might finally turn women’s sports around. 

While women’s sports might eventually need traditional media as a force multiplier to become mainstream — this less conventional exposure may bring the deals, viewership numbers, and demand for media rights required to accelerate growth. 

What comes next in the chapter on women’s sports? An exciting time for new business and technology opportunities — and we’re here for it.

As part of the latest 4/20 holiday celebration, we’ll dive into the latest developments of weed adoption in sports and the reasons why it’s an important topic to follow.

We’re (still) looking for contributing writers — if you want to publish your work on Sports, Tech, Biz or have any feedback, ideas, or suggestions for future editions, send me an email or drop me a message on Twitter @Ronenain!

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Weed Adoption in Sports

The new Collective Bargaining Agreement (CBA) between the National Basketball Players Association and the NBA will no longer penalize players for using marihuana, according to The Athletic.

Although the NBA stopped testing players for cannabis in 2021, this explicit policy statement means the league has officially changed its position on the substance.

An Evolving Attitude

This shift in attitude is part of a broader trend in the sports industry, as increasing state legalization and the adoption of marihuana in sports have pushed leagues, associations, and organizing committees to reconsider their stances:

• The MLB removed marihuana from its banned substances in 2019, allows teams to sell sponsorships to cannabis companies, and even signed an exclusive deal with Charlotte’s Web — a major CBD brand — as the official CBD partner of the league.

• The NHL tests for cannabis but doesn’t punish usage — it uses it to provide health and wellness services and recommendations to players.

• The NFL reduced its testing windows in 2021, allowing players to use cannabis during the offseason without any punishment.

Countless other sports organizations have loosened their regulations around cannabis — primarily due to the legal changes around it.

A Better Substitute

The alarming rise in deaths related to traditional opioid abuse — e.g., painkillers — has increased interest in alternatives that could be less harmful to users.

Some evidence suggests marihuana and its diverse strains can help reduce pain, inflammation, and stress.

Recent research findings suggest people have turned to marihuana as an alternative way to treat pain, avoiding more dangerously addictive drugs and reducing opioid prescriptions overall.

By accepting medical marihuana, sports leagues contribute to a healthier trend of safer alternatives to more harmful substances — but its potential does not end there.

A Gold Mine?

Sports properties can align their brands with a bigger purpose and monetize partnerships with medical marihuana companies.

Athletes can also invest or become brand ambassadors for weed companies and monetize their name image and likeness.

Although marihuana is only legal in 21 states in the U.S., many properties and athletes are already advocating for it:

• The UFC, the BIG3, and World Surf League have partnered with weed companies.

• Current and former athletes like NFL tight end Rob Gronkowski, NHL star Mike Cammalleri, and NBA superstar Kevin Durant are some of the few embracing the trend.

The Takeaway

While the NBA statement might feel like a minor change, it is part of a growing trend.

Sports leagues are continuously reacting and reevaluating their stances to evolving trends due to changes in laws, novel research findings, and attitudes toward specific substances.

Although full legalization might take more years, the increased marriage between sports and cannabis in the form of partnerships, deals, and endorsements suggests we must keep an eye on this growing intersection.

Today we’re analyzing IBM’s involvement in sports — and the reason why more sports properties could benefit from partnering with tech providers.

We’re looking for contributing writers — if you want to write for Sports, Tech, Biz or have any feedback, ideas, or suggestions for future editions, send me an email or drop me a message on Twitter @Ronenain!

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Is IBM the Greatest Sports Tech Partner of All Time?

IBM is the official technology partner of The Masters golf tournament, and it supports the event with diverse tech solutions.

This year, IBM knocked it out of the park — The Masters app surprised the public with the quality of its technology, creating shockwaves from people talking about it on social media:

The app featured automated highlights, insights, and projections, but the most enticing feature was Watson — an AI-trained language model that delivered insights in real time, like an announcer.

While IBM has a solid reputation — its tech success within sports has been a long time coming…

An Overnight Success, 27 Years In The Making

IBM has been the tech partner of the Masters since 1996, implementing different initiatives to enhance the experience for players, fans, and broadcasters.

One of IBM’s main areas of focus since the beginning has been the transition from the input from data and analytics to the outputs with insights and statistics to compelling storytelling.

In an interview with Local 5, the VP of Sports and Entertainment Partnerships at IBM, Noah Syken, said, “We focus on the data of these organizations, whether the scoring or video data, and we help these organizations use it to tell their stories.”

Whether from player statistics, weather conditions, or even course conditions — IBM can translate thousands of metadata points to provide real-time insights to broadcasters and fans — improving the overall digital experience.

But the potential of partnering with IBM lies beyond a simple feature (or event).

Leveraging An Ecosystem

An advantage of partnering with IBM is leveraging its tech ecosystem (AI, servers, platforms, equipment, etc.), experience with other top sports properties, and group of talented engineers.

IBM has been a tech partner of the US Open, Wimbledon, and ESPN for years.

The lessons from dozens of iterations in similar use cases have allowed IBM to create compelling solutions for these organizations.

For example, IBM’s Cognitive Highlights Solution — also used in Wimbledon — goes through thousands of highlights and decides which ones are worth sharing based on match data, crowd noise, player expressions, etc.

IBM’s cloud computing platform hosts the Masters website and app, allowing scalable, reliable, and seamless access to all tournament data.

The scale of using this technology rises above the capabilities of what any army of humans could ever do.

And What?

Due to its results and longevity, IBM could be in the conversation for the greatest sports tech partner of all time. Still, I couldn’t come up with reasons why a sports organization shouldn’t partner with similar top-notch tech providers.

Sports properties can derive long-term value from partnerships with companies like IBM to deliver high-quality products, services, and experiences.

The indirect effects of a superior product or experience are often intangible and hardly measurable — i.e., no marketing manager includes “millions of impressions and reactions from our great technology” in any marketing plan.

Still, even if it’s not always tangible, it feels evident — and hence, necessary.

Further reading:

1. Adapt to win in the sports industry with the help of IBM — The Drum

2. Elevating the digital sports experience for the win — IBM

Today we’re analyzing the valuation of WWE — one of the biggest entertainment companies in the world — and the reason why Endeavor paid a premium for it.

Lastly, we’re looking for contributing writers — if you want to write for Sports, Tech, Biz or have any feedback, ideas, or suggestions for future editions, send me an email or drop me a message on Twitter @Ronenain!

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Is WWE Really Worth $9.3 Billion?

Earlier this week, Endeavor announced it acquired a majority share of the World Wrestling Entertainment (WWE) at a valuation of $9.3 billion.

The merger will combine the UFC with the WWE to form NewCo — one of the largest sports-media companies in the world — valued at $21.4 billion.

But is the WWE worth it?

Relative Valuation

Comparing the WWE to big sports franchises might provide a proxy for its valuation.

According to Sportico, the biggest sports franchises in the U.S. — namely, the New York Yankees, the Dallas Cowboys, and the Golden State Warriors — are valued at $7.13, $7.6, and $7.56 billion, respectively.

These franchises differ from the WWE in their operations and sources of revenue, but it’s worth noting that they all compete for the same thing — the fans’ attention.

Yet, while WWE might feel expensive compared to the above, the WWE looks cheap relative to UFC’s valuation of 12.1 billion.

Multiples Valuation

For evaluating an investment, an investor will typically look for a healthy EV/EBITDA multiple ranging from 8 to 12.

WWE reported an adjusted EBITDA in 2022 of $384 million.

Under the acquired valuation of $9.3 billion, WWE’s EV/EBITDA multiple is about 24x.

WWE trades at a Price/Earnings multiple (PE) of 43.7. This ratio represents a 2.28% annual return rate — expensive, considering it’s lower than the 4.5% risk-free interest rate.

In short, WWE’s high PE ratio suggests the stock is overvalued based on the earnings it has generated so far under its current price.

So why is Endeavor paying a premium for WWE?

The Opportunity

Even though it feels like Endeavor paid an expensive premium for WWE, the opportunity to join forces with the engine powering the UFC to create the biggest powerhouse in sports media is undoubtedly highly appealing.

The growth potential of leveraging Endeavor’s knowledge and experience will help WWE’s global expansion, sponsorship revenues, and bigger media deals.

The Takeaway

Based on different valuation metrics, the $9.3 billion mark Endeavor determined for the WWE feels excessive — and the market is still undecided.

Even though the WWE stock kept rising in the days after the announcement, it still has a market cap of ~ $7.4 billion.

Still, based on its experience, and given it’s a property similar to UFC, the acquisition proves Endeavor’s vision and interest in the potential of the WWE — even at those abnormally high prices.

Today we’re exploring how a massive digital content creator ranks next to some of the biggest athletes in the world — and what are some of the things they could learn from him.

Lastly, if you want to write for Sports, Tech, Biz or have any feedback, ideas, or suggestions for future editions, send me an email or drop me a message on Twitter @Ronenain!

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Why MrBeast is a Genius

Horizm’s latest Digital Value report ranked the most popular athletes next to the biggest influencers to compare the value generated by their digital audiences and content.

The report found that Cristiano Ronaldo led the ranking of total value created at around €85 million, but YouTube sensation Jimmy Donaldson — also known as MrBeast — came in second at about €49 million.

The wildest part of the ranking is that Ronaldo’s audience size is more than seven times greater than MrBeast’s.

Overall, MrBeast crushes all athletes in value generated per fan at €0.46 — more than twice the second place, Conor McGregor, at €0.18.

MrBeast generates the most value per fan due to his efficient monetization strategies — a product of the engagement and performance of his content.

Behind The Creative Genius

In two highly recommended podcast episodes, Joe Rogan and Lex Fridman decoded some of MrBeast’s genius with great questions.

In case you don’t have 5 hours to listen to the full interviews, here are some nuggets of wisdom you can use to learn from him:

1. Quality > quantity

Jimmy talks a lot about the value of reinvesting all the money he earns into his content, stating his goal is always to make the best video possible.

He explains that in today’s overwhelming world of social media, the algorithm shows the quality content first.

“It’s much easier to get 5,000,000 views on 1 video than to get 100,000 views on 50 videos”

He is always thinking about improving the quality of his productions — once he made enough, he bought better microphones, computers, and cameras and hired people who knew how to make videos viral — emphasizing how quality wins over the long run.

2. Obsess over minimal details

MrBeast literally spent thousands of hours studying YouTube’s algorithm to figure out how to go viral.

He obsessed over everything that might appear minimal such as pacing, colors, brightness, frames, takes, safety, and even thumbnails.

Jimmy employs six people who design dozens of thumbnails BEFORE the videos are even recorded.

3. Expand the pie

Jimmy talks about the value of tapping more audiences (e.g., those who speak a different language) by simply translating the same content and having it narrated by a popular personality from a specific region.

For example, they hired a wildly popular voice in Japan that is the voice of a trendy local anime cartoon — increasing the engagement that a subtlety like that can have to expand the pie.

4. Work with hard workers who are coachable

MrBeast explains that when you do something highly specific, it’s very hard to find someone who knows the key to going viral — “it’s easier to find those who share your vision.”

The solution that has worked for MrBeast is to hire talent with the skills and general knowledge but who also carry a ‘beginner’s mind’ and are willing to unlearn what they know from traditional media and try different things out.

The Takeaway

At 24, Jimmy Donaldson has built a massive following and is among the highest-earning YouTubers today, but his popularity and revenues are not by chance — the strategies and tactics he uses are products of thousands of iterations of making videos for over 13 years.

Up-and-coming athletes and those with already established audiences can learn from MrBeast’s playbook to grow the value they can create through new media and digital content.

(For deeper dives into MrBeast’s strategies, check out this piece by Alexandre Dewez and this article by Henrik Karlsson)

I apologize for sending this a bit later than usual — I caught a stomach bug and have been sick for the whole week; plus, my brother is getting married this weekend — busy times!

Before today’s piece, I wanted to give you a quick shout-out. The publication is growing faster than ever, it recently crossed 1,000 subscribers, and we’re getting many organic subscriptions daily!

If you enjoy the content, all I ask is that you share the publication — it will help us reach more people who could benefit from it!

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Lastly, if you want to write for Sports, Tech, Biz or have any feedback, ideas, or suggestions for future editions, send me an email or drop me a message on Twitter @Ronenain!

Using Thermoregulation to Train Harder

Cold exposure and ice baths were mainly popularized by Wim Hof — AKA The Iceman — but have also been used and endorsed by public figures on social media like Joe Rogan, David Goggins, Tim Ferriss, and several others due to their benefits for health and wellness.

Cold showers or ice baths have proved to activate and release the catecholamines in your body. 

These hormones — dopamine, epinephrine, and norepinephrine — improve your mood, alertness, energy, and focus during the hours following the proper cold exposure protocol.

In addition, cold exposure is also helpful for recovery by reducing muscle inflammation after high-intensity or endurance training for athletes. 

Professional athletes from football, basketball, soccer, and other high-contact sports engage in it right after performing to recover faster.

Unless training for hypertrophy — where inflammation breaks down muscle tissue to regenerate and grow back stronger (i.e., adapt) — cold exposure helps athletes be ready to engage in physical activity quicker. 

Both for recovery and for the dopamine system, the use of cold exposure has been growing in popularity. 

However, real-time performance improvement is an area of opportunity with massive potential through the aid of thermoregulation.

How exactly?

Due to their lack of hair stem cells, three areas of our bodies can work as radiators or portals with the capacity to regulate temperature quicker in our bodies:

• The palms of our hands

• The bottoms of our feet

• The upper part of our face

In his latest appearance on the Joe Rogan podcast, Dr. Andrew Huberman explains that “Muscular failure happens because the muscle gets too hot when working out. If we lower the core body temperature through one of those radiators, people can preserve the training effect and keep their muscles going without failure. In short, athletes can train harder for longer by maintaining core temperature low.”

So far, biology Professors Craig Heller and Dennis Grahn have led innovation in inter-workout cooling as they’ve discovered the potential of thermoregulation in performance.

Their company, CoolMitt, currently competes with a few others, such as AVA Cooling Technology and CoreTX — but neither has a clear dominance in the market.

The Opportunity

Due to the proven benefits of in-training cold exposure and the size of the performance and training market, inter-workout cooling is a blue ocean of opportunity.

While market adoption has primarily included professional teams and athletes, I can only think of the millions of gyms and fitness studios that will eventually have them. 

I imagine a station in any local gym that you will be able to use in between sets to cool your body on demand and keep your workouts going.

I also envision gloves or shoes with cooling features that athletes in the NFL or NBA will wear during time-outs to help them perform better in games.

Some reviews for the different products available claim the current alternatives are far from perfect — suggesting we’re still early and that the sector needs both human and financial capital assistance to accelerate its growth exponentially.

It’s been 15 years. The recent collapse of Silicon Valley Bank (SVB) has brought banks back to the top of the headlines. We’re currently witnessing a historic pivot in the financial and banking industries.

Instead of explaining what happened (outlined better by some of the Wall Street GOATS — Ben Thompson and Matt Levine), I wanted to highlight the most important takeaways I’ve learned from the demise of SVB that should be relevant to founders and investors.

If you want to write for Sports, Tech, Biz or have any feedback, ideas, or suggestions for future editions, send me an email or drop me a message on Twitter @Ronenain!

3 Lessons From the Collapse of Silicon Valley Bank

1. Technology and Information Flow at Unprecedented Speeds

Last Thursday, SVB’s customers withdrew $42 billion in one day. In contrast, the previous bank run in the US was Washington Mutual’s in 08’, where customers withdrew $16.7 billion in 10 days.

While social media contributes greatly to access and flow of information, the concentrated customer base of SVB — namely, VCs, startups, and tech companies — also accelerated the speed of the bank run. VCs warned all of their portfolio companies, advising them to withdraw their funds from SVB, further accelerating the bank run.

The speed at which things happen today emphasizes the value of staying up-to-date with curated insights that block the noise from the signal from relevant and reliable sources of information. 

2. Smart People Can Be Wrong Too

Besides ignoring the advice from the TV personalities of financial news providers — we should be extra mindful of almost anything anyone with a platform says. 

When news of potential weaknesses in SVB's balance sheet broke out, smart analysts and bankers from top institutions were jumping on different finance media to talk about liquidity ratios and safety nets that compared SVB to how other banks collapsed during the financial crisis of 08’.

“Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.” — Warren Buffett.

In the end, it didn’t matter. Even with access to information from some of the brightest minds on Wall Street, we must not take anything for granted. Mainly because no two crises are the same, and past performance doesn’t mean anything for the future.

3. Buy The Rumor, Sell the News

Within trading, this expression means that markets move in anticipation of something happening before it happens. 

In other words, if good news is expected sometime in the future, the price will often move higher in anticipation of that date rather than after.

This lesson can also be applied to decision-making — if you hear a rumor (again, from a reliable and fast source of information) that can significantly directly impact your capital, assets, company, or holdings — make sure you take action before it becomes a headline. 

What’s next?

We’re going through highly volatile times, and new things are emerging every day. By this time next week, there could be another massive bank going bust. Keeping a close eye on the situation by following the right sources of information is vital to understand the transformation and further effects of the rate hike.

I curated a list of sources in finance and capital markets on Twitter. You can follow the list here.

I was excited to see an exceedingly positive response to the return of this publication — great feedback and hundreds of new subscribers!

As I continue to iterate over the publication, I decided to open up some slots for contributing writers who want to share insights and analysis of the industry with top executives in sports.

If you want to write for Sports, Tech, Biz or have any feedback, ideas, or suggestions for future editions, send me an email or drop me a message on Twitter @Ronenain!

Why Are Wearables Trending?

Commercial wearables and wellness-tracking devices continue reaching new heights as competition intensifies and companies seek opportunities to capitalize on health, wellness, and performance optimization.

• Technology company Whoop recently announced it's dropping subscription prices by nearly 20%, launching new features such as a stress monitor and adding weightlifting and user recovery data.

• Bloomberg reported that Apple is making significant progress in developing non-invasive blood glucose tracking sensors to add to its upcoming Apple Watch versions.

• In February, Fitbit filed a patent for a new blood pressure technology to keep up with its competitors.

Improved functionalities, more affordable alternatives, and continued R&D investment suggest companies in the wearables market are pushing the pedal to the metal to accelerate growth.

Additional developments in the market validate a growing demand, suggest these are becoming sustainable business models, and indicate that margins are still adjustable (to some extent).

Past performance and future estimates also solidify the thesis:

• Estimates suggest the global wearable technology market will grow at a CAGR of 13.89% over the next seven years.

• The wearables segment accounts for about 11% of Apple’s sales (up from ~4% in 2015).

The Takeaway

Competition is great for everyone — new tech allows companies to better understand our mental and physical health and provide more accurate insights and solutions while reducing prices and increasing the available market.

Soon, wearables will potentially provide life-changing insight and information with a high impact on our well-being — e.g., illness prediction, disease prevention, and stress optimization.

Whether to measure sleep, workouts, strain, or recovery — current devices offer various functionalities, but companies are now aiming at maximizing their full potential through technology.

My time as an analyst for Front Office Sports has concluded, but I’m excited to announce I’m back with more insights and analysis.

I rebranded this publication to expand my scope and coverage.

I will dive into sports, tech, wellness, fitness, gaming, and more topics with a business and investment angle.

My goal is to give founders, investors, and professionals in sports an edge by breaking down the hottest topics in the industry.

If you have any feedback, ideas, or suggestions for future editions, drop me a message on Twitter @Ronenain!

Why Is Non-Alcoholic Beer Becoming Popular?

“Wanna grab a non-alcoholic beer?” might be a text you’ll receive from a friend or a date in 2023.

Shifts in consumer behavior are changing the alcoholic beverages industry, as demand for non-alcoholic beer is rising and is projected to grow fast in 2023.

Recent research has found mounting evidence of the negative effects of alcohol on the brain, body, and performance, and the convergence of different trends has driven a higher interest in alcohol abstinence — particularly among the young generation: 

• In two decades, the number of young adults in the U.S. who abstained from alcohol increased from 20% to 28%.

• A study in Australia found that the pandemic lockdown reduced alcohol consumption in Gen Z by 44% — the most out of every generation.

Yet, the downward trend in overall alcohol consumption is consistent amongst all age groups.

Still, given that beer is an integral part of society, decreasing demand primes non-alcoholic beer to become a proper substitute:

• Anheuser Busch committed to making 20% of its beer volume non-alcoholic and low-alcohol by 2025 and launched non-alcoholic Budweiser in 2020.

• NielsenIQ says revenues for non-alcoholic beer accounted for $328.6 million in 2022 — up 19.5% from 2021.

• Projections estimate that revenues for non-alcoholic beer will continue growing at a 7.56% CAGR.

Lastly, the rise of new and innovative companies like Athletic Brewing, Partake, and Lyre suggests increased interest from private markets in the sector.

The Takeaway

The mindset about alcohol consumption is changing — but it’s still early. 

Non-alcoholic alcohol only had a 0.47% market share within the alcohol industry in 2022 — the highest it’s ever been. Still, we could expect more companies, capital, and products to emerge in this growing space in 2023 and beyond.

Employees on Wall Street get huge bonuses and handsome salaries to make sense of these markets, understand what is going on, and ultimately generate profits from that knowledge.

Some signs and indicators are meant to give us an idea of how things will play out.

Economic data shows how well consumption, production, employment, and the GDP growth of a country/economy have been performing.

Quarterly earnings reports from companies provide a glimpse into their performance and their expectations moving forward.

Statistical models and complex calculations take millions of data points to predict future performance.

Yet, no one has figured out how to beat the market and make profits every single time. We all know this, but somehow we try to convince ourselves that we will be right. That we will know what is going on. That we have the winning strategy.

See– the thing about public markets is that they’re not rational. They’re irrational – based on emotions.

Bernard Baruch – the famous Wall Street investor of the beginning of the 20th century, wrote in his book, “the stock market is the product of collective emotion.” This was over one hundred years ago, and things haven’t changed much since then.

It’s the reason why companies will beat all earnings expectations and drop 10-15% the next day. It’s why war can be going on, and somehow its country’s currency strengthens. It’s the reason why Netflix lost ~1 million subscribers in a quarter and gained 5% in value that next day.

It’s why inflation is at a 40-year high, but markets are feeling confident again with stocks going up, erasing some of the losses from earlier this year.

The stock market is a fascinating place that represents collective emotion.

Netflix jumped because they expected to lose 2 million subscribers this quarter BUT ONLY LOST ONE MILLION.

Woohoo! We only lost a million; let’s celebrate!

WHAT?

Again– it’s all about expectations and results.

Quoting from one of my all-time favorite movies, The Dark Knight – where the Joker (played by Heath Ledger RIP) delivers some world-class wisdom by saying;

“Nobody panics when everything goes according to plan, even if the plan is horrifying. But when one wrong thing happens that’s not according to plan; everyone loses their minds.”

Hell – I’ll even plug the video here, so stop reading and go watch it:

Expectations and results.

That’s the mantra – expectations and results.

Memorize it – expectations and results.

What can you do?

Fear and greed – products of people’s emotions – are the only two things driving the markets.

No one can accurately tell what is going on. This comic from 1981 nails it perfectly:

Knowing this, ask yourself; what is the collective expectation of things?

How have things performed so far– did things happen according to plan? Are the new economic reports in line with expectations? Was the ‘plan’ an accurate representation of the latest earnings reports? What are the latest reports saying about future expectations?

Staying up-to-date with Sports Stocks Earnings

Plenty of sports companies are publicly traded—Nike, Peloton, Draftkings, and the WWE, amongst others.

As an investor, knowing when companies report earnings is key to adjusting expectations on time.

Staying up to date with earnings dates could be a hassle (I know this from experience),

So I thought – what if I could have all the earnings in my calendar – the same as scheduled meetings/appointments on my iPhone?

I couldn't find any tool online for it, so I coded it. The script fetches the dates of the upcoming earnings reports for companies in sports from Yahoo Finance.

It updates monthly, and whether you're using iCal or Google Calendar – you can add it to your cal and track these earnings for free. Here’s the link for iOS and Google Calendar.

Closing Thoughts

In the 1930s, famous economist John Keynes said: “Markets can stay irrational longer than you can stay solvent.” If you like to bet, try sports betting instead.

Instead, aim to understand collective emotion; by learning about this so-called ‘plan,’ you’ll be able to adjust your expectations accordingly.

🎙 Halftime Snacks Podcast

Data-Focused Sports Marketing

Adam was one of the executives that built Harris Blitzer Sports and Entertainment (HBSE) and also worked for the NY Yankees, The Madison Square Garden Company, Prudential Center, and the New Jersey Devils.

Today, he’s the Managing Director in North America for Two Circles – a data-focused sports marketing firm that helps sports leagues, teams, and governing bodies monetize their data.

They work with world-class organizations worldwide, such as the IOC, UEFA, Formula One, English Premier League, Learfield, and the NFL.

We talked about:

• Adam's work at Two Circles

• Data as a business model and its value in understanding sports fans/consumers

• The strategy for Two Circles, the 'why' behind their business verticals, and how Adam thinks about community.

Listen on here:

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We only get to appreciate things when we practice gratitude for what we have and learn a thing or two about how these things came into existence.

While watching Wimbledon last week, I experienced one of these moments where I thought – “wow, things must’ve been so different before that problem was even solved!”

The solution?

The technology that verifies controversial situations during sports events – AKA Hawk-Eye.

In today’s post, I want to bring to your attention the fantastic story of Dr. Paul Hawkins and how his work teaches us a lesson on the evolution of sports.

Dr. Paul Hawkins

In 1999 in the city of Winchester, Hampshire – artificial intelligence Ph.D. graduate Paul Hawkins founded a startup out of college with the mission to “be the trusted choice for pioneering and inspiring change in sports.”

Like any other entrepreneur, Dr. Hawkins faced many challenging critiques at first, in a world of sport where innovation wasn’t as welcoming as it is today.

It took Dr. Hawkins about 18 months to have an entry point in sports with a small TV broadcaster for a test match cricket coverage.

This is what it looked like back then:

Today, Hawk-Eye employs over 1,400 people, and the technology is used in more than 80 tournaments worldwide, in more than 24 different sports, including tennis, ice hockey, horse racing, rugby, and soccer.

The Tech

Dr. Hawkins created a system based on the principle of ‘triangulation’ through a set of cameras positioned at different angles inside a stadium.

The system uses mathematical equations and timing mechanisms to create a representation model for a body in movement (say a ball) known as the ‘flight path,’ shown as a moving animation.

The Benefits

Hawk-Eye technology impacts the sport at so many levels:

• It helps players and coaches analyze games and train accurately.

• It provides broadcasters with a tool to improve the fan experience.

• It adds transparency to the game.

• Most importantly, the tool helps referees and umpires make the correct decisions– eliminating human mistakes and subjectivity.

Check out how it works from it being used at this Djokovic match:

The Evolution of Sports

Professional sports use incentive structures to set game rules, the competitive format, and design the game flow. Hawk-Eye technology enhances the implementation of these structures, rules, and limitations.

Think about all the energy, time, and effort wasted on the subjectivity of wrong calls before Hawk-Eye technology.

Think of all the athletes who were victims of ‘bad calls’ during crucial career moments: all the emotional drain, the anger.

Don’t believe me?

Here’s a clip of how John McEnroe used to get mad at officials for a disputed call.

Or this OBVIOUS Frank Lampard equalizer in 2010’s World Cup:

It might feel like ages ago, but wrong in-game calls were happening all the time just two decades ago. And even some soccer tournaments are only a few years old using it - the first FIFA World Cup to have it was in 2014.

Could you imagine sports today still being victims of subjectivity, human mistakes, and bad calls?

I don’t – and we owe it to Dr. Paul Hawkins – a protagonist in the evolution of sports.

🎙 Halftime Snacks Podcast

Scaling Companies in Savage Sports

Zac Litwack is a partner at Savage Ventures and helps grow their portfolio companies, primarily as their CMO. Savage Ventures is a venture operator that invests, acquires, and operates high-growth businesses within different industries, including sports.

Zac is also the CEO at Savage Sports, which is the top sports betting and online gambling marketing affiliate in North America.

In the episode, you’ll learn from Zac's story and current work as head of Savage Sports, CMO, and growth hacker. We also discussed Zac's rationale behind scaling companies, the outlook for the sports betting market, and the Savage Sports affiliate business.

Listen here:

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You may think, “But the house always wins!” And it’s true; statistics and probabilistic models make sports betting a profitable business model.

However, if the costs of running a sports betting company exceed the revenues for an extended period, the so-called ‘house’ will eventually close – it’s not sustainable.

And under the current market conditions, it seems like many sports betting houses are burning down.

Grab some coffee while we look at the market outlook for sports betting in 2022.

The Performance of Sports Betting

Roundhill Sports Betting (BETZ) and VanEck Gaming (BJK) – two of the most popular sports betting ETFs in the stock market – have been falling sharply since the beginning of the year.

BETZ is down 42%, and BJK has fallen 24% – these are more substantial than the ~20% decline from the S&P 500 index. By percentage of holdings, DraftKings (DKNG) is one of the most relevant companies within these ETFs, and it has also lost about 55% of its value YTD.

While the recent decline from these assets can provide an overview of an evident decrease in value – they do not tell us the whole story and certainly won’t explain the reasons behind its downfall.

So what happened, and what could we expect from these assets in the next six months?

The Good: Legislation & Technology

Since the supreme court struck down the PASPA legislation in 2018, 31 states in the US have started offering sports wagering – expanding the addressable market and unlocking further demand. I’d expect the 16 states will soon face tons of pressure to legalize sports betting.

According to Statista, in 2021, sports betting revenue in the US reached $2.1 billion, and this figure is expected to surpass $10 billion by 2028 – a massive 5x increase.

Additionally, the digital revolution has been vital for online sports betting. Companies have established fully immersive digital platforms with features like live betting, automated transactions, media, content, statistics, and information to enhance the customer experience and improve retention.

Great things happen when technological magic meets approved legislation.

The Bad: Profitability and Interest Rates

Due to its novelty and legal recency, companies within this sector are still in the innovation phase – investing in user acquisition, retention, and growth.

Many companies within the sector, such as DraftKings, Genius Sports, and Rush Street Interactive, have struggled primarily due to their lack of profitability – they’re spending more than they’re earning.

Furthermore, the fundamental value of any stock today is equal to the present value of future cash flows discounted using the interest rate (i.e., cost of money).

Rates have been rising lately – and higher interest rates decrease the value of future cash flows. Hence, reducing the forecasts and expectations of the stock’s fundamental value.

The Ugly: Economic Downturn & Consumer Spending

Within the hierarchy of needs of the sports consumer, betting is not considered a fundamental need – it’s a luxury.

Sports betting companies are entertainment providers. Their business and financial performance will rely heavily on a healthy economy under stable market and political conditions.

Furthermore, inflation and unemployment pressure the consumer to recalculate their budget and reallocate their spending based on their priorities.

These reductions in disposable income, combined with an economic recession, which has been a trendy topic discussed in the media – would reduce discretionary consumer spending, lowering overall demand for leisure, entertainment, and wagering.

The Bottom Line

Under the current market conditions, sports betting will have to face the storm with resilience to come out victorious in the end.

The value of sports betting stocks has decreased mainly due to lower expectations for future performance.

However, combining demand generation enablers (legislation) and deflationary tools (through technology) may be enough for these companies to weather the storm.

It’s risky, but the path towards profitability under cloudy conditions in 2022 for online sports betting could make a fascinating comeback story that will set the stage for what the future holds for these companies.

🔗Learn more:

1. Halftime Snacks podcast episode with Lloyd Danzig – Lloyd manages a VC firm that focuses on sports betting. Listen to learn more about online sports betting, fantasy sports, digital collectibles, and more. Listen here.

2. Halftime Snacks podcast episode with Adam Bates – Adam leads the investments in sports & entertainment for a venture capital fund that also invests in sports betting companies. He talked more about the outlook for these investments under the current macro environment. Listen here.

🎙 Halftime Snacks Podcast

Doug Holtzman – The Senior Vice President of Sports at Sportsdigita

Doug Holtzman, with over 20 years of experience in sponsorship sales in the NBA, the NFL, the MLB, NCAA, and NBAG, joined the latest snack!

Doug has been working at Sportsdigita for about four years, where he was recently promoted to Senior Vice President (SVP) of Sports.

In this episode, we decode Doug’s craft & expertise in sales – mastering the skills needed, finding mentors, lessons, insights, and main takeaways from failures and tips for starters.

We also discussed ‘storytelling as a service’ – differentiating between good and bad stories, mental models for brands who want to crush their storytelling, and sources of inspiration.

Finally, we learn why Doug works on Sportsdigita, his next steps as the SVP, and how he grows from here.

Listen here:

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This week, Nike reported their latest financial earnings – providing a glimpse into how business is going.

Let’s take a look:

Nike’s Performance

Year to date (YTD), Nike has underperformed the market (i.e., relative to the S&P 500 Index). Nike has dropped 37%, while the market is down only 20%.

Nike reported earnings Monday, and the stock has been down about 7%.

Companies move after earnings because investors learn about the company's performance and adjust their future expectations.

The earnings will tell us why.

The Earnings

Nike's earnings reported the fourth quarter (ending May 31st) and the full fiscal year, and two things stand out– revenues and inventories.

Revenues

Nike reported $46.7 billion in full-year revenue – representing a 5% increase.

For the quarter ending May 31st, Nike reported revenues of $12.2 billion, down 1% from the prior-year period, and earnings of $0.90 per share (down 3%).

Even though gross margins were up for the full year, margins for the quarter were down 80 basis points.

Their explanation?

“Primarily due to higher inventory obsolescence reserves in China, elevated freight and logistics costs.”

– Nike’s report

Full-year revenues for the Nike Brand were $44.4 billion, up 5 percent. Footwear was up 4%, apparel was up 5%, and equipment was up 18%. However, for the quarter, footwear didn’t change, apparel decreased by 6%, and equipment only grew by 10%.

What does all this mean?

The full fiscal year of Nike closed with an increase of 5%. Yet, sales contracted the last quarter by 1% compared to the year before. Meaning – the average growth of the first three quarters was good enough to support the last quarter's contraction. Nevertheless, this is actual proof that Nike actually struggled this previous quarter and that this struggle will likely be pulled forward for the rest of 2022.

Now here’s where it gets interesting:

Inventories

Nike’s inventories (i.e., unsold merchandise sitting in a warehouse) grew 23% YoY.

Think about that for a second.

Nike couldn’t sell 23% more of what they’ve produced the full year.

How do they explain this?

“Elevated in-transit inventories due to extended lead times from ongoing supply chain disruptions.”

“Elevated ocean freight and logistics costs continue to dampen near-term profitability in North America.”

“With extended lead times causing in-transit inventory to be 65% of our total inventory at the end of the quarter. Wholesale revenue declined 12% due to inventory supply constraints.”

– Nike’s Earnings Call (transcript)

During the earnings call, Nike’s executives also explained they noticed negative momentum against their highest-growing products, mainly driven by high inflation, near-term economic growth, and consumer demand.

What does it mean?

Nike had the same problem Target and Walmart reported on inventory overload. Earlier this year, companies scrambled to produce and stock their stores with products.

The problem?

Consumption habits from people changed, but not how retailers expected.

Additionally, most of what’s not being sold are ‘in-transit inventory’ – products that haven’t even made it to the stores.

The Bottom Line

Sports apparel has struggled with both the supply and the demand.

The war in Europe, raw material scarcity, and Covid lockdowns threatened the supply chains, leading to firms having inventory overload stuck “in-transit.”

With higher interest rates and product price spikes, the sports consumer is substituting high-end brands for more low-end goods, reducing overall demand.

With too much inventory, Nike will have to sell products at a discount– decreasing margins and earnings.

In short, Nike’s stock reflects the story of the nightmare of sports apparel.

But the good news?

This could lead to inflation coming down faster than expected.

🎙 Halftime Snacks Podcast

Content Creation and Sports Business Journalism at Sportico

Jacob is a sports business reporter at Sportico and has +10 years of experience writing for brands in sports such as the NFL, Boston Globe, the Washington Post, and Sports Illustrated.

Sportico is a digital content and media company that brings high-quality data, information, news, and strategy from what’s hot and relevant in the sports business.

We discussed the evolution of content and media in sports, Jacob’s process, style, and tactics for writing, sports journalism, Sportico, and what the industry needs in the future.

Listen here:

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The Power of Incentives in Sports

Incentives are the force that makes the world spin. It drives individuals and holds power to create great outcomes within any system.

The basic rule on incentives is that you’ll get what you award for – Charlie Munger and Warren Buffet built and grew their businesses under this mental model.

Similarly, a system with a short-term mentality or broken incentives will turn many good people into bad, bankrupt companies or even break countries apart.

But what role do incentives take within the realm of professional sports? How much influence can incentives have to determine the quality of a professional tournament, league winner, cup, title, or medal?

Understanding Incentives

Incentives are everywhere. Some are more obvious than others, but if you pay attention, you can see them. They’re what sets the path for a system. Sets boundaries to limit and push the ones involved.

There are different types– intrinsic vs. extrinsic, financial vs. non-financial. And they can come in different shapes and forms, such as awards, privileges, recognition, punishments, and consequences.

It’s what motivates people to do things. They explain why you study a career, go to work, work out, hang out with friends, gamble at the casino, travel the world, follow the stock market, pay taxes, etc.

You probably wouldn’t do an action with no positive incentive. Why would you? People learn to avoid activities that underpin negative incentives – this is known as the science of reinforcement:

“If we don’t like the consequences of an action we’ve taken, we’re less likely to do it again; if we do like the consequences, we’re more likely to do it again.”

“It’s a type of learning in which the strength of a behavior is modified by its consequences, such as reward or punishment.”

A system is responsible for establishing incentives through rewards and punishments to allow it to function with order and direction.

Incentives in Professional Sports

Professional sports are filled with incentives to stay competitive, keep a reputation, provide quality entertainment, and ultimately attract the best talent, partners, and technology to generate revenues.

• Soccer leagues keep themselves competitive through relegation and promotion systems that punish the worst-performing clubs each season and award the best performers from second divisions by promoting them to the top leagues.

• Teams motivate their coaching staff and players by offering attractive bonuses in their contracts conditioned to individual and group success.

• Different tournaments have prize money funds that award teams based on how far the team makes it, allowing them to earn more the closer they get to the cup.

These are all broad observations of incentive structures within sports, but let’s take a look at more tangible, real-life examples:

• UEFA Champions League pays €9.5m to every team that makes it to the Round of 16, €19m to the winner, and €15m to the runner-up.

• The NFL has a player’s code of conduct list of dozens of violations with their respective fines, created to control (to some extent) the way players behave in games:

• NHL players participating in the playoffs can share in the league’s playoff pool system. All 16 teams in the postseason share it, and the Stanley Cup winners get the most significant individual cash prize.

• Wimbledon prize money for their 2022 tournament:

• If a Formula 1 team replaces certain car parts outside permitted limits, they are punished with grid position penalties. Other breaches in regulations can lead to monetary fines, time penalties, and others.

These are only a few, but the industry is full of incentive structures that aim to provide direction and order inside and outside the playing field.

Final Thoughts

Once you see them, you cannot unsee them — incentives are everywhere.

In professional sports, incentives exist at every level – from the rules and natural setting of the game to the competitive format and structure of the tournaments.

Incentives can shape behavior and align people and organizations with the system’s goals. Think of a sports team, league, or organization that feels successful. Want to understand why? Take a look at their incentive structure.

The inverse is also true. A broken incentive structure breaks the system. And corruption usually happens when the system is too weak to establish or manage the right incentives.

These finals averaged over 12m viewers per game (up 26% from 2021), making it the most-watched finals series in three years.

Grab a snack and get comfortable – let’s dive into the money and business behind the NBA Finals.

The Rights

In 2014, the NBA signed a nine-year television deal with ABC, ESPN, and TNT that generates annual league television revenues of ~$2.7 billion running through the 2024–25 season.

It’s the second most expensive television deal in professional sports, right behind the NFL’s.

For the NBA Finals in particular, ABC owns the series' rights through 2025.

Ad Revenue

Just like the Super Bowl, primetime advertising generates most of the revenue.

According to Statista, by 2018, the cost of a 30-second commercial aired at the NBA Finals averaged $700k. Even though they stopped tracking in 2018, I would bet it costs way more today due to the growing number of viewers tuning in, the rise of streaming, OTT media, and other social networks.

You could argue that $750k pales compared to the $7m it costs to run an ad during the Super Bowl, but remember, the NBA Finals could go up to 7 games – increasing the likelihood of creating awareness and making a lasting impact in fewer viewers.

During the 2019 NBA Finals, the ABC TV network made + $230m in ad revenue from the finals between the Raptors and Warriors (6-game series, ~$40m per game)

The Arenas

For all NBA history – home game attendance, premium seating, merchandise, and non-NBA events during game-day have been a massive business for the hosting arenas.

This year has been no different.

Thousands of fans have attended the Chase Center and the TD Garden at almost sold-out arenas, which haven’t been cheap.

The Tickets

According to Team Marketing Report's research, the Warriors and the Celtics were the second and fourth most expensive teams to watch live during the 2021-22 season:

For this year’s finals:

• Game 1 tickets were going for an average price of $873.

• Game 2 was starting at $820 after fees.

• Games 3 and 4 started at $662 and $955, respectively.

Games 6 and 7 can easily reach a starting price of $1,100 per ticket.

VIP Seats get insanely more expensive: A few court-side seats behind the Chase Center scorer’s table for game seven (which won’t happen) were listed for $116,197 per ticket. However, they’ve ranged from 6k to 22k on average during the NBA Finals series.

The Bottom Line

Besides the rights, ads, and tickets sold, the NBA Finals business brings in millions from partnerships, consumption, and brand awareness through exposure worldwide.

Obviously, due to the nature of the business and the dependency on the number of games, the longer the series goes, the more money the league, teams, and stakeholders can make. That’s why everyone’s kinda cheering for a seven-game series regardless!

🎙 Halftime Snacks Podcast

T.J. Baumbaugh is a former pro racquetball player who has been the active commissioner for the Ladies Professional Racquetball Tour (LPRT) since 2016.

She organizes, manages, and promotes women's professional racquetball, the 10-month touring schedule, executive and broadcast teams, and a board of directors.

We discussed TJ's vision for the future and growth of the sport and how technology helps them grow. We also discussed the value of sponsorships, culture, and values of a new sport. Towards the end, we discussed how the LPRT envisions and practices diversity, inclusion, and equity for sports.

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This week, I interviewed on the podcast the CEO of Valorr – a risk management firm that helps sports organizations deal with different cyber-threats. The episode is a must-listen.

However, I consider this an essential topic, so I want to talk more about it today.

What is cybersecurity?

Due to the rise of multiple software and hardware technologies in the last 30 years – computers, smartphones, the internet network, servers, etc. – governments, companies, and people migrated their data, processes, and systems online.

The reasons?

To do things easier, faster, and cheaper — the cyber world provides the real world powerful leverage to execute more with less, more efficiently, and less scarcity.

The problem?

The cyber world is far from perfect. It can be vulnerable to attacks, viruses, theft, scams, and other cyber threats.

Cybersecurity was born to deal with these threats.

Cybersecurity is the practice of protecting systems, networks, and programs from digital attacks.

Cybersecurity in Sports

Whether you realize this or not, most experiences in sports happen within or involve some digital ‘touch points.’

As a fan – streaming a match on T.V., engaging with other fans on Twitter, betting on your favorite team, checking the stats on ESPN, buying tickets for a game, building a fantasy team, or even buying merch – they all include some digital processes.

Professional players build and sustain most of their reputation through online data and public digital profiles.

Organizations, teams, and leagues that use software and tools like CRMs and databases to enable sales, deliver content, market their products, track inventory, or even communicate internally, rely on digital systems.

In fitness – scheduling yoga lessons, tracking sleep with a Whoop band, buying the latest leggings, and analyzing performance – digital.

Given the degree of dependence on digital systems, the diverse stakeholders inside the sports industry are vulnerable to digital attacks.

For who?

As you can see, most (if not all) stakeholders in sports rely on the cyber world to deliver experiences and operate.

Without proper cyber protection, businesses in sports might not only be risking their operations and revenues – but their reputation as well.

Cybersecurity should remain a top priority for the stakeholders whose business or reputation relies mainly on digital tools, prioritizing the ones that hold the most vital value within the delivery of the service or product of the stakeholder.

“It starts by structuring a ‘supply chain’ list of digital tools and systems that your business uses to exist, establishing a priority list, and learning how to protect them.”

– Greg Tomchick, CEO of Valorr, on The Halftime Snacks Podcast

🔗 Learn more:

1. Why Sporting Organizations Need An Exceptional Cybersecurity Posture – a good Forbes article by Henry Doyle that outlines some examples of the digital vulnerabilities within sports.

2. Professional Sports Front Offices And Sports Agencies Are Using Cybersecurity As A Competitive Advantage, You Can Too – a solid piece from Valorr’s blog that covers the threat themes they’ve seen in sports and how to prepare better for them.

3. The Growing Importance of Cybersecurity in Sports – a quick read by Merav Savir on why sports are a good target for cyber attackers.

🎙 Halftime Snacks Podcast

Cybersecurity for Sports and Entertainment

Greg Tomchick is the CEO of Valorr – a team of cybersecurity experts that helps sports and entertainment organizations tackle their most challenging cybersecurity risks and capture their greatest competitive advantages.

They deal with cyber threats, privacy and security, workforce shortages, compliance, and other complex implementations.

In this episode, we discover what’s similar and different between professional sports and cybersecurity. We discussed the diverse cyber threats sports organizations might be facing and ended up learning best practices, tools, and guidance for sports organizations to start taking action on their cybersecurity.

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Apply to be a guest on the Halftime Snacks Podcast here.

Fans and media outlets worldwide focus on gossip, rumors, and expectations – all waiting for the acquisitions teams will make to compete in the upcoming season.

Transfers are key in the industry – teams invest in fresh talent to improve the squad and increase the popularity of a club.

You’ll hear about the traded players in the news, but you probably won’t hear about the masterminds driving the multimillion-dollar deals behind the scenes: soccer agents.

Grab a cup of coffee while we talk about soccer agents and their business.

The Agents

Agents work for the players, and their goals are to provide legal representation, negotiate the most satisfactory deals, and fulfill the best interests of their clients. All professional players have one.

The reasons?

First, players might not have the skills or business and legal knowledge to understand and secure the best terms.

Agents are counselors and negotiate everything from salaries, bonuses, compensations, image rights, and release clauses to other stipulations according to the involved interests.

Secondly, players are usually too busy focusing on their training and do not have the time to attend meetings and travel to find the best deals.

Third, it’s a great business, and it’s why tons of players are represented by their parents or close relatives.

The Business

The agent’s role is a sales position – they earn their salaries through commissions.

Agents receive a commission paid by the club on behalf of the contracted player.

Typically, the commission is 3-5% of the accorded player’s salary, but it will depend on the size of the deal and the popularity of the player.

According to L’Equipe, Messi earns an estimated 3,375,000 Euros per month at PSG – nearly 779k Euros a week. His father (who acts as his agent) should be getting an additional 24k Euros per week (~3%) from PSG.

Not bad, huh?

Besides, agents can earn up to 10% of the transfer fee (i.e., the expense between clubs to ‘buy’ the termination clause of a player’s contract).

Neymar’s transfer fee from Barcelona to Paris Saint-Germain was about 222m Euros – Barca paid his agent (who’s also his father) +20m Euros for it.

The Bottom Line

The business behind soccer agents is massive.

In 2021, European clubs spent $500.8m on ‘intermediary service fees,’ with clubs from England ($133.3m), Germany ($84.3m), Italy ($73.5m), Spain ($34.8m), France ($30.3m) and Portugal ($29.3m) responsible for 77% of the total sum worldwide.

Football agents play a vital role in the careers of professional players, from getting the best deals to fulfilling their interest in playing for a specific team or coach.

And the best part?

One agent can represent dozens of players – multiplying the earnings potential.

For instance, Jonathan Barnett – who represents 388 players – is the highest-earning agent globally, making over 121.1m British Pounds in commissions.

Maybe I should become an agent?

🎙 Halftime Snacks Podcast

Decoding Fan Engagement

Episode #102 of the Halftime Snacks features Dan Healy – Co-Founder and CEO of PickUp: the incentivized fan engagement platform that validates the fans’ opinions and, in the process, makes sports content more fun and create engagement.

We discussed the value of fans’ opinion & how it plays a key role in Pickup’s formula for engagement.

We also learn about what it means (from an operational view) for PickUp to partner with relevant brands in sports like NASCAR, FloSports, and Comcast.

Lastly, we discover the alternative opportunities for PickUp in media, betting, and other adjacent segments in the “engagement” economy.

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Atlas and Pachuca face off this week in a two-game final matchup to dictate a champion for the first tournament of the year.

Believe me when I say – every taqueria, pub, restaurant, and bar in the city has been televising the playoff games on repeat, even when no live matches are going on!

Newspapers, magazines, radio, and sports shows are talking non-stop about the playoffs. Everyone’s wearing merch on the streets and talking about it – even my grandma has asked me about it!

Turns out – I may not be the only one noticing the quick popularity growth of the Mexican soccer league.

According to Sportico, private equity firm Apollo Global Management plans to offer La Liga MX $1.25 billion for a 20% share of the Mexican soccer league’s international media revenue over the next 50 years.

My first reaction to the news was – “50 years!? That’s insane!”

But then, I decided to dig deeper to understand why it makes sense. Grab some morning coffee while we break it down.

The League

In Mexico, Liga MX absolutely dominates. Nonetheless, the league’s also playing the international game well, particularly in the United States.

La Liga MX has been widely successful in the US over the last few years leading as the most-watched soccer league, outperforming both the European leagues and the MLS.

Currently – the Liga MX clubs’ broadcasting rights in the US are worth about $110m per year and are spread across Fox Deportes, Univision, Telemundo, ESPN Deportes, and TUDN.

Although the problem is that the international broadcasting rights in Liga MX are distributed at a club level, instead of at a league level.

Nevertheless, their numbers are quite remarkable. Univision itself reaches around 37.7 million households in the US and held an average viewership of 845,000 in the 2021 season. In contrast, for Premier League matches, NBC averaged a viewership of 475,000 in 2021.

Liga MX has almost twice as much viewership as the Premier League in the US.

Read that again.

If you’re still not convinced, you might be when you realize these margins have been consistent since 2016:

The Investment

Private equity firms invest huge amounts of money and have access to diverse investment opportunities in sports, such as funding events, acquiring a stake in clubs and leagues, or even getting a share in media rights deals.

Usually, private equity firms hold investment horizons between four and seven years, although Apollo is looking to lock their capital on a 50-year deal for this particular case.

Why Invest?

Private equity firms have a competitive advantage in the investment world due to the large amounts of capital under management. They can access ambitious projects that could deliver outsized returns.

The opportunity to invest and seek returns from a project as big as La Liga MX is not available to the regular investor and considering the current economic environment, its growth potential, and its promising positioning in the market – it may be a massive opportunity for Apollo.

Check out this Twitter thread I wrote with some numbers behind the investment

The Bottom Line

With a great product, a solid market share in the US, and a growing global interest in soccer, Liga MX might be in a primed position to capitalize on its offering.

Private equity firms are starting to realize this and are rushing to buy a piece of the cake before it’s too late.

From a financial standpoint – the investment makes total sense. It looks like a massive opportunity for Apollo to take a stake in La Liga MX and bet on its growth and its long-term potential.

The ball is now on the Liga MX’s court – and it will depend on its management’s capability to handle rights at a league level, establish a fair value to its offering, and turn this opportunity to capitalize, grow, and finally raise the Mexican league to a world-class standard.

🎙 Halftime Snacks Podcast

Fan Relationships and Engagement at the Premier League

Cathy Long worked for over 15 years in the Premier League on fan campaigns, media, partnerships, policy, and diversity. She also became an independent consultant for clients like Tottenham, Liverpool, Watford, and Swansea FC.

Cathy founded Aposto – a digital platform that provides services and tech products for sports venues and organizations.

In this episode, you'll learn what it's like to work at a sports league from Cathy's experiences in the PL and with the clubs. You'll also hear best practices on working (and understanding) with fans, fan empowerment, diversity, and inclusion. Finally, we discussed how Aposto enables new solutions for sports venues and organizations.

Come snack with us!

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Rising interest rates, struggling supply chains, and a damaged economy will push consumers to cut some expenses and prioritize spending.

Due to the role that sports-related products/experiences have in sports consumers and their utility – we’ll likely see a significant decrease in the demand for those products.

Nevertheless, I want to take this opportunity to talk about a theory in economics and consumer theory that may explain what sports consumers will do next: Substitute Goods.

Substitute Goods

In economics and consumer theory, a substitute good is a product or service that consumers see as essentially the same or similar-enough compared to another product.

The goal?

To provide alternatives to the consumer when they are looking to fulfill a purpose. Additionally, adding products to a market creates competition and lowers prices.

The simplest example:

If you’d want to drink a Coca-Cola, but the store ran out of stock, you could buy a Pepsi as a substitute for your choice. It has a similar goal for your needs.

An Android for an iPhone, Domino’s Pizza vs. Pizza Hut, Zoom vs. Google Meet – substitute goods are everywhere.

Some products are easier to substitute through similar brands or product types than others – it really depends on individual preferences.

If a product can substitute another entirely, it’s labeled a perfect substitute, and it can be easily replaced. If it can only partially benefit the consumer, it’s an imperfect substitute, and the consumer will easily perceive the difference.

For instance, if you’re looking for any entertainment on TV, you might substitute a soccer match with a movie, or vice-versa depending on your preferences.

It’s important to note that demand shifts from substitute goods when prices change. If Coke and Pepsi are perfect substitutes and only Coke raises their price, Pepsi will benefit from increased demand.

Substitute Sports Goods

Under the current macroeconomic environment, companies earning their revenues directly from the consumer in the sports industry are extremely likely to raise prices.

Hence, according to the economic theory – we can expect the sports consumer to look for substitute sports goods quickly to replace products with things that can achieve the same purpose for less.

For example:

• In apparel, equipment, merch, and clothing, we could expect consumers to look for substitutes to costly brands like Nike, Adidas, or Lululemon and switch to more affordable alternatives.

• For TV subscriptions like the NBA or NFL League Pass, we could expect increased subscriptions to generic substitutes like ESPN or DAZN, increased audiences on sports radio, and higher usage of diverse sports mobile apps.

• We could expect consumers to substitute fitness memberships with home fitness equipment, cheaper gyms/studios, or free workout alternatives like running, yoga, etc.

• Live-games ticket buyers may substitute experiences by attending minor league games, the cinema, the theater, or other forms of live entertainment.

The Bottom Line

The substitute goods theory allows us to understand how the sports consumer will react to price hikes in some of their most frequently bought sports-related products.

For companies, it’s a real challenge to keep up with sales expectations when things get tough, and raising prices will result in an overall decreased demand for their products.

Consumers will adjust their spending at all consumption levels based mostly on their individual preferences.

They will be quietly switching between products – things that are more easily replaceable will be the first to experience that downtrend in sales – if they haven’t already.

🎙 Halftime Snacks Podcast

SimBull – The Stock Market for Sports

Kenneth’s the founder of SimBull – the stock market for sports, allowing fans to profit from their sports knowledge by trading shares of teams.

The platform was designed to lower gambling fees, create long-term investing in the sports industry, and develop a new form of sports entertainment centered around the stock market.

We talked about the story and foundation of SimBull, the features, concept, and product roadmap. Finally, we discussed the business model, economics, and market that SimBull created.

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Inflation is rising (i.e., most things are getting more expensive), supply chains worldwide are struggling to keep up with demand, and some commodities are becoming more scarce, amongst other problems.

To counteract these economic effects, central banks and governments worldwide are using the most powerful tool at their disposal – interest rates.

Today’s Sports Tech Biz edition is a premier on interest rates, how they’re used, and their impact on the sports consumer.

What are Interest Rates?

Simply put, the interest rate is just the cost of money.

Sounds weird? Bear with me for a minute, and it will make sense.

The central bank is the most important financial authority in a country because it controls the money flow at a country level. They lend money to regular banks, who then lend money to you and me.

The interest rate is the ‘cost’ at which central banks lend money to other banks, who then lend money to the public.

This rate represents the amount (in percentage terms) to which lenders need to pay the interest back to the bank for the time they borrowed the cash.

For example:

Say you need 100 dollars to afford a Dallas Cowboys game but don’t actually have the $100 currently; what do you do?

You go to the bank and ask for a $100 loan. The bank agrees to give you $100 but asks you to pay an additional 5 dollars (or 5% interest) on the loan at the end of the agreed period.

If rates are low, it is cheaper to borrow, so more people will get loans – but if rates are high, it becomes expensive, so fewer people will end up asking for them.

That’s why the best way to think about rates is to consider them as the cost of money.

Rising Interest Rates

In a broad sense, interest rates have the power to control the amount of money that is flowing in any economy.

A stable economy goes through different cycles, including growth and peaks when things are going well and contractions that lead to recessions during more challenging times.

Interest rates serve as a tool to boost or diminish the amount of cash flowing around, depending on the stage of the economic cycle.

When there’s tons of money in the economy, things tend to get more expensive because more people can afford to pay for various products, services, and experiences, particularly items with a fixed or limited supply.

For example, suppose Manchester United could only host 40,000 fans in their stadium.

Prices are set optimally to address that supply and fill it with 40,000 fans. Although, what happens if more people could afford tickets and ManU would suddenly have 70,000 people trying to get tickets?

They raise prices to counteract this effect.

That’s the origin of what’s called inflation – it just gradually happens at every level of consumer spending.

Inflation is good until a certain point, and it cannot go on forever. Products need a balance in price.

However, if you add to that the fact that the supply chain and commodities have been limiting the number of available products out there, then it makes sense for things to get more expensive faster.

Central banks then raise interest rates to limit the amount of money flowing into the economy, reducing demand (due to decreased purchasing power) and requiring companies to lower prices again.

Consumer Behavior

Suppose a guy named Fred lives on a monthly budget of $10,000.

Fred pays his rent, insurance, gas, food, social activities, the season ticket to watch his hockey team, his fitness membership, the Netflix and Disney+ accounts, some merch of his favorite team, the NBA League Pass, and some other expenses.

Fred lives a charmed life and never wants to change his consumption.

But what happens when out of a sudden, things get pricier, and $10,000 is now not enough to cover his usual spending?

What if Fred would now need $12,500 to have the same lifestyle he had before?

What would Fred do?

Consumer behavior theory says that Fred will have to order and prioritize his spending based on what brings him the most utility.

The Maslow Hierarchy of Needs says that Fred will first cover their primary needs (food, water, shelter, etc.) and then look for products that fulfill other secondary requirements like experiences and entertainment.

Rising Rates in Sports Consumption

Going back to Fred in our previous example – assuming he has no way of earning or getting more money for his monthly budget. What expenses do you think he will cut first?

Based on the hierarchy of needs and the theory of utility, I guess that entertainment and leisure will be the first ones to go – Netflix already lost +200k subscribers this year, and they estimate they will lose about 2 million in 2022!

For the most part, sports are entertainment. And while entertainment is excellent, it is not something humans need to survive. Overall and at a macro level, I would expect people to stop attending games, paying for season tickets, or having diverse sports streaming subscriptions instead of eating less or stopping paying rent.

The Bottom Line

Central banks use interest rates to prevent the economy from going into a crazy inflation loop where things get more expensive to infinity (like what happened in Venezuela and Argentina).

A higher rate means higher borrowing costs and fewer people borrowing money and limits people's purchasing power, making them choose where to spend their money.

The sports industry will most likely be affected by higher rates because of its role in people’s hierarchy of needs and how they prioritize spending.

With less cash in hand in the economy– fewer demands for games, entertainment, and overall spending on sports seem like it will happen next.

🎙 Halftime Snacks Podcast

Content, Marketing, and Strategy at Learfield

Rob is the Chief of Content, Development, and Strategy at Learfield – the leading media and technology company in college athletics. They connect brands with passionate fans through media, technology & data.

We talked about Robert's specific background in the military and the experiences that built his mindset around content and marketing.

We then discussed the product mix strategy for Learfield through learning the reasoning behind projects like The Varsity Network and Learfield Studios.

Lastly, we chatted about diverse trends around content, data, digital media, and innovation in college sports.

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