Sport embraces ‘fractionalisation of everything’ – Sportico.com
Over the past few months, JohnWallStreet has chronicled several attempts, including successful Big 3 efforts, to decentralize ownership of sports teams. Ryan Sweeney (General Partner, Accel) says these projects are steps on the road to “fractionalizing everything. It all started with Uber, where your car is effectively broken into pieces. It happened with Airbnb, where your house can be broken into pieces and used. And you start to see it with durable assets. These are undeniable trends that [still] in the early innings” and likely to continue to migrate into the sport in the years to come. Accel is the lead investor in Rally, a company that splits everything from sports cards to wine (think next-gen eBay).
JWS review: The splitting trend has gained momentum in recent years as people look for ways to invest in items they cannot afford to buy individually and a guarantee of getting what they are looking for. As Sweeney reasoned, someone “could save up and buy the [Shohei] Ohtani rookie card, like we had to do when we were kids. Keep buying packs and hope to rip the good one. Or buy a piece of [the card] today.”
While it might seem strange for someone to buy a stake in a card that they will never physically own, the concept makes sense for members of the lower-capital younger generations. “People are increasingly feeling comfortable not owning their assets entirely, with this idea that other people can share them or it’s a bit of a commons,” Sweeney said.
This trend is part of changing attitudes that move from ideas about ownership to consumption. “If you think about this generation growing up on cellphones, they don’t watch sports, they watch the highlights. They [might] listen to the last two minutes of a game,” Sweeney said.
He argues that to capture and hold the attention of the next generation, which is only getting scarcer, rights holders need to find ways for the fan to participate in the game beyond the game. that is in and around a sports team, in and around watching [the game] and around the collectibles is going to be [a strategy] which is used.
Giving fans a chance to participate in ownership makes sense for fledgling sports properties looking to build a rabid, vocal following, it’s not practical in the big four leagues for reasons ranging from limitations on LPs and valuations. a billion dollars.
Yet the splitting of sports media rights is underway at the league level. Just look at MLB, which has added Amazon, Peacock and Apple to the distribution mix in recent months.
Lou DePaoli (general manager of executive search and team consulting, General Sports Worldwide) also expects the approach to gain momentum at the team level. “Look what the Yankees did [with Amazon]he says, noting that the tech giant will broadcast 21 games this season. The former executive vice-president of the New York Mets, Pittsburgh Pirates and Atlanta Hawks sees teams slicing and reducing their rights in the coming years as it will allow them to make more money on television . “As the media landscape evolves and the cord-cutting continues to negatively impact RSNs, teams and leagues are going to have to adjust their business models with respect to media rights to ensure they maintain or increase that revenue stream.”
To date, durable asset splitting has largely been limited to trading cards and in-game memorabilia. This will continue. Sweeney, who is a minority owner of the Utah Jazz, envisions the franchise hosting “Donovan Mitchell Signed Jersey Day,” where a portion of fans receive a stake in the uniform worn by the player during the game as a giveaway. .
But collectibles are “just the start of what’s going to be a massive trend” in sports, Sweeney said. The beauty of splitting is that it makes assets once accessible to the privileged few and accessible to the masses.
Sweeney thinks some exclusive sports deals, including premium membership packages and access to luxury suites, will increasingly be broken down into smaller stakes and offered to a collective of people. “Why not sell your stuff this way?” The logic is that the team can charge more if the cost of the product is shared.
The practice has been going on for five to seven years, although largely behind the scenes. DePaoli said he encountered fans during his Mets and Pirates tenures who wanted to sit in the front five rows behind the dugout for 20 games. “He’s a person willing to spend a lot of money on your product,” he adds. But these seats were sold as part of full-season packages. “So our staff were mixing and matching people who didn’t know each other.” In the end, the club was able to meet fan demand and get more money for inventory.
Profit margins aside, Sweeney expects more splitting as rights holders need to provide fans with a reason to be invested. “In a world where everything is commoditized, where I can watch any game I want and spend my money 50 different ways in a given city every night, how do you make people feel special?” he asks. Providing access to things or experiences that were previously out of reach can be part of the solution for rights holders.
DePaoli confirmed that the industry is thinking along these lines. “Teams are becoming much more aggressive in how they present themselves and present themselves because they know there’s so much more competition in sports and entertainment.”