Investing In Athletes: The Newest Hot Trend
Investing In Athletes: The Newest Hot Trend
Interesting development of companies helping to support athletes & providing investors with an "ETF" option.
Imagine you’re a young athlete with ambitions to become one of the next greats.
But there’s a problem…
You play an individual sport and can’t rely on a salary — prize money and endorsements is how you’ll make your money.
Here’s what it looks like:
19 years old
no endorsements ($0)
no college degree
no pro matches yet ($0)
solid amateur career
So what do you?
Luckily you have some options (and companies are now being built to support you).
Let’s Dive In 👇
Individual Sports Are Expensive
Being an individual sport athlete can actually be a negative...
Kiranpal Pannu is the 606th-ranked tennis player in the world.
Here’s his 2022 tennis season broken down:
+ $6,770 prize money
+ $10,000 coaching
- $9,500 hotels
- $5,000 training
- $20,000 in flights
─────────
($17,730) Net Loss
During the 2022 season, 97 players (58 men and 39 women) ─ made over $1 million on the tennis court from prize money.
Keep in mind, that’s 97 tennis players out of roughly 3,000 (or 3.2%).
The REAL money is in endorsements.
And this dynamic has led to players doing strange things...
At the 2022 French Open, Facundo Bagnis played with a hurt right calf.
He did this to earn the $65,000 in prize money (which he was later fined for).
We're slowly seeing the death of individual sports — and luckily there are some interesting private companies addressing the issue of low player pay.
History of Investing in Athletes
With loads of expenses and no major prize money or endorsements in sight, players have typically had a few options:
Retire
Pick up side-jobs
Accept money from individuals (often at shady terms)
If you dream of becoming the next tennis great, none of those options are ideal.
However, the legalization of sports betting + the rise of blockchain technology & digital collectibles created an opportunity for startups.
Over the past few years, we’ve seen the comeback of “investing in athletes”.
“Invest in Athletes” Companies
Companies like Mojo and PredictionStrike allow you to bet on an athlete’s future potential like a stock.
Think of them like “DraftKings + Robinhood”, but for trading shares of athletes.
There are also private equity-focused companies like Big League Advance (which funds the lives of promising Minor League baseball players before they reach the pros).
And there are also some fan-led athlete investing platforms like Carry Golf and Globatalent.
But when you look at where the space is going….
There is a company doing something very interesting.
NFT-based athlete investment platform FANtium raised a $2M pre-seed round last October (and have hit the ground running ever since).
So how does it work?
Fans can invest in an athlete (therefore funding their expenses) and garner access to their future earnings.
Last month, 19-year-old Felix Mischker raised $52,000 on FANtium enabling him the ability to pursue his professional career.
The platform tokenizes a certain amount of future season's prize money and sells those shares as NFTs to fans via the FANtium platform.
Meaning…
upfront cash for athletes
future returns for fans
And when viewing their website…
It looks like they’re about to announce a few more soon (including a women’s tennis player).
So where is all of this headed…
For investors, it’s intriguing because you could create an ETF-type portfolio where you bet on 20 athletes.
And only 1-2 of them need to have a great career for you to net solid returns.
For players, this creates the opportunity to pursue their professional careers with full focus.
Going Forward
The global sports market encompasses 97% of the world’s population and is a multi-trillion-dollar niche.
Investors are constantly on the lookout for the next big thing — one of which is the ability to invest in the success of athletes.
A few companies in the past have attempted to do this and ended up falling short.
The evolution of sports betting, daily fantasy, alternative investments, web3, and athlete empowerment may prove to be the difference in timing.
I find FANtium extremely interesting (and with the most potential in the space).
Podcast 🎙
Today’s guest is Jonathan Ludwig, CEO & Co-Founder of FANtium.
FANtium is taking a unique approach to “investing in athletes” and has great traction in its first year.
You’ll enjoy this episode as we discuss:
Felix Mischker raising $52,000 on Fantium
the possibilities web3 technology enables for sports
idea behind Fantium, current traction, and future initiatives
Check out the podcast episode here.
Not only did Jonathan exit his 1st company, but he was also an early investor in Sorare ($4.3B valuation). Lots to learn from this one.
Thanks for reading (and listening today)!
Have a great weekend.
Peace,
AP