Investment By Sports Properties and Rights Holders Into Startups Is Accelerating
BY ADAM GROSSMAN
In a recent post, we discussed how brands are looking to make venture investments into sports properties featuring T-Mobile’s new partnership with the Drone Racing League. Corporate partners, however, are not the only organizations looking to capitalize on sports business investments.
In fact, the creation of sport-based accelerators and investments by sports properties and rights holders directly into startups is accelerating rapidly. This is welcome news for the sports industry and should further spur developments in a wide range of revenue generating sports technologies including data and analytics, non-fungible tokens, blockchain, streaming content, and artificial intelligence (among many others).
Whether through an accelerator or direct investment, teams, leagues, athletes, media companies, and events are looking to make financial and / or human capital investments into new companies. In the past, teams in the United States including the Los Angeles Dodgers, Philadelphia 76ers, Dallas Cowboys, and Minnesota Vikings have established sports accelerators to spur innovation from startup companies.
More recently, the Charlotte Hornets “selected apparel startup The Jurse as the winner of its inaugural Innovation Summit”. In addition, the Minnesota Twins recently announced the launch of an accelerator for sports, technology and entertainment startups in partnership with Techstars.
These teams are building in part on the playbook started when FC Barcelona signed a “collaboration agreement” with Georgetown University to “explore possible avenues of cooperation within the framework of the Barça Innovation Hub” in 2017. Barcelona’s decision to explore this partnership provides an interesting new dynamic for a sports industry focused on innovation.
More specifically, Barcelona, is one of the first teams to establish an innovation presence using this approach. The team already had an office in New York City, had received approval for an expansion team in the National Women’s Soccer League and had developed six soccer academies in the U.S. at the time. The new relationship with Georgetown also further increased the visibility of its International Champions Cup match versus Manchester United in July 2017 in Washington D.C., where Georgetown is located.
The collaboration through Georgetown and its Master's in Sports Industry Management program is similar to working with entrepreneurs at startups earlier in their development cycle. Both are interested in leveraging innovations technology, analytics, and data as the foundations to build and grow companies.
At the same time, starting a company has significant risk. Some of the challenges include finding clients, developing products, securing financing, and hiring talent (among the many challenges). For many students in MSA programs, these hurdles make pursuing a new venture extremely difficult.
Established sports properties and rights holders investing in the companies can mitigate these risks. Barcelona’s relationship with Georgetown reduces this risk because it enables students to develop new ventures through its innovation program while still in school. Because most MSA programs operate in a school of professional / continuing studies, students can keep their current jobs while pursuing new ventures.
Students then have access to Barça Innovation Hub resources to help deal with the challenges of starting a company and potentially can turn one of the biggest sports organizations into one of its first clients. In turn, the club is able to “innovate, generate, attract, manage and share knowledge.” More specifically, Barcelona can incubate new ventures started by future industry leaders at a top MSA program and make commitments with the most promising companies.
This approach is being borne out in more recent examples with the Hornets and Twins. The Jurse received $15,000 from the Hornets for coming in first place and exposure for winning the competition. The Twins are providing a “three-month program and receive funding, hands-on mentorship from the Techstars and Twins networks, and access to curated workshops and resources, as well as access to the Techstars global network for life.”
Win-win is an overused cliché, particularly when applying it to a relationship in the sports industry. The collaboration between sports properties and startups, however, does have the potential to perfectly represent a relationship in which both sides should generate significant value.