The New Battle: Sports 3.0
The New Battle: Sports 3.0
1.0 was regionalized, 2.0 went global, and now 3.0 is igniting sports into a new atmosphere.
The world is witnessing a surge in investments as sports emerges as a prominent and influential sector.
And while a lot of the focus has been on the Arabian Peninsula (specifically Qatar, UAE, and Saudi Arabia)…
There are plenty of noteworthy trends taking place elsewhere (including China, Africa, Singapore, India, and more).
Sports 3.0 is here — let’s dive in 👇
Sports 3.0
An influx of money from the Middle East is reshaping the global sports power structure — and sparking debate over the source of funding.
Yet leagues, teams, and athletes across the globe are willingly taking on the capital flows (I don’t blame them).
The result: an impending surge in the worldwide realignment of resources and influence across sports.
So what’s happening?
Nations are working to establish identity, amass power, demonstrate that authority, and exert influence by means of sports.
In the book, “The Geopolitical Economy of Sport,” the author talks about Sport 3.0, where nations increasingly use sports, together with the digital media boom, as an instrument to achieve broader policy goals.
Middle East
In past briefings, I’ve covered in deep detail Saudi Arabia and its initiatives across sports (however, the UAE and Qatar are also making big moves).
Some more recent developments:
NBA and the UFC held events in the UAE.
UFC announced plans to hold 2024 fights in the Middle East.
Saudi Arabia is now the lone nation trying to host the 2034 World Cup.
Tennis stars Novak Djokovic and Carlos Alcaraz agreed to meet in an exhibition match next month in Saudi Arabia.
Saudis’ Aramco (Formula One), Qatar Airways (NBA), Etihad Airways (MLS), and Emirates Airlines (U.S. Open) are sponsoring major teams and events.
Qatar Investment Authority put up ~$200 million to own a small % of Monumental Sports (the holding company of the Washington Wizards, Washington Capitals, and the Washington Mystics).
Pretty wild that a sovereign fund now owns a stake in one of the top 4 U.S. sports leagues.
And it hasn’t stopped there…
More than $4.5 billion has been committed to sports properties by the region’s sovereign wealth funds in the past three years, according to the Sovereign Wealth Fund Institute.
PIF’s most recent public report stated that less than 2% of its investments have been directed toward sports and entertainment.
Saudi Crown Prince Mohammed bin Salman wants to up it even more (and help grow their domestic talent).
Keep in mind…
Saudi Arabia only has two silver and two bronze medals in their Olympic history. Not a great homegrown record.
China x Singapore
A strategic deal between China National Sports Group 🇨🇳 and the White Group 🇸🇬 recently hit the headlines with their ambitious plans:
❶ sports derivatives
❷ sports technology
❸ venue construction
❹ sports event investment
❺ international sports funds
❻ plans to operate top international event IPs
❼ China-Singapore International Sports City
By 2025, the Asia-Pacific sports technology market is projected to reach US$10.8 billion in value (this deal will help accelerate that).
But taking a step back…
More than three decades ago, China’s interest in sports began by wanting to bring the Olympic Games to Beijing.
How’d they get there? 🇨🇳
shaking the right hands
staging smaller events first
building the necessary venues
getting seats on key committees
China’s heavy investment in sports eventually led to them hosting the Summer Games in 2008 and the Winter Games in 2022 (its rise running parallel to its growth as a powerful global trade partner).
Now that the Middle East has stepped up — many other regions are re-evaluating their stance or trying to follow a similar playbook.
If you start connecting the dots over history…
You realize as societies become more affluent, sports and entertainment become a staple.
The US and Europe came first, then sort of Asia, now the Middle East, and more to come.
Africa
The NBA and NFL have been dedicating serious resources across the continent of Africa.
I don’t know if this is exactly correlated but could be part of the reason why…
Players with African ancestry:
70.4% of NBA
56% of NFL
25.6% of MLS
6.3% of MLB
3% of NHL
Founded in 2010, NBA Africa is now valued at over $1B and has seen several players make it to the league.
NFL Africa is expanding its program to Kenya after several players from Ghana and Nigeria have made it to the league.
I fully expect to see an NBA or NFL game played in Africa over the next decade.
This is just the tip of the spear — I’ll save more for a future briefing.
India
Personally, I think India is the most interesting region in all of sports.
1.4 billion people certainly helps — but there’s still necessary infrastructure to be set up as most Indian consumers don’t have a ton of “consumer spend” available today.
IPL is one of the best business models in the world (and with millions of consumers now online, it’s exploded).
I’ll go deeper into India again in 2024, but did a past briefing that covers a lot.
Sports Are Regionalized
Here’s a thought experiment for you…
If Patrick Mahomes went to the Riyadh Rhinos would you care? Would you stop going to Kansas City games? Fly to watch him play in Saudi Arabia?
Probably not.
Sports might have global fandom — but it’s still regionalized within its community.
The Middle Eastern countries have been signing older players. But honestly, I think that’s just marketing spend to appease their other moves.
scooped up some of the world’s most-known soccer franchises, including Paris Saint-Germain (Qatar), Manchester City (UAE) and Newcastle United (Saudi Arabia).
eyeing entire leagues beyond golf, attempted to purchase Formula One, WWE, broadcaster beIN Sports, and has shown interest in the tennis tours.
The sentiment seems to be…
It may burn them when they discover that they cannot control the more enlightened superstars who engage with their communities — but maybe it’s a more political play as they know by owning US sports [golf, tennis, football, basketball, etc] they have a direct line to the wealthy plutocrats who can buy off US politician friends?
Looking Ahead
I have an international friend from Boston University who always used to say to me…
“Americans have the strongest set of morals and ethics in the world, except when it comes to money, then all morals and ethics are treated as a commodity.”
Is this part of the reason the Middle East is having such an influence across sports? But what about Europe? It’s not just the U.S. taking this money.
Nonetheless…
Sport 1.0: localized version of games throughout the world
Sport 2.0: globalization and free trade opening doors
Sport 3.0: digital media boom, consumer economy, as an instrument to achieve broader policy goals
So where are we at?
To use a sports analogy, we’re not even midway through the first quarter. This is going to last for many years.
For decades, Europe and North America were the major power centers in sports — but that’s starting to shift.
Sports has become an investable asset like real estate, like stocks and bonds... And it is only going to grow as an asset class.
Podcasts 🎙
This week’s guests included:
Sandeep Rajan - Founder & CEO, Grandstand (listen here)
Former product leader at Dropbox and Patreon who raised $2.75M to build out an interesting app that better connects athletes and fans.
Allen Broome - CEO, MediaKind (listen here)
After previously serving as the VP of Cloud Engineering at Comcast, Allen shines a light on the state of sports media, OTT, streaming, RSNs, and much more.
Headlines
Several athletes joined Marc Lasry in the purchase of SailGP Team USA.
IMG Academy receives athlete investors through Patricof.
Women’s sports to generate $1B+ in 2024, according to Deloitte.
Norwest Equity Partners re-acquires United Sports Brands.
Going to Art Basel Next Week?
One of our portfolio companies is hosting a celebrity basketball game so I’ll be down in Miami, FL (December 6-8). Let me know if you’ll be there!
Have an awesome weekend.
Peace,
AP