Are Professional Sports Franchises the Future of the Sports Business Ecosystems?
The sports industry is projected to reach $73.5 billion by 2019. Two of the biggest reasons for this meteoric growth is the rising increases in revenue derived from media rights deals and the adoption of new innovative technology. There is no place that is witnessing this more than professional sports franchises. Yesterday, the Philadelphia 76ers just bought a pair of eSports teams and just last week the Minnesota Vikings announced a new startup accelerator with new state of the art stadium. While interest will continue to be on a steep incline there are only a few currently incorporating technology into their organizations and sports business ecosystems.
One of the few successfully playing in this space, which happens to be located in St. Louis, is Stadia Ventures. Stadia Ventures is a sports accelerator for entrepreneurs, industry partners, and investors. They create an ecosystem for sports innovation growth by leveraging their team’s core strengths — education, investment and industry expertise.
Stadia Ventures is led by a team of seasoned serial entrepreneurs, sports business executives, angel investors, adjunct professors, and startup champions. I recently spoke with Tim Hayden, Co-Founder & Managing Director, to get his perspective on the future of sports business ecosystems.
What’s your background and why did you start Stadia Ventures?
My partner, Art Chou, is a former SVP of Product for Rawlings and I helped start 7 sports businesses as well as create and build several professional soccer teams including Saint Louis Athletica and AC St. Louis. Entrepreneurs have a tough time breaking through all the clutter getting to the right industry folks. We wanted to overlay investors that have a deep interest in technology, real estate, construction, and manufacturing but their passion is sports. We can help them be able to put their passion for sports to their ability to invest.
Industry folks want to be involved and we give them the best opportunity to innovate within their companies. We don't need to own it all, we just need to be able to connect great people together.
What’s driving the widespread growth of sports? Why now?
Sports economists might have a better impression, but sports to me is the last reality show. TV, in general, is all scripted. You cannot script the end of any sports event. This is why it is so exciting. With eyeballs comes the sponsors and with sponsors come the networks and what they’re willing to spend.
There are more people that watch the finals of the eSports championship than the last two super bowls combined. The numbers are absolutely crazy. eSports is the next frontier. Kids are now finding opportunities to join leagues, make money and be seen as true competition. In the next 5–10 years you’re going to see gaming become one of the next dominant sports. With the NFL as an example, the eGaming side will dwarf whatever we can physically put down.
What criteria do you look for in the startups you invest in?
We look for anything in the sports space whether it be nutrition, training, eGaming, fantasy, data, software or wearables. We look for startups that already have a product/service in market, traction, and revenue of about $100k-$3M. Anything around the $100k revenue threshold has normally proven the pain that people are willing to pay for. After the $3M mark we believe you have a solid company. We are a business development accelerator which means our goal is to put as many potential clients in front of industry partners. Industry clients such as Under Armour (UA), Gatorade, etc… If UA signs a contract with you tomorrow, we expect you to execute immediately. Our goal, since we only have you for 12 weeks, is to truly move the needle on sales.
The Minnesota Vikings just announced plans to open a startup accelerator. What are the potential benefits of professional teams incorporating innovative technology into their organization? Examples?
Nike had created one and it went belly up. Each team has it in their best interest to build an accelerator. Each team should look into how to innovate in the stands and on the field but they may not be set up to actually help startups grow. The thinking behind it is rock solid and the intentions are the best to help the next generation of sports startups, but in reality, it’s become really difficult to execute in all areas.
Accelerators solely focused on accelerating the businesses are more ideal than just a sports property. Our sole mission is to help entrepreneurs move through the system as fast as possible while the team’s first focus is to win on the field. Our goal is to play with anybody. We would love to see more teams do this as a sports innovation hub mentality rather than just creating it for one team.
Could there be potential downsides for a professional sports team or brand establishing a sports accelerator?
Entrepreneurs become more wary of just working with one sports property because it may alienate them from working with other NFL teams or contractually prevent them from working with any of the other teams.
Also, investors are always looking for red flags. This is an area where we can help all stakeholders navigate this space more than wants to go on the field. If the teams want to go this route, that's great, but we will continue to cohabitate with them in this big external ecosystem. You need everybody at the table in order to help these entrepreneurs. There’s enough sandbox for everybody to play in.
Are there particular services that sports accelerators provide startups that the traditional accelerator can’t offer?
Yes! We keep hearing they would have been lost in the other accelerators because it’s not sports focused. We have startups that should be in Y Combinator or Techstars but our networks are suited for the sports business side of it. That’s truly where you’re going to see these accelerators turn into niche accelerators. To get a true opportunity to accelerate your business you need someone focused in your area. The true success of accelerators is driven by investor pool, curriculum, mentors and potential clients. Our mentors are sports-focused and understand how to get past the gatekeeper. There’s also an internal ecosystem as well as the external ecosystem I mentioned earlier.
What outcomes are your industry partners, investors, and entrepreneurs looking for when they align with your accelerator?
The investors and partners want a return on investment…bottomline.
Our industry partners are looking for the next big thing that can help them compete against their competitors.
In terms of outcomes for entrepreneurs, they are looking for sales and connections to channels of traction.
It seems like a sports accelerator/VC is a subset of other technologies — like data, IoT, etc…
You have to be a sports business of something. We are a subset of a lot of different categories, but the thread always comes back to sports.
Do you see competition from adjacent funds?
We would love to see more adjacent funds. It only helps these startups if they need additional funding. We want to see Courtside VC, Sterling Ventures, and the Kobe Bryant’s of the sports world. Come in with us, join the party!
Your accelerator is based in St. Louis. In five years, the midwest will have more startups than Silicon Valley. Do you believe sports startups can deploy world-class technology in proximity to sports towns and major universities even if they’re located in flyover states?
We’re the third largest accelerator city in the country. St. Louis University has the 7th ranked entrepreneurship undergrad program and 14th for masters in entrepreneurship. It’s the 25th straight year of being ranked in top 25 nationally. No one ever knows any of this. How do we continue to build the ecosystem in St. Louis and homegrown new business? The next Anheuser-Busch will come out of a university or an accelerator.
We are the flyover state that everybody is stopping in now. — Tim Hayden, Stadia Ventures Managing Director
83 judges flew in from around the world to help pick who would be in this fall’s cohort. The head of Sony sport out of Japan and teams from the west coast like the 49ers participated. By the time the judges left they were blown away by what they saw in St. Louis. There’s a reason why we stay in St. Louis. We have more sports leadership talent in the world than the general public realizes. DNA all traces back to St. Louis and the greater midwest.
Any final thoughts on how the future of sports can shape thriving startup ecosystems?
Our goal is to help any entrepreneur in the sports space. We want every startup to be on our radar even in the idea phase because we may be able to introduce them to someone that can help them. The same on the industry side. At the end of the day, it will hopefully introduce new innovation.
We have a larger pool of entrepreneurs than the pipeline to push them through. We want to see entire towns create accelerators and have the pro teams support innovation.
