Over the past few months, JohnWallStreet has recorded several attempts – including the successful efforts of the Big 3 – to decentralize sports team ownership. Ryan Sweeney (General Partner, Accel) says these projects are steps towards “fractionating everything.” It started with Uber, where your car is effectively torn to pieces. This happened with Airbnb, where your home can be divided into parts and used. And you start to see it with solid assets. These are undeniable trends that are [still] in the early innings ”and are likely to continue to migrate to the sport in the coming years. Accel is a leading investor in Rally, a company that divides everything from sports cards to wine into fractions (think: next-generation eBay).
Getting JWS: The trend of factionalism has gained momentum in recent years as people look for ways to invest in items they can’t afford to buy individually and a guarantee that they will get what they are looking for. As Sweeney thinks, someone can save and buy [Shohei] A card for Otani’s rookie, as we should have done as children. Keep buying packages and hope to open the right one. Or buy a piece of [the card] today. ”
While it may sound strange that someone will buy a stake in a card they will never physically own, the concept makes sense for members of the younger generations who are less active. “People are becoming more comfortable not to fully own their assets, with the idea that other people can share in it or that it’s a little common good,” Sweeney said.
The trend is part of the changing attitudes that range from property ideas to consumption. “If you think about this generation that grew up with mobile phones, they are not watching sports, but the most important moments. They [might] “Tune in for the last few minutes of the game,” Sweeney said.
He argues that in order to capture and hold the attention of the next generation, which is becoming increasingly scarce, rights owners need to find ways for fans to participate in the game outside of gambling. “Factioning of anything in and around a sports team, in and around watching [the game] and around collecting will be [a strategy] which is used.”
Giving fans a chance to own property makes sense for new sports properties that want to build fierce and vocal followers, not practical within the big four leagues for reasons ranging from LP limits and billions of dollars in estimates.
However, the factionalization of sports media rights is under way at the league level. Just look at the MLB that has added Amazon, Peacock and Apple to the distribution mix in recent months.
Lou DePaoli (Managing Director, Executive Director of Team Search and Consulting, General Sports Worldwide) expects the approach to gain momentum at the team level as well. “Look at what the Yankees did [with Amazon]”, He said, noting that the tech giant will broadcast 21 games this season. The former vice president of the New York Mets, Pittsburgh Pirates and Atlanta Hawks sees teams cutting and reducing their rights in the coming years because it will allow them to make more money from television. “As the media landscape evolves and cable outages continue to negatively impact RSN, teams and leagues will need to adjust their business models as they relate to media rights to ensure they maintain or increase this revenue stream. . “
So far, the fractionation of solid assets has been largely limited to trade cards and souvenirs used in games. This will continue. Sweeney, who is a minority owner of Utah Jazz, plans to host the Donovan Mitchell T-Shirt franchise, where some fans receive a bet on the player’s uniform during the game as a gift.
But collectibles are “just the beginning of what will become a mass trend” in sports, Sweeney said. The beauty of fractionalization is that it makes assets once available to only a select few, available to the masses.
Sweeney believes that some exclusive offers in the sport – including premium packages with season tickets and access to luxury apartments – will increasingly be broken down into smaller bets and offered to a team of people. “Why don’t you sell your stuff this way?” The logic is that the team can charge more if the price of the product is shared.
The practice has existed for the last five to seven years, albeit largely behind the scenes. DePaoli said he met fans during his tenure at the Mets and Pirates who wanted to sit in the front five rows behind the dugout for 20 games. “This is a person who wants to spend a lot of money on your product,” he added. But these seats were sold as part of an all-season package. “So, our staff will mix and match people who don’t know each other.” In the end, the club managed to meet the demand of the fans and get more money for the inventory.
Leaving aside profit margins, Sweeney expects more factionalization because rights holders need to provide fans with a reason to invest. “In a world where everything is made in the market, where I can watch every game I want and spend my money in 50 different ways in a city every night, how do you make people feel special?” He asks. Providing access to things or experiences that were previously inaccessible may be part of the decision of rights holders.
DePaoli confirmed that the industry is thinking in this direction. “Teams are becoming much more aggressive about the way they present and pack because they know there is a lot more competition in the sports and entertainment space.”