Subscribe to JohnWallStreet

May 31, 2023

Editor Note: Andy Marston takes the controls on Wednesday mornings. You will find his latest Sports Pundit column is below. I'll be back tomorrow before Adam Grossman rounds out the week on Friday.

Competitive Socialization Trend Reaches Pro Sports

Formula One

recently announced

plans to open a US-based F1 Arcade at Boston Seaport in early '24. The venue, the first of more than 20 expected across the country over the next half decade, will combine an immersive gameplay experience with premium food and drink offerings in a social setting. 

Competitive socialization has become one of the fastest growing trends in global hospitality over the last 10 years. 

"When Bounce launched in 2012, it was the first time [a pure leisure game like bowling or pool] was brought to life,” Adam Breeden (CEO and founder, F1 Arcade) said. "Soon after, we saw a whole array of new concepts and brands come to market.

Breeden has been a pioneer in the space having also co-founded All Star Lanes (bowling), Puttshack (golf), Flight Club (darts) and Hijingo (bingo). F1 Arcade is a joint-venture between his company, Kindred Concepts, and the global motorsports property.

As more and more of these concepts have emerged, those competing for market share have been forced to find new and/or additional ways to standout–and pro sports IP is an effective way to do it.

F1 Arcade has developed a "completely unique and bespoke [simulator based] racing experience for people of all levels,” Breeden said. 

But it is the Formula One IP that he sees as the greatest differentiator and the likely driver of its long-term success (pun intended). 

“The F1 brand takes the concept to a whole other level with 700 million fans worldwide,” Breeden said.  

Toca Football, a technology enabled soccer experience company and operator of indoor training centers, has come to a similar conclusion. It sold an equity stake

to Major League Soccer

back in October '22. MLS will host various activities at Toca Social venues as part of that deal. There will also be Toca-branded fan engagement activations at select MLS stadiums.

While competitive socialization venues benefit from their association with pro sports properties, rights owners like F1 and MLS have plenty of upside in these deals too.

“We are seeing an increasing number of rights holders commercializing their intellectual property rights with [these types of] venues," Rob Mills (CEO,Turnstile) said. "This trend [has been] further exaggerated by venues currently being developed in the Middle East" (see: Ferrari World Abu Dhabi or Real Madrid’s partnership with Dubai Parks and Resorts).

Rights owners are often able to monetize venue deals beyond the sale of their IP too.

“Typically, 60% to 80% of these sorts of venue deals are composed of IP rights, meaning that rights holders can commercialize finite assets such as signage and hospitality with more traditional partners,” Mills said.

Of course, the benefits to these licensing deals are not limited to the top line. Competitive social experiences like F1 Arcade can be an effective way for a rights owner to engage with existing fans. And given that these venues tend to appeal to 18–35-year-olds, they can also help said rights owner to reach new and/or casual fans.

“Just like Netflix’s Drive to Survive has encouraged millions of new fans into the sport, we will have a similar effect as we get to scale,” Breeden said.

While that remains to be seen, F1 Arcade expects to have 12 million fans passing through its doors within five years. Its flagship location will draw 350,000 people this year. The company plans to open 36 venues over the next half decade.

About the Author: Andy Marston leads growth and marketing at Zone7, a proprietary AI platform committed to helping sporting organizations unlock greater performance data insights. Based in London, he founded Sports Pundit in 2020. In addition to this column, he publishes a ‘Highlight Reel’ newsletter each Friday breaking down key stories from across the industry. You can find him here.

Building an independent media brand is a heavy lift. We use this space to shine a spotlight on some of our favorite sports, media and finance content creators. We hope you will check them out. 

The Sunday Column by Roger Mitchell

Roger Mitchell and his podcast AYNE look at the uncertain waters of sport and finance, to try and better understand the risks facing the business of sport. 

Recent Story: The quest for sport content that pays its way.

Excerpt: “Huge-revenue but zero-EBITDA- producing”. This phrase is so profound that it describes a 20-year entire zeitgeist in “venture” and “growth” in capital markets.  “anything not working for profit is toast”.

Click

here

to read more.

Subscribe

here

.