不止于终场比分：体育如何成为新的投资前沿

I'm Eric, founder and CEO of Stable, and I grew up in Madrid, which means I fully appreciate the power of sports. Every taxi I've ever gotten into anywhere in the world quickly agrees with me that Real Madrid is the best team on the planet.

Ooh.

Normally, I have a pretty smooth trip, and I'm very excited about this renewed Galácticos 3.0 era that's coming. Like a football talent spotter, my job is to spot talent, but in the investment realm. What we do at Stable is give new and up-and-coming fund managers lots of money, and we help them scale their firms.

It's a pleasure to be surrounded by two of the best players in the game. They've already proven that they can withstand the pressure of being in the arena. Given that it's a bit awkward to brag about yourself, I'm going to introduce them, and then we'll go into our sports-investing master class.

Alexis is the founder of 776, a venture firm that he started after co-founding Reddit. His investments read like a thesis statement of where the puck is going. I'm going to crassly try to fit in as many sports analogies as possible. He's a founding investor in Angel City Football Club and Chelsea Women. He's in golf and volleyball, so he's not just buying into leagues; he's actually building them.

One fact I love about it is that he first tweeted about this billion-dollar sports idea in 2019, and then he got dragged by millions of people on social media. Thanks to Reddit. It's been really helpful for the discourse.

Yeah, I know.

The good things also show up, though. Alex Morgan replied to you, I think, and that's how you got involved in ACFC.

That's the reason I became the founding controller of Angel City. All credit to Alex Morgan.

So good things happen from social media, too. That's good.

Every now and then.

Mark is the co-founder, chairman, and CEO of Avenue. That's a lot of titles, Mark. I don't know how you find—

It's a lot of work.

It's a lot of work, yeah. You have three jobs right there. He's spent 40 years finding mispricings, and he's brought the same eye to sports. He invested in the Bucks in 2014 and exited in 2023. Is that right?

Yes.

He has a stake in the North Carolina Courage, and you're a pickleball investor. Controversial. The good thing about Mark is that he's actually harvested returns, as opposed to all these magical marks that we see in the market.

What's really interesting about Mark is that I think he's good at discerning a market from a fad. Maybe except for pickleball, but we'll get there in a second.

1. Sports Become An Asset Class

Just to set the table: why sports, and why now? It's gone from trophy asset and ego massage to institutional asset class in about 10 years. So let's start with Alexis. What made you allocate serious dollars to the space instead of it being a passion bucket?

I laid it out in that tweet. I saw an opportunity in women's professional sports back in 2019, simply because it was a Women's World Cup year. I didn't follow the sport, but I knew these stars had transcended it. That was a sign to me that there was something coming.

After spending 16 years building Reddit, I'm a heat-seeking missile for this kind of online engagement. The fact that Alex Morgan and Megan Rapinoe had millions and millions of followers told me that there was value there. I'd seen a headline that Megan's team in Seattle had just sold for $3 million, maybe $3.5 million. The math didn't match for me. I was like, "Well, look, she's worth at least that much money every year in brand deals. How is her team only worth that much? It must be really poorly run."

I went on this rant about how it was an obvious billion-dollar opportunity, given the dearth of soccer excellence on the men's side here in this country but the wealth of greatness on the women's side. I know I can market greatness all day long. Given that this would be something very applicable, I think, to the women of the household who control all consumer spending, basically, it seemed like brands would sign up for it en masse.

For better or for worse, I think my wife almost tried to talk me out of it. My wife is Serena Williams, and Serena and Venus are the case study for how women's sports, when invested in, can be just as valuable as men's, right? Because Billie Jean King got pay parity, and because two girls in Compton saw the opportunity to make a ton of money playing sports, they became the greats and blew up tennis.

To this day, more Americans watch the U.S. Open women's final than the men's. That's no discount to the men; it's the fact that women's tennis is seen as just as valuable as men's, and the market says that. It's not activism or charity; it's the free market.

That was my window into why it would work. So far, it's off to a pretty good start.

Thanks, Alexis. Mark, you've done it once already with the Bucks, and now you're buying in again. What's the thesis that keeps you coming back?

2. The Durable Sports Asset

Well, I think part of it is that you learn a lot by owning a team. For argument's sake, the pickleball investment: I bought it for $50,000, and I sold it 2 years later for $5 billion. So it actually worked, even though I never played it.

I think what you quickly learn in sports is that there are only 3 ways you make money: ticket sales, sponsorship, and then media. The thing I loved about sports, what I learned about the Bucks, and why you want to be invested in sports is this: your favorite team, I guess, is Real Madrid?

Yep.

All right. So we'll use you as an example. If Real Madrid loses all their games and they suck, you don't go and become a fan of Barcelona.

No, never.

Never. You're still going to be there. So think about that. For all of you who have an iPhone or any product, normally, if a product had a hole in it—here, we have a glass of water—we would never use the glass, right? We'd throw it away. It's a bad product.

Yet Real Madrid could be horrible, and you don't switch. What that taught me is that you have an asset that you could grow, and every year you get more and more fans. There is this sustainability to sports teams and to value, and that value is what I saw and wanted to invest in.

3. Franchises Versus The Ecosystem

You alluded to franchise versus ecosystem and those 3 verticals on how to make money. There's a real choice for capital in how to engage. Is it the franchise itself, or are we also seeing opportunities in the ecosystem—hospitality, real estate? I wonder where you're putting your next dollar when you think about the vertical opportunity.

We invested in a company called Cosm. I don't know if you've ever been there. Has anybody been there?

Oh, yeah. We got to watch the screen.

It's like these mini spheres, and you go in and feel you're sitting at the 50-yard line or courtside. So that's one of the verticals, but anything adjacent to sports, people love.

One of the things we quickly found out is that during COVID, people wouldn't come into the office, right? You had remote work, and everybody worked remotely.

Mine still don't come in.

Cracking the whip.

Right? But people would go watch a Knicks game. People would go watch their teams, and you'd be in the office and everybody would be like, "Oh, you got to be 6 feet away." But you'd then sit next to somebody you didn't know, and they would score and you'd go, "I love you!"

Yes.

Right? And you would touch and hug. So what you quickly found out is that sports will transcend. We love the verticals because there is quite a bit of money that's going to be made there, and we've invested in a number of those businesses.

4. Pricing Sports Growth

Let's talk about valuations and duration. Here we have an emerging-to-established life cycle. Alexis, when you're pricing a women's league or any new property, what does cheap even look like at this stage?

I can't talk about specific valuations, but I recently bought the L.A. franchise for League One Volleyball. These valuations are all still, let's say, what would have been a normal seed round in venture capital—maybe not this year, but in prior years. I'm underwriting to building billion-dollar franchises.

At the end of the day, I'm still looking to be on the ground floor. I can't say it was the first team in the league, but I still want to be on the ground floor, really helping to build. I think where our expertise shines is in operating from zero to one. So a sub-$100 million valuation, easily.

Got it. And Marc, you watched the Bucks franchise—I don't know, that's 6, 7, 8x. I'm not very good at math, but pickleball sounds like a 100x. It's pretty good.

Are we at fair value? Are we fairly priced for growth? Is it a bit frothy? What's the 60-second view on valuation now?

I think everything is pretty fairly valued. Ultimately, what ends up happening is that you could buy a basketball team today, and you'd make, I would say, 3% or 4%. That would be a decent return.

But the problem ends up being that if you own a team, you want to win. And if you want to win, you spend money. I think that's the hard part in sports, and what we always see with Real Madrid is that you want the team to win. You don't care if the owner makes money. You want him to spend as much as possible so they can win.

And what ends up happening is that when you own a team, your goal is to win. And so, you build franchise value, and you build value the more you win, the more people want to end up owning that. So, when I sold the Bucks, I think we were losing $100 million. The reason for that is because we're in the luxury tax.

Mhm.

At the same time, Michael Jordan was selling the Charlotte Hornets. The Hornets were selling, and he sold them for $3 billion. The Bucks were losing $100 million, and we sold them for $3.5 billion.

Right.

If I said to you, “What do you want? $3.5 billion, and you can lose $100 million, or do you want to make $15 million and pay $3 billion?” Why did somebody pay more? Because you're winning. Because your franchise value is greater. That's what you're doing day in and day out by spending money.

5. Building Winning Teams

So, let's pull on that thread on how to win. Alexis, when you're thinking of yourself as an operator, you've obviously built a business. So, both of you wear these operator-investor hats.

Mhm.

What value creation can you bring to the table to win more? How do you think about adding value to the assets after you bought them?

I don't touch anything on the football side or the sporting side. I probably should offer more advice these days, especially with how much AI is helping revolutionize everything when it comes to processing data, but that's not where my strengths are. So, I can't take any credit for our TGL team winning the championship this year. I can't take any credit for it; I did nothing.

I think our leverage ends up being maybe talent selection, to some extent, for the leadership on that side. I learned a lot from mistakes early on in sports that, if I'd known Mark and asked him for advice sooner, maybe I could have avoided. But good lessons learned.

For value creation, to me, it speaks to how we use software in every part of our back office, or I guess the front office, to actually run the business more efficiently. Once I got under the hood of sports teams and realized that most of the work happens on-screen, happens in meetings and after meetings, making spreadsheets, collecting emails—these are all things that software could do 100 times more efficiently, especially now that software, thanks to AI, is truly commoditized.

All of our teams will forevermore be run very asset-light, with maybe a fraction of the people. I fully expect to have a front office with maybe a dozen people max, managing agents to do things like outreach to enterprise sales clients, with social media content scaling massively through software instead of headcount. I think those teams will just be run far more profitably than they were in the past. But on the football side or the sporting side, I don't.

Mark, in your experience, that $100 million you were losing—I'm interested in some anecdotes. Where's the highest dollar-to-win conversion? Where would you spend that dollar to win?

It's a great question, because that was the big argument I would have with our GM. When you understand math, you would say, “Why are we paying this person $20 million and this person $2 million? Is the guy you're paying $20 million 10 times better?” And the answer always is, “No, he's not. He's a little better.”

And so, we ended up having the team focus on this: “Giannis, you're going to give him the max, but your job is to find people who are making $2 million who we can sign that are producing as if they're a $20 million player.” And that's really hard. That's what we really focused on.

I would say the difference between Alexis and me is that I would give our team pep talks, which didn't really do much. But I'm a big believer in pep talks. So every time we'd have a game, I'm like, “Go out there and win. Put it in the basket. That's just an idea.”

I heard life, like football, is a game of inches.

That's right. And our golf team, I'd say, “Guys, hit it straight.” And then when they didn't, I was like, “See, if you listened, we would win.” But it's hard; everyone's got to work hard. Oh no, they miss me. Oh yeah.

6. The Path To Liquidity

So, let's change gears a bit. To all the investors in the room, everyone's a bit stressed about liquidity. All of us are adjusting our distribution winter models to see when we get any cash back from anything. So, what's this asset class actually worth when you sell? You can look at market comparables on franchise value, but the buyer universe is small and the league approval gates everything. I'm just curious—maybe, Alexis, on the earlier-stage things you own, what's the path to liquidity? Are you thinking about an exit?

Yeah, it's funny. I still do a lot of venture and a lot of tech, like traditional tech, and I have seen investments in companies like Ripling, Flock, or Row that are still a couple of years away from an IPO that I made in 2014. And so, it's ironic: I actually can see it. We talk about the illiquidity of sports historically, but even tech is obviously dealing with its own challenges, where there was always a traditional path to an IPO, and it still—it will come.

But I think this tidal wave of investment that's now opened up—private equity is obviously investing in a big way in sports—means it's not just a trophy asset for billionaires. Three years ago, when DALL-E dropped, that was the first image-generation tool from OpenAI. I was out here playing with it, posting my little images, and they're janky but good.

I was onstage not too much longer saying, “Okay, guys, images happened way faster than I expected, and than a lot of us in tech expected. Videos are just moving images, so I've got a line of sight to probably the next couple of years seeing some really incredible video generation, like text-to-image and then text-to-video.”

When that happens, there will be an existential crisis in Hollywood because so many of the biggest-budget films were all just guys in green tights and gals in green tights in front of green screens. When you can reproduce that budget for a fraction of the cost—and if you've seen any of the new Seedance models on your Twitter feed, you see what I'm talking about—those things all lined up. And very quickly, one of the pillars of entertainment is going to be under existential threat because of AI.

So, let's look to the next one: the music industry. Same thing. And again, you can see all this stuff on my Twitter, like, 2½ years ago. You'll have one-hit wonders with chart-topping songs that are entirely AI-generated. They're here. They're already here.

Live events will still matter. I'm still taking my daughter to see Taylor Swift in 10 years. But a bunch of one-hit wonders will never happen again, and instead, AI will generate that, because this tech is that good.

What's left is sports. And the guarantee was that when you need to capture millions of people to tune in, when the stakes have to be there, live and real, sports will be the last one left standing. Because even when you have robots, no one wants to watch a bunch of European robots face off against a bunch of American robots in a game of 18 hole-in-ones of golf. All right, that is not entertaining.

There will be robots fighting each other; that will be a thing—sort of BattleBots, but with humanoid robots. But set that aside. Traditional sports will actually be even more valuable as a way to capture attention 10 years from now. And if I'm one of the companies left standing in the business of trying to capture people's attention, the obvious ones are the streamers.

So, whether it's Google, Amazon, or Netflix, you're already seeing it, right? Netflix created content of a guy climbing a building, and millions of people tuned in for it. It's not—I mean, it is a sport, but it's not a traditional sport in the traditional sense. It's a glimpse into the future.

And so, I think there are exits that abound for emerging leagues to some of the big streaming companies that, in the next 5 to 10 years, will absolutely need to find the last thing left that they can guarantee millions of people will tune in for. It's sports. And then, for the teams themselves, I think, again, the sky's the limit as people realize that—to Mark's point—the tattoo test.

When I knew Reddit would be successful 3 years in, it was because I met the first Redditor who tattooed the logo—the little alien that I created—on their body. It was weird. His name is Fernando Takai. I actually checked in with him recently. He did get the tattoo removed. Sorry, Fernando.

Technology. That's a tip you've heard here today.

But the reason I thought that was a sign we'd be successful is because if you can create a brand that someone is willing to tattoo on their body in just 3 years, you're onto something very special. Very few corporate brands ever reach the point where they get tattooed on people's bodies, right? Maybe the Nike Swoosh, some Disney or Marvel IP, or the Playboy Bunny. There are a few, right? But sports—every one of those are corporate logos.

And we take for granted the fact that there are probably a few people here who have Knicks tattoos right now, right? Sports logos are taken for granted as things that we tattoo on our bodies forever. And so, the power of the brand that these institutions have is so significant and still so undervalued in a world where we'll be full of more and more AI slop. These are the things that can actually break through.

So, I'm not worried. I think there will be plenty of exit opportunities over the next 10 years.

7. The Next Sports Frontier

Good to hear that we're all going to get our money back. We have 30 seconds left. I've got a final question for each of you: What sport doesn't belong in an institutional portfolio yet, but is something that you're looking to add in the next few years?

Padel.

Padel?

That's a good one.

I don't want to give away all the alpha. I've got to buy a team in the thing first.

I'm paying to be here for charity. They need something.

Yeah, okay. All right, fair enough.

Well, one of the lessons from NWSL is I should have bought the league instead of just starting a team. So I set my sights on the Olympics, and one of the most popular sports there every 4 years is track and field. So I ended up starting a league called Athlos.

I think there will be other opportunities in Olympic sports that are extremely popular every 4 years and then disappear. We just have to figure out how to build a community around that. So you can go through the list; you can find them.

Curling. Curling would—

Uh, well—

Huge.

Maybe gymnastics, maybe swimming. I don't know about curling, but—

Curling.

There's probably some big curling fans out there.

I'm going to invest in this.

Get a broom, a broom sponsor.

Curling.

I mean, think about that. Here's a sport. Somebody says to you, here's what I'm going to do: I'm going to roll a ball. I'm going to roll it on ice.

Well, it's a puck. It's a giant puck, and you shove it—

I'm going to have one guy with a little—

Sweeping. Yeah.

Like this. That guy's got to really do it hard.

In these Olympics, the first time we heard a Canadian swear, that was a big—

I know.

Yeah, that's crazy.

Unfortunately, that's all the time the clock will give us. Alexis, Mark, thank you.

Pleasure.

Thank you.