Could CBD End the Opioid Crisis in Sports? Extend Athlete Careers?

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Kyle Turley estimates that he experienced upwards of one hundred concussions – along with dozens of other injuries – during his nine-year NFL career. Like many players, the hulking offensive lineman used a variety of pharmaceuticals to mask the pain; buying as many as five thousand Vicodin in a single transaction.

So, when the news broke that Los Angeles Angels pitcher Tyler Skaggs had passed away in his sleep at the age of 27, Turley said he knew immediately that opioids were to blame. “[Skaggs] was a veteran player. He had an injury. He’s on the road and scheduled to start the next day. I know exactly what comes with that [situation], especially if [the player] is dealing with team doctors; it comes with a muscle relaxer, a pain killer and a sleep aid.” Sadly, the former pro-bowler had seen the story play out before. He said, “the things that killed Tyler were the things that killed my friends Norman Hand, Kevin Mitchell and Pio Sagapolutele.

Opioids are being abused in locker-rooms across the sports landscape. Turley says all one needs to do is look at “story after story” of team officials supplying players with prescription pain medications to realize there is a problem.

Howie Long-Short: When the former Saints, Rams and Chiefs tackle retired from the NFL in 2007, he left the game with a collective of physical and neurological ailments so severe that he was unable to hold his hands steady, speak properly or conduct a television interview without sunglasses and a hat on (to shield him from the camera lights). He said, “I was constantly experiencing vertigo, I had migraine headaches that were off the charts, seizures and I was hospitalized multiple times.” A regimen of pills developed over two decades playing the game (starting as a high school senior) would get him through the day.

But Turley says all of that changed in 2014 when he discovered the science behind the human cannabinoid system and put himself on a “cannabis regimen free of pharmaceuticals”; a lifestyle change he credits with improving both his mental health and physical well-being. The symptoms he suffered from have since dissipated – he says he hasn’t experienced a single episode of vertigo since – and “according to the NFL’s own concussion testing, [he’s] seen an improvement in cognitive ability.”

The former football star is now on mission to convince other athletes – he currently works with several active NFL players – to leave addictive pharmaceuticals behind and to educate themselves about the healing benefits of CBD. “CBD works because it matches our genetic profile. There’s a cannabinoid system in the center of the brain that regulates everything from pain management to neurological issues.

Turley says CBD isn’t just a safe way to treat pain, but a way to extend players’ careers. “If I had [medicinal] cannabis available to me from the beginning of my football career, there’s no doubt I would still be playing football right now at 44 years old.

Back in ’15, Turley founded Neuro XPF (stands for extreme, performance, feel). The company that has sold nearly $10 million worth of product since.

Fan Marino: If CBD can extend careers one would assume that the NFL would support its usage, but all indications are that the players will have to make concessions if they want marijuana removed from the list of banned substances during the next round of CBA negotiations. Turley says that “it’s a shame a league with so much influence over society doesn’t take a more proactive approach towards adopting the one thing that has been patented as a neuro-protectant. With concussions and CTE being such a big issue it’s egregious and appalling that the players would have to give up anything. The NFL should be leading this [movement], not Kyle Turley.

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NFL Sees Reddit as Content Engine, Way to Reach Differentiated Audience

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The National Football League has announced a content and advertising partnership with the “social news aggregation, web content rating and discussion” platform, Reddit. As part of the deal, the league has established an official Reddit account (r/NFL, 1.5 million members), committed to hosting a year-round series of “Ask Me Anything” (AMA) discussions and will create an original video series for the Reddit community using content generated during those Q&A sessions. The Wall Street Journal reported that the league is not paying Reddit to operate on their platform. Instead, the company will share in video sponsorship revenues.

Howie Long-Short: The NFL’s decision to embrace ‘The Front Page of the Internet’ – as it has Facebook, Instagram, Twitter, YouTube, Snapchat and most recently TikTok – signals the platform’s arrival as a mainstream social media outlet, a far cry from its early roots as a hipster outlier. Reddit may be growing rapidly, but it’s not a new company; it was founded back in 2005 by Serena Williams’ husband Alexis Ohanian and his college roommate Steve Huffman.

The NFL “wants to be anywhere fans are spending time” and with 9 million fans visiting league-related communities on the platform monthly (it has 330 million total users), Reddit certainly fits the bill. NFL vp, digital media business development, Blake Stuchin explained that it also has “a really differentiated audience. There are many users on Reddit that are not on other social channels.” According to ComScore, 43% don’t use Snapchat, 33% don’t have an IG profile, 28% aren’t on Twitter and 17% are without a Facebook page. These fans tend to be younger and are predominantly male.

Sub-reddits, which allow the user to “focus on a specific interest or topic,” make the platform ideal for storytelling. Stuchin said that from a marketing standpoint, Reddit gives the league the opportunity to showcase the players and their personalities; something it “[doesn’t] really do anywhere else.”

Stuchin described the NFL’s ongoing AMA series (at least once/mo.) as a “first of its kind” amongst American pro sports leagues. “The questions will be sourced directly from the Reddit community and players, coaches, front office executives and some of [the league’s] biggest fans will have a chance to tell their stories, in their own words.

It’s important to point out that the behavior displayed by Reddit users during AMAs is “endemic to the platform.” As Stuchin said, “there are a lot of places where rights holders can do Q&A, but Reddit users are trained to ask questions, vote their favorite questions up or down and actively participate in the conversation daily.” That engagement-level is attractive to the NFL and presumably will be to advertisers too.

The league sees these AMAs as a “news or content engine for all of NFL media.” Stuchin envisions “quotes or topics discussed during AMAs being turned into an Instagram post, a tweet, an NFL.com article or a feature article on NFL Network.” The town-hall style discussions will also be converted into video content and redistributed on the platform (as well as on the NFL’s social channels, NFL.com & NFL Network).

The partnership’s success will ultimately be determined by three metrics. The number of people reached (and the experience those fans have with the content being produced for Reddit), the amount of revenue generated by the league’s newest advertising unit and the amount of content (from AMAs) that the league can recirculate across its various media distribution endpoints.

Fan Marino: Daryl Morey’s tweet in support of Hong Kong protestors set off an international firestorm last week, so it’s worth wondering just how receptive the NFL will be to its AMA guests taking controversial questions from fans. Stuchin told the WSJ that “generally, the participants will be representing themselves, first and foremost, and not necessarily the views of the NFL.”

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Chargers +/- $350 Million Short of Initial PSL Sales Target

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The Los Angeles Chargers are struggling mightily to sell personal seat licenses at their new home in Inglewood (slated to open in ’20). One high ranking team executive said that Dean Spanos’ organization is +/- $350 million short of their initial $400 million target. Rams owner Stan Kroenke is understandably upset about his tenant’s inability to move PSLs. Those revenues along with a $200 million NFL G-6 loan are supposed to go towards the new venues’ constructions costs (+/- $5 billion) and he’s is responsible for the difference.

Howie Long-Short: The Rams have long history in the L.A. basin (’46-’94) and Kroenke spearheaded the league’s return to the city, so the Chargers status as both a newcomer and as second class citizens in the market has made it difficult for them to sell high priced products. The club is learning the hard way that there’s a finite amount of time and money that people are willing to spend on pro football. Remember, the Rams also have the better on-field product and Los Angeles is a town that craves star power. Chargers PSLs are a tough sale.

It’s not uncommon for projections on a large-scale construction project to be slightly off, but by nearly 87.5% is an abnormally wide miss. The initial study conducted by Conventions, Sports & Leisure International (a Legends subsidiary) suggested that the market could support $1 billion worth of PSL sales (Rams: $600 million, Chargers: $400 million). When the Chargers stumbled out of the gate with CSL’s suggested pricing, a second study was done and the team’s sales target was lowered to $150 million. But Spanos’ club isn’t even close to reaching that number. Our source said that while the Rams are pushing $500 million in PSL sales, the Chargers have sold just +/- $50 million worth. Executives at the league’s highest levels are said to be concerned.

The Chargers aren’t responsible for picking up the short-fall in PSL sales (if there is one) and are entitled to keep all game day revenues, so one can understand why some believe Spanos “got a sweetheart deal.” But if the club continues to struggle to sell tickets and suites, it’s not certain that his franchise is any more valuable in Los Angeles than it was in San Diego. Remember, this isn’t baseball where the teams control local media rights. There are no local rights in the NFL – the league maintains national TV deals and each franchise is entitled to 1/32 of the revenue. Just moving from a small market to a big market will not – on its own – boost team revenues.

The size of and money in Los Angeles (along with the CSL study) likely convinced Kroenke, Spanos and the league that demand for NFL football in the market was greater than it is. Of course, the Rams owner won’t have an issue paying down the debt if the Chargers come up short by a few hundred million dollars; he’s estimated to be worth $9.7 billion.

If the market continues to reject the club it’s worth wondering if a return to San Diego could be in the team’s future. The team executive we spoke to said that was unlikely. While the Chargers are contractually obligated to play at SoFi Stadium long-term, it’s believed that Kroenke – already upset that the number pledged to cover the debt was cut – would be willing to negotiate an early exit. The problem is, San Diego isn’t taking a Dean Spanos owned team back; a Chargers return to the city would be contingent upon the franchise being sold.

The Chargers’ decision to leave San Diego never made much sense. Sure, the team was unable to get a new publicly funded stadium there, but the city has just one other pro sports team and it plays during the spring and summer months. There are no other teams to compete with for sponsorship dollars (or eyeballs) in the fall and winter.

To be clear, no one (not the Rams, Chargers or the league) is discussing relocation. In fact, the individual we spoke to that is tied to the stadium deal believe it’s premature for anyone to even begin to panic. “As the building comes up out of the ground more people will see that it’s real and sign-up [for tickets].” In the meantime, all the team can do is “market harder and play better.”

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Lawsuit Holding Up Redevelopment of Oakland Coliseum Site, Manfred Threatens Relocation

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Oakland Mayor Libby Schaaf confirmed on Tuesday that Major League Baseball Commissioner Rob Manfred has threatened relocation of the Athletics if the city fails to drop a lawsuit filed to prevent Alameda County from selling its stake in the land on which the Oakland Coliseum sits to the team; the city wants the county’s fifty-percent share, but lacks the funding necessary to make the purchase. A’s owner John Fisher intends on redeveloping the 155-acre site to help pay for a new $850 million ‘privately financed’ waterfront ballpark (along with residences, retail, remediation and transportation). Manfred has made it clear that construction of the Howard Terminal ballpark and the Coliseum redevelopment project (which does not include construction of a new sports venue) are a package deal and unless the lawsuit goes away, the city risks losing the team to Las Vegas.

Howie Long-Short: Alameda County wants out of its investment in the Coliseum property (owns 50%) and is inclined to accept the A’s $85 million offer. The problem is California law requires that “publicly owned surplus lands be considered for affordable housing before they are leased or sold” and the city claims that the county failed to act ‘in good faith’ by privately negotiating with the team before it was given the chance to discuss assuming ownership. Until the lawsuit is settled, the A’s seemingly never-ending search for a long-term home is on hold.

The 49ers, Warriors, Kings and Raiders (in Las Vegas) have all broken ground on new venues during the Fisher-Wolff era, so one could understand MLB’s frustrations. Manfred certainly doesn’t want to move a franchise with a storied history in the Bay Area, but Andy Dolich (president of the sports consultancy Dolich Consulting) reminds “it’s the commissioner’s job to increase the net value of every team in the league and the A’s have been playing in an older ballpark while looking for a new venue since Fisher took over thirteen years ago. The league is saying it’s time to do something [in Oakland] or we’ll look at other markets.

Fisher needs the revenues from a redeveloped Coliseum site to fund his Howard Terminal vision. Dolich says there is a real opportunity to build a “retail, residences and transportation hub” where two outdated venues (Oracle Arena is adjacent to the Coliseum) and a vast amount of concrete currently reside.

It must be noted that “many people believe the most logical solution is to build a new ballpark – much less expensively – on the Coliseum site. It could become what the Giants have seen develop in Mission Bay; research, businesses and homes all moving in because it sits in the middle of a transportation hub that already exists.” That isn’t the case at Howard Terminal, far and away the most problematic site the team has looked at. As Dolich explained, “the complexity and costs associated with building right on the water (it’s the 5th most active port on the west coast) are prohibitive.”

Dolich doesn’t believe Manfred’s relocation threats are serious. “The club has proven over time, across various ownership groups, that the market is more than spacious enough for two successful baseball teams and there’s no available market better than the one they are in.” That said, he does see Las Vegas as a viable baseball market. That’s not the case with Nashville, where a group recently issued stadium renderings. “In Oakland, the team draws from all of Northern California; Sacramento to Salinas and east to the Nevada border. Nashville lacks the next realm of fans outside the immediate city. It’s too small of a market.

There is no connection between the Raiders pending move to Sin City and Manfred’s threat. Remember, Henderson, NV was among several cities outside of Arizona that obtained an RFP from the Diamondbacks in the wake of their settlement with Maricopa County. It’s no secret that the Las Vegas suburb would like to bring a third pro sports franchise to the market.

Fan Marino: Did you know? The A’s-Rays wildcard game set an all-time attendance record (54,004) for the round.

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NBA Will Take Stand on Social Justice Issues IF It’s Good for Business

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Houston Rockets general manager Daryl Morey sent out a tweet on Sunday night saying “Fight for Freedom. Stand with Hong Kong.” The simple message in support of pro-democracy protestors upset NBA media partners, sponsors and basketball officials in mainland China. Morey eventually deleted the tweet after the Rockets issued a statement calling his comments “regrettable”, but the damage was done; the Chinese Basketball Association, Li Ning and the Shanghai Pudong Development Bank Card Center all announced they would be suspending their partnerships or affiliations with the franchise and/or league.

The timing of the controversy could not be worse. The Nets and Lakers are scheduled to play a pair of games and commissioner Adam Silver and Nets governor and Alibaba co-founder Joe Tsai are set to hold a press conference in China this week. CCTV (China’s State broadcaster) has announced it will not be showing the pre-season exhibitions and fans and local celebrities alike are planning to boycott the games.

Howie Long-Short: It’s not often that a single tweet from the general manager of a sports team sets-off an international firestorm. Len Elmore, a 10 year ABA/NBA player, former attorney and current faculty at Columbia University, explained that Morey’s comments quickly made waves halfway around the world because “the Chinese are particularly attuned to social media and they really believe it’s injurious to have a negative image passed over social channels.” Presumably the Chinese aren’t pleased with the optics that mass rallies against their government presents.

The league put out a statement on Weibo saying it was “extremely disappointed in [Morey’s] inappropriate comment”, a clear indication that it’s only willing to take a stand on social issues when it’s good for business. China remains the league’s largest international market and one it cannot afford to lose (much of the NBA’s future growth is expected to come from Asia). How big is the Chinese market? Elmore says, “NBA China – not including sponsorship pacts – is currently worth $4 billion per year. There are 500 million people in the country watching games on television and 300 million playing the game of basketball.”

Silver’s comments Monday saying “that Daryl Morey is supported in terms of his ability to exercise his freedom of expression” is nonsense. Remember, Morey pulled his initial tweet down. It’s unlikely he did so because his feelings on the protests suddenly changed.

It’s important to point out that the Chinese have suspended relationships with the NBA and the Houston based franchise – they have not put an end to them. Elmore called it a “shot across the bow”, but says there’s no real teeth to the threat. “In the long-run the Chinese government recognizes the value of the NBA and isn’t going to cut ties. There’s too much money at stake for them to get radical in their response.” Tencent says they are planning to blackout Rockets games and could theoretically maintain a boycott of the franchise indefinitely, but that won’t hurt Houston’s bottom line; overseas media rights are sold collectively.

Tsai bought the Nets with the intention of tapping into the Chinese market, so his comments siding with the authoritarian regime were to be expected, but as Elmore points out “they failed to address the [Chinese government’s] attempt to erode the civil liberties of Hong Kong citizens or the democratic reform that’s not taking place – even though it was promised.

Fan Marino: Elmore agreed that league’s business in China runs counter to the narrative that it’s the most ‘woke’ of the pro sports leagues. “[The NBA] talks about being a value based, progressive organization – particularly relating to civil liberties and human rights. To say they respect the history and culture of China, when communism has ruled [the country] for the last 70 years, there have been brutal regimes and most recently they’ve been imprisoning Chinese Muslims is hard to reconcile.” The league won’t refer to the individual who owns a franchise as an “owner”, but they’ll do business in a control state. The NBA has lost all credibility as a socially conscious organization now that “people can – rightly or wrongly – point to money being a determining factor in their decisions.

It’s disappointing that outspoken personalities like LeBron James, Steve Kerr and Gregg Popovich have failed to speak out in support of the protesters – and by proxy Morey. Elmore says we shouldn’t be surprised. “They’re not going to speak out as quickly [as they did with Donald Sterling or the discriminatory legislation against the LGBT community in North Carolina], simply because of the business ramifications.” Unfortunately, Morey being forced to walk back his comments is likely to have a chilling effect on others taking a public stand on controversial issues in the future.

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Landing Top Overall Selection in Draft, Star Defenseman Changes Trajectory of Devils’ Business

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The Devils will play their (sold-out) home opener tonight – the team’s first game since selecting Jack Hughes with the number one overall selection in the 2019 NHL Draft. All-star defenseman P.K. Subban will also make his New Jersey debut after coming over in an off-season trade from Nashville. The two high profile additions have raised team expectations, excited the fan base and as newly appointed team president Jake Reynolds said “changed the trajectory of [the] business.”

Howie Long-Short: To ensure the organization was prepared to capitalize on the newfound opportunities that the June additions would bring the team built out its sales and content infrastructure “overnight”. The size of the sales staff grew +45% (from 60 to 105 employees), while the content team added nine new faces bringing its total head count to eleven.

The excitement surrounding the franchise is translating to fans coming to the Prudential Center.” Reynolds said that 90% of 2018-2019 season ticket holders renewed for the 2019-2020 season (10% made their decision after learning the team was set to land Hughes), the club is among the top ten in the NHL in new season ticket sales and individual game sales are up +150% YoY. Despite the “significant uptick” in ticket sales the Devils are not sold out for the upcoming season.

Fans of opposing teams are now interested in seeing the Devils too. In fact, the club currently ranks 2nd – only behind the defending Stanley Cup champion St. Louis Blues – in YoY ticket sales growth on StubHub. The NHL also scheduled New Jersey to play in four other teams’ home openers, a league record indicative of its newfound standing as a ‘must-see’ team.

The expanded content team has also produced immediate dividends. Reynolds said the team has broken “every single internal record related to social engagement, website traffic and video views – with each metric up at least +200% YoY. [The club] is 3rd in the NHL in Instagram engagement and 4th in the NHL in Twitter interactions since the draft.

There’s financial upside to the team’s content production strategy, too. Reynolds says, “the future of the sports business is direct-to-consumer marketing; building a database, finding meaningful ways to engage fans and then finding ways to monetize [those channels].” For the Devils it’s also the present. The organization is one of just a few professional sports teams running pre-roll ads on social video content.

On the sponsorship front, the team signed two new deals over the summer; neither has been announced.

Fan Marino: “There’s an incredible amount of talent on the ice that is going to allow [the team] to compete not just in the short-term, but for years to come.” As constructed, Reynolds believes the team has a five-year window to win the Devils 4th Stanley Cup. In addition to Hughes and Subban, the team features the ’17 number one overall selection Nico Hischier and the top pick in the ’10 draft Taylor Hall.

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Expect NCAA to Move Goal Posts on Name, Image and Likeness

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California Governor Gavin Newsom signed a bill (SB206) last Friday – the news was disclosed during an episode of Uninterrupted’s ‘The Shop’ on Monday – that will permit collegiate athletes in the state to both profit off their name, image and likeness (NIL) and hire an agent to represent them come January 1, 2023. NCAA bylaws currently forbid student-athletes from taking benefits beyond the value of a scholarship and considers individuals who have profited from their participation in college sports (or hired an agent) to be ineligible. The governing body has yet to issue comment on “next steps in California,” but previously maintained that the “bill would remove that essential element of fairness and equal treatment that forms the bedrock of college sports.” SB206 does not allow colleges and universities to pay student-athletes directly.

Howie Long-Short: Newsom, a former collegiate athlete himself, believes the bill will “initiate dozens of other states to introduce similar legislation.” That seems like a safe bet. Back in August, New York introduced a statute akin to SB206 that would also award 15% of athletic department ticket sales revenue to student-athletes; and South Carolina recently announced it would consider its own version of a ‘Fair Pay’ bill.

The NCAA rightfully believes “that a patchwork of different laws from different states will make unattainable the goal of providing a fair and level playing field.” SB206 gives the California schools a significant recruiting advantage, which is why Wisconsin A.D. Barry Alvarez said his school would no longer be scheduling non-conference games against them. The NCAA could try to exclude California colleges and universities from sanctioned competitions (think: March Madness), but the eight Pac-12 schools not located in the Golden State are certain to oppose any outcome that would further the competitive disadvantage that the conference is at. Remember, for every game a P12 team plays in the NCAA tournament, the conference gets a $1.7 million pay-out over six years.

The more likely outcome is the NCAA decides to move the goal posts once again. The COO at one P5 school pointed to the organization’s history of “overcoming tough challenges” (think: Title IV, Ed O’Bannon lawsuit) and suggested “this [will be] no different than that.” ‘Fair Pay’ is a “massive shift in how the NCAA currently thinks and operates”, but our source strongly believes that “everybody in the profession will come together to figure out the best way to resolve name, image and likeness for collegiate sports and the student-athletes.

The cat is out of the bag now that SB206 has been signed into law – the NCAA has until 2023 to figure out a solution. Our source suggested it won’t take nearly that long and said he/she expects coaches, administrators and the governing body to immediately begin working on re-balancing the playing field.

It’s highly unlikely that major national corporations will look to sign relatively unknown college kids over mainstream celebrities, so most (let’s exclude the footwear companies from this discussion) of the NIL deals that will be struck will be done on a local level. While it is possible – okay, likely – that boosters will line the pockets of football and basketball prospects, one must wonder what happens at schools where those dollars generate little ROI in the form of wins? One could argue that NIL makes it more likely talent will concentrate at the top, but that dynamic already exists.

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DraftKings Introduces Venture Studio, Athlete Network and VC Fund

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DraftKings has introduced the formation of DRIVE, a new venture studio and athlete network. General Catalyst, Accomplice and Boston SEED are backing the actual investment fund. The pre-seed and seed stage companies that the fund invests in will go through the studio’s 12-month program. DraftKings intends on leveraging its brand, internal resources (think: engineering, product development) and wide network of influential contacts across the sporting landscape to give those companies the best chance of success. The fund has not yet made its first investment.

Howie Long-Short: There are at least 25 team-backed investment operations, in addition to the 40+ sports-specific funds (several of which are backed by team owners), so there is a lot of VC money being poured into a relatively small sports-tech market. Many of the team backed funds lack deal flow because the people sourcing them are business or marketing executives without a venture background. That shouldn’t be a problem here. Co-founder Rashaun Williams has spent the last 8 years in VC (he was an investment banker at Goldman & DB prior) and has invested in over 120 startups. DRIVE also has three other full-time investment professionals (Janet Holian, Kiki Mills Johnston and Julian Fialkow) on staff.

The DraftKings brand and venture studio will prove to be beneficial, but it is the athlete network that provides the DRIVE fund with a real differentiator. Athlete investors are attractive because in addition to their capital, senior investment associate Julian Fialkow says, “they’re almost like free marketing and they have the channels – whether it’s on television or social media – to promote products and services.

Members of the athlete network will go through “an immersive five-week internship program.” Fialkow explained that participants will learn about everything from “building a robust portfolio, to investing in companies at varying stages and buying real estate.” While the goal is most certainly to educate, the hope is that “participants invest in the portfolio companies or join in a board member or advisory capacity.

The DRIVE athlete network isn’t starting from scratch. Williams serves as a financial advisor to more than 150 professional athletes – so there is an existing network to tap into – and Grant Williams (Celtics), Thaddeus Young (Bulls), Matt Light (Patriots) are all already on board. The program is open to both current and retired players.

DraftKings is the majority shareholder in DRIVE, but they are two independent entities; each company has their own board, committee and CEO. In fact, DRIVE does not exist to serve DraftKings interests and the goals of the industry agnostic fund are not aligned with the gaming operator’s business plan. That said, most of the opportunities that the fund is likely to look at will be sports technology related. Fialkow believes that there are opportunities for advancements in “contentwhere people watch, how people engage, how people learn sports and how people cluster data. The rise of wearable devices has created a big opportunity at the intersection of sports and knowledge.

Fan Marino: Fialkow said that a venture studio backed by the likes of DraftKings and General Catalyst will be attractive to athletes that struggle to identify if investment opportunities are “authentic or real.” There are countless stories of athletes that have been lured by conmen into nefarious schemes, perhaps none are as wild as the one orchestrated by financial advisor Peggy Ann Fulford. It might just the best piece of journalism that you’ll read this week. Sports Illustrated: The Peggy Show’.

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Corporate Sponsors Finding Stadium Naming Rights Deals “Are Working”

SoFi

There has been a bevy of activity relating to stadium naming rights agreements over the last six weeks.

  • SoFi secured the rights to the new NFL stadium in Inglewood, California with a 20-year pact worth at least $30 million annually.
  • The Denver Broncos announced Empower Retirement agreed to a 21-year deal to replace Sports Authority on the stadium at Mile High. The venue has been without a corporate sponsor since the sporting goods retailer liquidated back in 2016.
  • Miami-Dade County disclosed that American Airlines would not be renewing its sponsorship of the house that Dwayne Wade built when their 20-year agreement expires in 2020.
  • US Bank allowed its deal with the venue formally known as Riverfront Arena in Cincinnati to expire after two decades as the naming rights sponsor.

Both American Airlines and US Bank will continue to maintain a presence at those venues. Neither building has announced a replacement for their long-time partners.

Howie Long-Short: The Inglewood project and the stadium at Mile High both have new naming rights partners, but the value of those two deals differs tremendously. Financial terms of the Broncos-Empower Retirement pact were disclosed. It’s reasonable to assume that the agreement looks more like the $150 million over 25 years that Sports Authority agreed to back in 2011, than the $600 million deal SoFi signed. It should be noted that SoFi’s agreement with the Rams and Chargers did not include the financing of the stadium – typically one of the ways a financial institution can recoup money a naming rights agreement.

The new venue in Los Angeles was able to set a new ceiling on the naming rights market because “there’s just not many buildings scheduling 16 consecutive regular-season NFL games.” Michael Neuman, managing partner, Scout Sports & Entertainment explained that “it’s an opportunity that might come across once each decade,” so the competition is steep. The last time it happened, MetLife set the bar agreeing to pay the Jets and Giants $20 million annually.

But it’s not just Rams and Chargers games that will bring attention to the venue and by proxy the online financier. The stadium is set to host the ’22 Super Bowl, the ’23 CFP National Championship Game, one to three ’26 World Cup game(s) and the opening and closing ceremonies of the ’28 Olympics. The value in those events is most certainly baked into the price tag.

Expect to hear about more of these high-profile naming rights agreements. Many of the stadium sponsorship deals struck in the 90s – when the boom began – were for 20 or 25 year terms and have expired or soon will. Priorities have shifted and leadership has changed at many companies over that time leading Neuman to believe that there may be “a wealth of opportunities for new brands to enter the space” on the near horizon. It is not clear why American Airlines elected to not to renew its deal in Miami. The company has 10 years remaining on a 30-year agreement with Dallas’ NBA arena.

The first generation of naming rights deals lacked sophistication. Brand marketers assumed that simply having their name and logo on a building would influence the purchase funnel. That thinking has changed over the last decade as consumers now have access to more information than ever before with connected mobile devices. It’s widely accepted within the marketing community that to cut through the clutter “there needs to be a deeper more amplified approach to activation – a year-round commitment to supporting the needs of the fans in that community.

Those that have made the effort have found “stadium naming rights partnerships are working.” Neuman says that the research indicates “naming rights partners have connected emotionally with fans on levels other sponsors have yet to achieve and are influencing purchasing decisions more so than any other relationships the team has.” For that reason, expect both the the Miami and Cincinnati arenas to find new sponsors willing to pay an annual increase over their expiring deals.

Fan Marino: It’s not clear who will replace American Airlines in Miami, but I’m certain it won’t be BangBros; the South Beach based pornography company that bid $10 million per year for the naming rights. Any chance of the Heat taking the bait likely came to an end when the club found out the company was proposing a change to the name of the venue from American Airlines Arena to The BangBros Center (The BBC).

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American Football Becoming a Global Game

International Series

The NFL is viewed as a domestic sports league, but the popularity of the league’s international series and an increase in the number of international buyers purchasing tickets to games stateside would indicate the league’s efforts to grow its fan base abroad are working. Back in late August, StubHub revealed that ticket demand for the 2019 international series (includes: 4 games in the U.K. and 1 in Mexico) rose +55% YoY, while international buyer sales are up +19% YoY.

Enthusiasm for American football is spreading across the globe. The league determined that the number of avid football fans in the U.K. rose +25% to 4 million in 2018, making it the 3rd most popular sport in the country. There’s serious momentum for the game in Germany with avid fan growth up between +15% and +20% YoY and league EVP, chief strategy and growth officer, Chris Halpin says that Brazil has become a “really strong consumption market” for the league. Australia, Mexico and Canada, where the NFL has become the number two sports league (behind the NHL), are also growth markets. If you’re looking for a common thread between all of these countries, they’ve all sent home-grown players to the NFL – players who then serve to advocate for the sport in their homeland both during their playing careers and in retirement.

Howie Long-Short: The avidity of the English football fan is clear. The two international series games scheduled at Tottenham’s new venue sold out in 45 minutes. It took a bit longer – roughly one hour – to sell the two games at Wembley; of course, the venue holds 18,000 more fans. Halpin says that the league is “about 10x over-subscribed” on ticket waiting lists for games in the country.

There is currently “considerable over-demand” for the NFL product in the U.K., what is not as clear is if that demand would hold should the league expand its international offering; earlier this year it was reported that the league was considering the idea of increasing the slate to eight games. Halpin acknowledges that selling single game tickets to four games is different than selling a ‘London season ticket’.

Did you know? Last season’s Eagles-Jaguars game at Wembley was the “most in-demand regular season game, in terms of secondary market demand, in NFL history.” A prominent Jaguar fan base – remember, the team has regularly played games in England since ‘13 – combined with the rare opportunity to see the defending Super Bowl champions live made the game a particularly tough ticket.

There is constant speculation about the possibility of placing a franchise permanently in London and the league acknowledges it is “always testing the [market’s] ability to [support] a franchise – [evaluating] endemic [interest], corporate support and most importantly fan energy and ticket demand.” But the U.K. isn’t the only international market that the league would consider. Halpin said that “Mexico City and Toronto [also] have the fan bases to support a team.

That doesn’t mean fans in those cities should start saving for personal seat licenses. Once the Rams, Chargers and Raiders move into new buildings next season, Halpin says the league feels as if it’s in “pretty good position with [its] 32 franchises.” There are no immediate threats for relocation and the league is highly unlikely to upset the balance that eight, four-team divisions provides.

Fan Marino: The NFL plays regular season games abroad, while international soccer leagues continue to serve the U.S. sports fan meaningless ‘friendly’ exhibitions. It wasn’t always that way. The league played pre-season games overseas throughout the ‘90s and ‘00s, but decided if it was going to make the trip, it might as well put its best product on the field; the sophisticated sports fans can tell the difference between elite-level competition and glorified practice. To build a following in a new market a pro sports league needs to make a commitment to the local fans. They need to know the league is serious if they’re going to invest their time, money and emotions in the games.

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