Welcome to another edition of our weekly newsletter on sports investment. This week, we cover a major investment in football player representation, a debate on whether phones should be banned in sporting events, the USL’s decision to inculcate promotion/relegation, and some more recent acquisitions and fundraising rounds in sport.
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PE firm Velocity Capital Management invests $100 million in football agency Unique Sports Group.
⚽️ What: American private equity firm Velocity Capital Management will acquire a stake in football talent agency Unique Sports Group. Velocity has previously made a number of investments in sports and gaming, and USG, which represents a number of high-profile footballers (and increasingly, cricketers) is the latest.
🤔 Why: Broking is big business in football; in 2023, clubs spent $888 million on agents. Despite stronger FIFA regulations, more agent-independent transfers and talks of a world without intermediaries, the transfer market is still heavily dependent on agents. That means that there is a lot of money to be made for outside investors willing to take a bite out of agent commissions. Access to a top quality talent pool that is bound to get high profile transfers essentially guarantees a steady stream of income, and that seems to be the appeal for Velocity in this deal. In recent years, the agency landscape has also become concentrated in the hands of a few key players; USG hasn’t been affected by that yet, and its heads are hoping that an intervention from Velocity will help them maintain their autonomy.
📰 Read more:
More information on the deal. (SportsPro)
Forbes’ take on the deal, what it could mean for the increasingly cartelised state of player representation, and how Velocity could exit and profit. (Forbes)
Promotion and relegation is coming to US soccer, and it may threaten the MLS’ hegemony.
🇺🇸 What: The United Soccer League and its constituent clubs have committed to adopting a promotion/relegation system that will be in place by 2028. The USL has been touted by many to be a serious, more authentic alternative to the MLS, and this is adding impetus to that belief.
🤔 Why: The MLS has long been criticised for a closed shop; though its nature creates safe environments for private investment and an entertainment-led model led by superstars and big names, many believe that it in its current format, it cannot compete with the world’s top football leagues in terms of sporting quality and fan engagement. The USL, its hipster cousin, ended its partnership with the MLS in 2022, and has since established itself as a property of its own as opposed to the eternal second tier of US football. With promotion and relegation now in the fray, and with there already being strong, community led team-brands in the league, there is a belief that the USL can viably compete with the MLS for attention and success in the coming decade. The league’s expansion structure and business model is also less constrained than that of the MLS, which gives it lots of room to grow. A key factor here of course, is that the USL will be able to provide underdog narratives and levels of jeopardy that the MLS structurally prohibits.
📰 Read more:
’s piece on this very topic. (Gameplayer on Substack)
Some logistical information on how promotion and relegation will work in the USL. (United Soccer League)
USL President Paul McDonough’s interview on the league’s plans to introduce promotion and relegation. (CBS Sports Golazo)
No phones at The Masters: should other sports follow?
⛳️ What: The Masters Tournament prohibits spectators from using their phones during the tournament. This is done to preserve the sanctity and exclusivity of the experience for attendees, and to ensure that fans are wholly focused on the action. The policy has many fans, and it seems to be having the intended effect, which is now prompting calls for other major sporting tournaments to follow suit.
🤔 Why: The policy, which has been in place for a long time, has worked quite well, according to spectators, players, and outside observers. The atmosphere is raucous, everyone is involved in the action, and in an age of information anxiety, it is possible to actually live in the moment. That stands in stark contrast to most sporting events, which now are dependent on increasing digital access and engagement, which in turn is dependent on the presence of a phone. Though some people are calling for similar bans in other golf tournaments (and possibly other sporting events), the ban works for the Masters simply because the allure of the tournament is so focussed on exclusivity and being esoteric. It’s credible that the product is so good that people can enjoy it so much despite being disconnected, but it remains to be seen whether such bans can viably be transplanted to other sports. To make them successful, sports properties need to create products as good as The Masters.
📰 Read more:
More information on the phone ban at the tournament, and testimonies on the impact it has on its atmosphere. (Front Office Sports)
Despite The Masters’ successful strategy, other major golf tournaments are not planning to ban phones altogether. This is not just due to fan engagement concerns, but because of how inseparable mobile devices have become from live experiences due to concepts like digital ticketing. (Front Office Sports)
Wimbledon, which has had similar rules in place over the years, softened them in 2018 during the FIFA World Cup. In that case, competing interest with football and fan attention was among the theorised causes. (The Guardian)
Other pieces of news that interested us:
North Sixth Group, an American investment firm led by Matt Rizzetta, is about to acquire Italian basketball team Napoli Basket. The deal comes amid rising interest in European basketball due to the continued success of the EuroLeague, and the impending European cousin of the NBA. (Front Office Sports)
The founders of Topgolf, Steve and David Jolliffe, have raised $34 million for a new, gamified version of pool called Poolhouse. Akin to the STRIKR boxing concept we covered previously, Poolhouse promises to bring more technology and gamification to the sport it is seeking to revolutionise. (Financial Times)
LaLiga has ended a two-decade long relationship with production partner MediaPro, instead choosing to sign Host Broadcasting Services (HBS) for the next five-year distribution cycle for its competitions. MediaPro have not taken the divorce well, and are planning to challenge the contract, citing HBS’ supposed inexperience and questions over the fairness of the tender process. (SportsPro)
Brentford owner Matthew Benham has acquired Spanish third-division side Mérida, two years after he sold his stake in Denmark’s Midjtylland. One of the pioneers in multi-club ownership, Benham has been lauded for creating a clear and successful philosophy at his clubs. The acquisition comes on the heels of Steve Menary’s thought-provoking article on multi-club ownership, wherein the writer argues that the cons of the concept are beginning to outweigh the pros. (Associated Press / Play the Game)
That’s all for this week! For more content, follow us on LinkedIn, and if you’re interested in learning more about us, please visit www.sportinvestmentstudio.com