FULL TRANSCRIPT

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Eric Cantor (00:00)

All right, let's kick things off officially. Welcome again to Scouting the Next Breakout in Sports Investing. We have a great discussion for you over the next hour with two experts who've both been in the ring, as it were, and are now in the boardroom. We're gonna learn a lot, we're gonna cover a lot of ground. my name's Eric Cantor, I'll be your moderator. I'm the CEO of Vincent, where we help investors navigate private markets of all stripes. Sports is on tap today. We do a lot around pre-IPO as well as crypto.

Real estate, private credit, and other asset classes that are interesting to our investors. You can find us at www.withvincent.com. Now, more importantly, let's think about who's here listening to this event. we have a great audience today. about 60, 40 accredited investors. You don't have to be accredited to invest in any of the assets we're talking about, though there are some opportunities that are restricted. So this would be a good conversation for for either type.

more beginner and intermediate investors, though we do have a few people who are doing this as their day job, and they can chime in as well. Last but not least, and we're gonna ask you a little more about this later, but the majority of folks here are planning to invest in private markets over the next 12 months. We've got a segment they're unsure, so let's try to make up your mind and in one direction or other. but I think you'll enjoy this. Let me introduce the two co-hosts of this conversation who are extremely impressive and knowledgeable about the subject matter.

let's start off with Marques

Marques Colston (01:26)

Good good morning, good afternoon, wherever you are. great to meet you. I'm Marques Colston. I'm a former professional athlete. I played 10 years all with the New Orleans Saints. I think more importantly for this conversation, I've been an investor and operator within the sports ecosystem for the last 15 years. I have worn a bunch of different hats from from angel investor to advisor, consultant. I've done a lot of work with the NFL Players Association on investment initiatives.

have have run athlete investment syndicates, have served as a financial advisor for for two years with my series seven and series sixty-six. and ultimately this is an opportunity. Sports as an asset class is a conversation I'm excited to lead with you all. just really excited to to be able to bring that 15 years of operational experience combined with the 10 years of actually being the product on the field to fruition.

in a way that creates value for for investors like yourselves that are looking for alternatives and maybe looking in the sports space.

Eric Cantor (02:27)

Great. Thanks. looking forward to learning from you. Nick?

Nick Edwards (02:32)

Thanks so much, Eric. Hello, everybody. my name's Nick Edwards. Rocket fast background, not too dissimilar from Marques, although I did not play in the NFL. And I couldn't do that if my life depended on it, but I am a former professional athlete. for the past 15 years, I've been in and around the sports business ecosystem and investing. myself, I went from my days of competing to then into the entrepreneurial seat.

I tell everybody that I've had both sides of the equation, both the successful exit as well as the doom and gloom side of business. So battle tested, if you will. Was an LP in funds, general partner in funds, ran a startup studio to now running this with Marques and being the portfolio manager of the champion fund.

Eric Cantor (03:10)

Okay, great. So we've got a lot of expertise on the panel. I should point out to investors if you want to ask a question. We did get a lot of questions when everyone's signed up, but if you want to ask a question of the panel, just drop it in the QA spot on Zoom and we'll get to as many of them as we can. So before we get into the meat of this conversation, I just want to mention that this is not financial advice. We will be talking about financial matters, investment issues, but anything you do yourself is, you know, up to your own situation. It should be run by your own advisors.

and other counselors. So no financial advice, but we will be talking investments. Great. So let's get into sports. The business of sports. Everybody loves sports, right? Probably one of the most probably the top draw on any content network and something we talk about at the water cooler with the kids, whatever. but the business of sports has really been pumping.

And even, I mean, just this summer, right? These deals on this slide are just from this year. We've seen a record-breaking sum in terms of Lakers valuation. We've seen it across all sports. We're hearing stories of secondary sports like lacrosse starting to get professional leagues. What's driving all this activity? I mean, what what what is happening right now that all of a sudden, you know, sports are in the news, or or maybe is it just that some of us didn't notice it as it was brewing, you know, a few years back?

Marques, you wanna start us off on that one?

Marques Colston (04:37)

For sure. I think like we we've all seen the stories, we've all all seen the headlines. And each one of those headlines happens to be a new record breaking sales price for one of these organizations and what we call the big four. So that's the NFL, the NBA, MLB, and NHL. And, you know, from my perspective, there there's a handful of words that are really driving this whole train. scarcity is one. each of these leagues has manufactured scarcity. So

That there's only ever gonna be thirty-two NFL teams. Or there have been thirty-two NFL teams for the last twenty years. there have been thirty NBA teams for the last decade plus. so the manufactured scarcity around these these leagues is what helps to as revenues continue to drive

upwards and as you know viewership and engagement continue to drive upwards, what you're seeing is the denominator's not changing, right? The the revenue's driving you know positively, but it's being divided against that same number of teams, which you know continues to drive the value for each one of those franchises north. the other piece is media. and that's kind of the catalyst for this whole machine. when you look at the NFL and the NBA in particular

a lot of their valuation increases and the trajectory of their valuations have been driven by really strong long duration media deals. Right. So when you have multi billion dollar media deals divided again.

against those denominators that don't change. The the trajectory continues to move forward, upward and to the right. and all of this is kind of happening on the heels of there there's been some changes to access, right? There there's private equity has has started to enter the conversation as of the last decade. And the fourth and final word that I think it that's driving this whole thing is liquidity. Right. I think some of these owners that have owned these platforms, these the Seahawks, the Lakers

These have been owners that have seen this trajectory go up and to the right, but they've owned these products, they've owned these platforms for for decades. So

The the valuation numbers that we're seeing and the and the exponential growth that it feels like we're seeing in the very short term is really a long term duration hold for a lot of these family, these family owned businesses. and as the cost to run these businesses increases, the valuations continue to skyrocket, there's an opportunity for these control owners to take some chips off the table in ways that, you know, some of these franchises are able to sell 10% ownership stake.

for and pull in more dollars than they actually paid the basis that they actually paid in in the beginning. Right. So I think all of these factors are kind of kind of converging to create what we're seeing and the acceleration that we're seeing in the sports asset class.

Eric Cantor (07:22)

It's great overview. Nick, do you wanna add anything to that or should we jump ahead to where this is all heading?

Nick Edwards (07:27)

You know, I think that I think that's great, but the one thing I love to highlight for folks when they see this because I think sports, because it is new er in the public eye, they don't necessarily understand how these things get valued or what hits the headlines. So you see the Lakers transactions and yes, it's a sexy thing to look at, but sports has outpaced the market for the past sixty years.

And so if you look at these inflection points, they've actually grown at a steady eddy clip from like 14 to 17% year over year. It's when they change hands that it really sees the headlines. So sports has always been there. It's been part of the investment ecosystem. I can tell you, we in our business, we're actually on transaction number nine for the year. So we've been getting the reps on this, kind of like what Marques I said for the past 15 years. And so there's no shortage of the assets and where these go. It's only those top big four leagues that you really see hit.

But there's a lot of transactions and action between that I would say the entry point where most people can gain access to the high trade at the family level, you know, where there's thirty two teams like Marques said, that's going back and forth.

Eric Cantor (08:35)

So just following what you're saying, we actually have a graph of value growth over time. and I just learned this week that sports has its own index, the RASFI. so you know, according to this calculation, which I think goes back twenty years or so, sports has really outperformed a number of other asset classes that we track. so I'd love to hear, and actually if we go to the next slide,

You know, w we're seeing, as we talked about, not just the major, not just the top leagues that you everybody's heard of, like the NFL, but also these secondary league lacrosse, soccer, cricket, more women's sports, right? Because the principal leagues are are on the male side generally. And then there's this whole other ecosystem. So I'd love to just hear from you, you know, w where is this all going? I mean, is it really if I'm investing in the Lakers at twelve and a half billion, can I really have an expectation of a 10X? And and is all, you know, how many more fans can

can be added or you know, are some of the better opportunities in these other categories were which maybe haven't had that bump more more speculative yet? So, you know, w what what is the trajectory and where is it going next?

Nick Edwards (09:35)

So backing up through some of that, I don't think it necessarily is a men's or women's sports, but more so the platform that they sit on to really garner the media and broadcasting rights. If you distill it all the way down to how sports makes money, the more eyeballs that it gets, generally there's gonna be larger transactions and more revenue that'll f flow through them. So when you look at that as a whole, yeah, are the Lakers gonna have a 10x bump?

Not in the next two, three years. It's not gonna happen. What we just saw is definitely an anomaly. But you're gonna see absolutely some growth. And because they're manufactured scarcity in these assets and they're still high demand, there is only one way for that to go. Are we gonna see a 10X in 10 years? Most likely not. But are we gonna see continued outpaced growth in market? Absolutely. I would say, however, if those

that are, you know, listening right now are familiar with like the VC play where they think they're gonna get a moonshot, 100x. Are there some companies in the sports tech downstream pieces of assets that it works with in sports? Yes, but being a picker is very hard. Not everybody's a Y combinator in sports that can do that, right? So what you can see is looking at a pre negotiated basis, a start point of where these emerging leagues go. So this is the ones like I said before, the platforms. If they have the platform that's able to garner the eyeballs and then

grow and grow with revenue, that allows them to drive exponential growth, vast returns, and then you can get ahead at an entry point of a repricing schedule that does yield, you know, a five, 10x on capital versus the major big four leagues. You're just not going to see it there.

Eric Cantor (11:13)

Great. Marques, do you want to add in on that?

Marques Colston (11:17)

Yeah, I mean the only piece that I'll add is you you just start to to you start to look at the numbers and you have to think think through the lens of what has to be true for the Lakers as an example to continue to grow at the same clip that they're growing. when the biggest catalyst becomes the media rights and that's locked up for let's call it seven to ten years on average, right? Right.

So what has to be true in order to continue that growth trajectory is revenue has to grow and accelerate at a pace that we've never seen before, or these platforms are going to start selling at tech multiples. the only third option, and it's starting it's kind of what we're starting to see with the bigger platforms is they have to invest and create more assets on the balance sheet to be able to justify those valuations. So a lot of the bigger

Team platforms have become less about the team itself and more about the real estate, the stadium, the mixed-use districts, the real estate around the stadium and really owning as much of the asset base as possible so that you have an opportunity to continue to grow at that same pace. So there's really one one of three ways that those valuations can continue to run.

Eric Cantor (12:27)

Got it. So we're gonna shift in a minute to the section of this where we actually tear into a deal and look at the numbers and talk about some of the forecasts that you just talked about in a much more detailed way. Before we do that, let's talk about access, right? So I'm a sports fan, I'm a business of sports fan. sadly, nobody called me when the Yankees were doing their last financing and offered me to invest. So how is it that everyday investors like us are

Both historically and today, being able to access some of the growth in this asset class.

Marques Colston (12:58)

For at at the current moment, there aren't very many access points.

There are there are a handful of teams and platforms that are that are available in the public markets. there are a handful of sports focused funds that are typically accredited investor only and have some are even qualified purchaser only and have these pretty high minimum investment thresholds. and then there's there's there's plays like

the champion fund which which we'll kind of dig into is in and one of the reasons that we built this vehicle in the way that we did that allows for both accredited and non-accredited investors to play in registered platform. but to your point sports as an asset class is new in that investment in it has traditionally been off market private equity is relatively new to the space so even even the

Big financial players are just getting their shot recently within the last decade or so. so in in what has typically been and traditionally been family held businesses for the most part, most of the downstream assets have kind of been locked up, right? You you only really have seen early stage tech, early stage maybe some sports and healthcare types of plays, and you might have gotten access.

To one off real estate deals in and around stadiums or in and around venues. but as an asset class as a whole, it's been pretty, it's been pretty inaccessible as the sum of its parts. And you know, when even when you look at, you know, some of the public market plays, what you start to realize is that in anything that and this is just investing in general, this is why the pri the private markets are so are so are so attractive.

Anytime that an asset reaches the public markets, it's already trading at a discount. So even when you look at the MSGs of the world that are publicly listed, you'll see that the enterprise value is

is trading at a discount to you know what evaluation that the sportical would would put on the rangers and in the Knicks. Right. So in a world where the alpha is in the private markets, the private markets have been largely inaccessible to most investors when it comes to sports.

Eric Cantor (14:58)

Love that you mentioned MSGS because as you know, we ask our investing thought leaders to share picks with us, things that they think are interesting on their mind. you shared a couple. the pick that I was asked to make in I think March was MSGS, and it's up like 60% since then. and I do think it's very good illustration of your point, right? You can own the Knicks and the Rangers and the total market cap is 10 billion. The Lakers alone are 12 and a half. So I don't know. You want to compare it? We don't want to have a Knicks and Lakers contest, but clearly there's some growth there.

Nick, do you wanna add anything on how investors you know are are getting access before we shift into our deal teardown?

Nick Edwards (15:34)

You know, I think Marques hit the nail on the head. The only thing that I would add is it's one of those pieces where currency is not necessarily the currency of sports. It is access as the currency. So you there's rooms that just frankly people cannot get into. And so you need to be aware of the deal where it's going, because once it's downstream and in the public eye, it is kind of already too late at that point. There's been a repricing, there's a discount to it. There's many factors that are there. So

I you know, speaking right to the audience and kind of that 60-40 of accredited, non-accredited that we have on this webinar, you know, I would say that not everybody, I'm sure that none of us on here, I'll just be bold to say none of us on here are going to stroke an eight, nine figure check to go buy the Lakers tomorrow, or at least the size of a portion of it. So you have to look downstream and get into assets that are known that surround the sports economy. And so that being said, if you're going downstream and looking at those.

that is where you can still get into the private off market deals, which amount with a much lower ticket size, as long as you know those folks that have access or part of the platform that is providing access into those assets.

Eric Cantor (16:41)

I mean it sounds somewhat similar to the AI rounds that are happening, which is you hear about this two billion dollar round and it's all full, and then a month later you see some invitations to join some SPV with the two and twenty that's maybe marked up from there. and there's a lot of that flowing around. I don't I don't see as many sports deals, I'll just say, though more than zero. I think it's even more, you know, hard to to to access.

So let's shift into something you guys were able to access and let's let's just talk through this business case. And this what people are here to see. and the team is Ipswich, a soccer team that's like super interesting. and I think we just want to learn from that. again, I'll ask investors. We we have a few questions coming in, but please continue to ask questions during this part, and then we'll try to get to them at the end of the business case. so let me hand it off to you to to take us through.

The Ipswich deal and how you went about diligencing, finding and investing in it.

Marques Colston (17:36)

So sure. I'll kind of give you guys a an overview of Ipswitch and what we saw in the asset itself and then and Nick and I can kind of walk you through lock step by step kind of how we evaluated and how we actually got to a decision point. so when you look at English football, for me as an American football guy, I'm I'm still getting used to calling it football.

But English football is different in that it's different from the NBA, it's different from the big four in that there's the seats in that league.

in any league is not guaranteed. Right. So in a world where the Premier League has 20 clubs, those 20 clubs rotate based on performance. And typically the bottom three teams in at the end of any season get relegated. The top three teams in in the secondary league

get promoted up. So there's always there's constant movement at the end of the Premier League roster and the top of the championship league roster. And why that matters, you know, looking at it from an asset evaluation perspective is a lot of the revenue similar to the big four leagues here in the US, a lot of a Premier League club's revenue comes from being in that league, the media right share from that league. Right. So when when we looked at Ipswich initially

they were playing in the England in the EFL Championship League, which is the second tier league. but they had some really interesting they had some really interest as a business case, they had some really interesting pieces in that the revenue, the attendance, the fan engagement was all top-notch, all top tier. And the only thing that was holding them back per se was the on-field performance. And

As you as you look at these opportunities and as you as you start to evaluate league after league and team after team, what you realize is the teams that can control the controllables at a high clip and create a strong business case outside of the league wide revenues and the media share revenue.

those are the opportunities that give you a solid base to and a solid foundation to invest in. And that's what we found with Ipswich at the AFL championship level. so the other thing that we had an opportunity to take a look at is a little bit of past history. they had been promoted back in 2024, relegated back in 2025. So we had an opportunity to get some see-through into how the economics actually changed with the prior promotion.

So as we were looking at the asset, what we started to see was an asset that had a really strong business foundation, a really strong core business, a track record of promotion and how that impacted both the balance sheet and the and the PL. And we had an opportunity just through relationships that Nick is going to go through to enter this into this position in a way that we were able to to negotiate our entry point.

And be able to lock that entry point in to where as we're buying in at a second tier level, we're able to lock that pricing in and kind of ride the wave to promotion and potential relegation the whole the whole entire way. so it's a it's for us, it was a really interesting anchor asset into a not only a club that had potential upside.

But just a well known brand that already had a lot of really good things going for it. I'll I'll kind of pass the ball to Nick to talk about some of the just kind of the some of the detailed upside that we saw and some of the opportunities that we really saw an opportunity to take advantage of.

Nick Edwards (21:01)

Perfect. So, you know, when we're looking at this, we have to underwrite it where it is in that day and then where can it be promoted? I talked about it before, but it's that repricing, and we want to be able to get a hold of, kind of get ahead of how that repricing would work. So for us as fiduciaries, we want it to stand on its own merits. Having looked in the rearview mirror, promotional relegation, what happened, but even in just Champion League, what that does, and what can they still earn in that if they never got promoted?

Or if they did get relocated, what is our downside case, right? Because it's all about protecting the principal. So when we got into this, we sourced it through our own network. This goes back to providing access. So we sourced it through our own network, intro into the ownership group, and then we entered into it right before promotion. And doing that, we were able to secure kind of the rights to it where we could add in another $4 million into the exact same terms over time, regardless if they got promoted or not.

So that entry point basis secures our position and lets us ride the wave if it goes up, but also provides us protection in the downside scenario. So when you look at this, you know publicly what teams are making on the media and broadcasting rights in the champion league, what they're doing in Premier League. And then based on those top-tier earners, lower tier earners of each one of those leagues, we can then underwrite that case from sourcing and then pull it into our diligence analysis and see where it goes, regardless again.

Promotion relegation. And so for us, looking at Ipswich, it was able to stand on its own numbers, kind of its own merits, and know where we'd be able to be in kind of that fluctuation and what that would do from our entry point basis to then our growth curve and the valuation over time. The way that we position this into our fund and as fund portfolio managers of this is that champion fund is traded on the nav. So that's the net asset value of the shares. So

It has nothing to do with liquidity, exit. It's patient long term capital. So that we can analyze this and see a minimum growth curve over time to know what that does to each individual's portfolio in there. And so that's what started our underwriting of the process.

Marques Colston (23:12)

So as Nick said, like that negotiated basis is really kind of the the the anchor of this deal for us. And y you know, as we as we look through the potential upside in in this new promotion cycle.

we looked at and we tried to comp it against some of the mid tier to to higher tier clubs that are already in the Premier League. And what we started to look through is again having that having that rear view mirror and seeing how the the prior promotion actually changed the economics and changed the PL, what we were able to do is kind of extrapolate that out and see just based on the last promotion.

the club saw four a four X on revenue in the last promotion. So extrapolating that out and just kind of carrying

It forward, it put us into a place that we can conservatively kind of look at the valuation landscape of all the other teams in the Premier League and we can we can get an idea conservatively of where Ipswich would fall into that into that mix. And that piece gave us a lot of confidence in that we've already secured a an entry level that was at the second tier level. So it kind of created this risk mitigation against relegation and it allows us to really capture the upside in a way that

even conservatively, you know, putting it alongside its Premier League peers, there's there's going to be potential upside just from the basis to a baseline within the Premier League. And if the team actually is able to perform and reach the higher level of the Premier League, and those shares of the revenue and those that market share, it just creates a an even steeper, an even steeper trajectory for us as investors at that negotiated basis.

Nick Edwards (24:55)

So when we started looking at this, I think it's important to and I'll even take a step back. When diligent a sports asset, it's actually very similar to anything else that you'd see in the industry. You're looking at the revenue, you're looking at the valuation, the multiple, you're looking at the founders, the operating team. There is really no difference in any other private company.

Every industry is going to have its own nuances. Sports is no different. Really, you need to know the economics of sport and really how the digital footprint of the dollar kind of surrounds that asset and how that flywheel moves. So for us, when we're looking at this, the main one there is the broadcast revenue. So what we want to look at is kind of what you see on the screen there. What risks are there in the investment? And then where does that do for the pricing? And what does that do to the nav versus our entry point? And so

In our diligence, we found that even if the broadcast revenue falls back to and if they are relegated again, we the repricing actually is still ahead of our negotiated basis that we're at. So we're still coming out ahead on that. being looking at other clubs and promoted, we wanted to look at the mid-tier brand and other promoted clubs to see where does this go? How is that going to go?

The next piece is that we want to look at multiples on the same amount of revenue that come through. So if the medium broadcasting rights go down, what does that do to our revenue? And what does that do to our multiple on the revenue valuation? Sports clubs as a whole, the teams, are traded on a multiple of revenue. Kind of like what Mark said at the very beginning, there are other assets that surround it, but that is the main driver of how these things are bought and sold. And so for us, when we enter in in a minority position.

We do not get a say in day-to-day operations. We are a passive partner. And so we're analyzing the control that happens with that majority control partner. And then so our share is going to trade below a control price. And then the last piece here is what does this do for overall liquidity? Just calling it as it is, sports is notorious to be a very illiquid asset class. So being that it is illiquid and there's limited amount of transactions that change hands.

There needs to be some kind of liquidity piece built in. So this is private, there's no public pricing for that, it's not disclosed. And so there really isn't a secondary market that's available for demand for people to share their pieces back and forth. Which again, that makes sense for us as an interval fund to be able to provide liquidity for our shareholders semi-annually. So for us, where we looked at it, how it would move the value.

And then based on where our vehicle aligns with how the value would be moved to ultimately get to our decision.

Marques Colston (27:37)

So once you once you start to calculate so we've got our negotiated basis point, we've calculated you know how the risks and where the risks are and how we can potentially mitigate some of those risks, with the biggest w risk being relegation back down to a second tier league. the risk mitigation there is some the parachute payments are that happen that come along with relegation.

soften the blow a bit. so from there we started to look at how do how do we calculate the upside? How we how do we calculate how this asset can potentially grow alongside its peers. And in order to do that, we kind of took three different three three different looks at it, three different lenses. so the first is looking at what act buyers actually paid for this club before promotion. and we saw a band there that you see here on the graph.

that kind of gave us again kind of kind of this crystal ball into this is a starting point. the second lens that we looked through was again evaluating across this peer group. So a band of Premier League clubs just looking at third party pricing. so we use some of these third party sources to to kind of create this band around six hundred and sixty six hundred and seventy six million and seven hundred and forty three million.

so that's the that's kind of the second band that the that this valuation falls within. And then the third that Nick just touched on, just a revenue multiple. So again, taking that same band of comparable clubs and in a range that went from about 2.8x multiple on revenue to about 3.6, almost 3.7x, we kind of took that average at about 3.2x of revenue.

Which gave us a band of around 600 million to 760 million. And we took and we looked at w where all of these, three different lenses converged. And that's what got us to this band that we feel pretty confident and pretty comfortable around, still being conservative that you saw on the slide before, at that 665 million to 720 20 million range for a Premier League club with with the profile and the business case that Ipswich presents conservatively.

so getting to that price, when you see conservatively how the promotion can actually accelerate the value and accelerate the growth of the asset against the negotiated basis that we've been able to to lock in, that's how we got real conviction around do we have enough risk mitigation if the club gets relegated back? We feel really good about that just based on

basis and the parachute payments and then looking at the upside of where this can conservatively go, we got really comfortable and really convicted that this is a good was a good anchor play for us.

Nick Edwards (30:10)

So cutting right to it, there's a lot of information there. And hopefully, you know, if you guys have questions, absolutely ask. This is the world that Marques and I live in and would love to answer. But for us, once we were able to go through each one of the diligence components, we were able to check the box on kind of everything in diligence to get to our decision, where, you know, the revenue architecture is there for Ipswich FC being not only in champions, but then promoted to Premier League.

the revenue as it sits there, one of only four clubs that was profitable even in Champion League, which is very rare. there's obviously only 20 positions inside of the Premier League. So scarcity asset is there, which is going to obviously jump up the valuation. The operating discipline is fantastic. It's like I said, it's one of the four clubs with underlying profit. The operators who are there are tried and true. and I think that's a big factor in this is looking at how does this become a billion-pound club.

is do we have the right operators in there? And then obviously the entry price. Being that we've said this a few times, being able that we are able to get in at that before the promotion makes all the difference in the world and still able to fill up that bucket and add more dollars into our allocation. So that follow-on investment makes it so that it's reserved and there so that we as Champion Fund can continue to ratchet up our involvement and ownership inside of the club.

Eric Cantor (31:27)

It's a great business case of how to underwrite one of these. I think we don't get to see this a lot. We see the headlines, the exciting amounts, but it's really great to be taken through kind of the step by step on how a professional team is looking at these one-off businesses and how they pencil out. and I think we want to do is

Take a few questions on the business case itself, kind of sit here for a minute, and then kind of zoom out and talk about, okay, I I'm I'm interested in sports still. Like how do I, as an investor, you know, access this in general, specifically your product. I will just comment that relegation is a pretty fascinating thing to underwrite. So, right, where the business the business side and the s and the on-field side don't usually meet. I often wished as an NFL fan that there was something similar because

In my view, if you're an ownership group, you're being given this I mean it's really on par with like the Soviet Union giving one guy like a steel factory with a monopoly, right? You nobody can ever touch you and you don't have any obligation to deliver anything. But what if if you didn't win a playoff game for a decade, you were forced to sell the team at the prevailing market rate? You'd see a lot more urgency on

some of the teams at autumn dwellers becoming better. You see more parity. I don't know. That's just my thought. is there anything else you want to wrap on this relegation issue, just and how you underwrote it before we jump into some of the questions coming in from investors?

Nick Edwards (32:53)

The only other thing that I'll add, because exactly what you said, Eric, is that in the NFL, you got to think about it's a cult following, right? Like if you're I'm in Minnesota, I mean I bleed purple and gold. And you know, I I've suffered for that. but it's the same thing, even promotion relegation, these are generational cult followings. So the storyline of Ipswich Town and kind of the following there is very important. Because if there is relegation, are you still seeing the ticket sales? Are you still seeing

the merch, the revenue, the kind of follow on that happens downstream of it. So although median rights is really the flywheel that creates it, each one of these assets has their own generational following that you have to analyze. To your point, what happens on the pitch, but also what happens moving the dollars behind the scenes.

Marques Colston (33:38)

I'll add one one additional layer to this that I think we touched on, but I think we didn't drive home enough. And you you just mentioned it, Eric. Like these headline prices, these are all control prices. These are the prices that whoever's coming in and taking out that controlling stake, they have the negotiating power. And I think what gets lost on a lot of investors, the rest of us investors, is exactly that. Like we you're just along for the ride. You're along for

whatever whatever price the control figures out, you whenever they decide to liquidate, whenever they decide to sell, you look at the lakers transaction. I don't I don't know who came in on the la on the $10 billion round, but were they ready to exit at twelve twelve point five? You don't have a say in that. So that negotiated basis point as a minority, as a minority holder, becomes kind of becomes your bargaining chip in a lot of ways.

Eric Cantor (34:32)

So we're digging in some questions. So let's let's talk about the team and then we'll zoom out and talk more about just broader investing in the space. So one of the questions, a couple of questions I'm gonna merge them together is around how these teams actually make money. I mean, you talked about nav a little bit, Nick, but it is the only and put the wrapper, the 40 act aside, just as a pure investor, I go buy up switch. Is there a profit opportunity here or is this really all based on future appreciation and holding?

in illiquid acid until that possibility comes.

Nick Edwards (35:05)

Take a step back and answer. I think it depends on which category of sports you're talking about. The way that Marques kind of look at it is there's kind of five subcategories that make up sports. So taking that step back, the first one is teams and leagues, which we've obviously concentrated a lot on today. there's media and services. So think about more the platform plays in sports. You have sports tech, which is the underlying infrastructure that makes it happen.

You have real estate and hospitality. So think mixed-use districts, the surrounding square footage of a stadium and asset itself. And then you have kind of the specialty manager and asset class. So think about like experiential dining, like a putt shack, pool house, F1 arcade, something that still involves sports, but people don't seem typically think of it as it's a sports asset. And it is. That's what's kind of so exciting about sports. Each one of those needs to be evaluated differently. And so

A lot of those treat it just like anything else. Real estate does it have the opportunity to cash flow? Yes. Does the team? Most likely not. I would say the majority of teams are revenue neutral or losing money year to year. However, the positions that we're seeking are ones that there's no capital calls. We're going in there and our entry point is there for patient growth capital. So people should expect if they're getting into a team asset, it is a long-term hold.

And you're not going to be looking to get into that because of cash flow. You're getting into it because of long-term value appreciation in a portfolio. Versus think of like in other industries, HVAC plumbing, more blue collar industries, same thing that you'd see downstream here. We've looked at everything from ticketing companies to parking lots to security venues. Those are all things that surround sports asset that do cash flow, but aren't the same as the team.

Eric Cantor (36:50)

And just just to hone in on one of the couple of the questions were about when you get promoted, you have to get better players, you spend more money. So who who are the some of the, and this is I'm just joining a couple of questions, who are some of the other funds and investors that came in on this? And do they share your views on the capital calls and allocation, et cetera?

Marques Colston (37:10)

Yeah, I mean that's that's that it absolutely is part of the promotion relegation piece. once you get promoted, you gotta stay there. so you do have to spend and it's a different there there's a different level of investment to kind of meet the the new found revenue, I'll call it, from from the media deals. but it then at the same time, to to kind of answer the part B of your question, I don't see a lot of funds that share

the kind of diversified approach that we have.

From what we've seen, a lot of the funds in the space are really focused on those minority stakes in teams, whether they are the big four, they're European soccer. they are they're s kind of solely focused on that being the asset class. or there are some other funds that are solely focused on the downstream elements, the picks and shovels, we'll call it. we've taken the approach to combine the two because to Nick's point,

Each one of those differ those five categories has a different return profile to it. It has a different liquidity profile to it. and we feel like the ability for an investor that wants to get into sports and doesn't want to bear the burden of being a company picker, or bear the burden of becoming an expert on any one industry can benefit from the diversification of a managed portfolio.

and that has been our approach from day one. And and a lot of that is born just from being inside the ecosystem and all these different seats that we've had, being the operators, being the product on the field, being the advisors, being the the investors, you just have an opportunity to see these different categories from from every side of the table. And our conviction was

the teams and leagues are the anchors, but the real alpha is in the downstream elements, the downstream categories and the ability to bring those all to fruition in one basically one point and click investment was was kind of our vision you know, throughout.

Nick Edwards (39:15)

Eric, I'll also double down on one of the questions directly. The when a new majority control owner comes into a team, when they purchase and they also raise capital for that asset, they are taking into account the promotional relegation and what it needs. So for instance, our entry point is gonna be different than someone else's entry point a year from now. So what's gonna happen is money will be raised at a higher valuation, which will then

I would say it will scale up the player, the player assets and their abilities, the coaching, the staffing, all of that will have to level up in tandem with being moving up higher and higher into Premier League. So, and that's not Premier League exclusive. That's any league nationwide, worldwide, where basically the managers of that asset will constantly raise at higher valuations, which for us it just solidifies our position even.

Eric Cantor (40:12)

I want to do one more question because I think it's a good one from Steven on the Ipswich case. And I want to zoom out to the broader ecosystem. So the question was what's the most overlooked investment a club can make to win consistently? And how can you tell it's working before results show up? I would just kind of add into that this, you know, the question of is there like a money ball? Is is there something you can do as a team besides just spend more money?

And I know, you know, it's probably not your your role in most of these teams, but I just wondered if there's anything interesting you that you would pass along.

Nick Edwards (40:45)

that's a real good one. I'm gonna I'm gonna go way off script. And I'll let Marques. This is I think this is a fun spot for Marques and I as portfolio managers because I think we see kind of the front of house and back of house complementary but differently, which is great, because then we can really kind of tag team the evaluations and diligence together. I'm gonna lead with teams now. I actually just did a post on this the other day. Teams are content creators.

And we truly are evolving into this creator economy. And so what can teams do? The best thing they can do is spend money on things that put eyeballs on that team to increase the distribution and increase the propensity of the market to spend around that asset. So, my opinion is absolutely content creation and adding money and value to those things that create content. Today, that is what's gonna, in my opinion, really catapult up revenue and valuations of clubs.

Marques Colston (41:40)

Yeah, that is that is the business side of the answer. The the performance side of the answer is you absolutely you've gotta invest. but you it's not just it's not just spending dollars to to create like th there there's some cultural elements to build a club and building a team that's gonna perform on the on the pitch or on the quarter or on the field, wherever wherever it might be. so I think it's the balancing act of really driving the business forward to next point around.

How do you reinvest in the business to to create more assets that you can then monetize down the road?

but the kind of just run running clubs, the running joke is winning doesn't guarantee you financial success, but not winning guarantees that you won't have it. Right. it's a need to have, especially in a promotion relegation situation. You have to win, you have to invest in in the talent.

you have to invest in the right talent and build the culture so that you can actually go win on the pitch and at the same time investing in all of the pieces that support that talent, support the the new cre kind of creator mentality and the creator focus in a way that you can continue to drive new fans into the funnel, engage new fans.

and if you can do both of them at a high clip, then then you then you have something that that's that has some staying power.

Eric Cantor (42:52)

It's great way end this part of the discussion. I think some business schools are definitely gonna be calling about this case. Definitely got something here. Let's zoom out to the broader ecosystem and how people are getting access again. So we talked about at the top of this about how people have been getting access historically. Let's zoom in on your actual product. What's the approach? how do you get access to sports investing through the champion fund?

Nick Edwards (43:17)

Sure, I can I can take that on. So I will take a step back and say for those that because I know a big portion of our listeners today are the folks that are interested in sports, but there's kind of the two sides of the coin of the accredited and non-accredited. I'll just hit very bluntly that the accredited side of the spectrum has had much more access points, historically more access points than the non-accredited. the non-accredited will start there.

There are some crowdfunding efforts around some one-off assets that are there. So, like a Reg C F, if you're not familiar with it, absolutely take a look at it. Reg C F or Reg A, there's nothing wrong with those vehicles. I'm very biased because obviously we have something different. However, you need to be a picker to jump into those. So being a picker to go to those meaning that not every fifth division team is gonna be a Rexon story. It's just not possible. So there's gonna be a lot of zombie capital that sits on the side.

And I think it's very cool to say, yes, you know, I own a team it's the fifth division team in wherever in the world. That is very cool. But at the end of the day, this is, I mean, I'm a fiduciary, this is investments. This should be looked at as an institutional asset class that is earning money for you, not just a passion, a hobby, throwing out dollars into the wind. This is truly making a difference for generational wealth. So looking at that, if that's one side of the poll, the other side really has been to the accredited investor.

jumping in with a very large check to get access to a minority stakes team. Again, nothing wrong with that. There's actually some phenomenal funds and fund operators that are out there that if you are able to write that check, they're producing great returns. So nothing to say there. However, to not be a picker or have a one-off or to not be able to have that large of a size check, that's what we designed, is that access point in the middle, that kind of saw it's more a, it's a ubiquitous entry point

For an asset class that truly strings everybody together. So why would we not provide more access? So we have it so that we have a managed portfolio of sports in one's fund. So every dollar really gets spread across a basket of assets. And I kind of already talked about those five earlier. And so it's a fully managed passive fund. So that means this is patient capital. It's good for IRA eligible funds, good for retirement accounts. People can come in and are patient long-term holds.

there's no capital calls in this vehicle. It is actually taking public, I'm sorry, private companies and putting it into a publicly monitored SEC monitored vehicle. And so for those that aren't familiar with interval funds that are out there, that is what this is. an interval fund, there's about 150 of them in the country, if not more, with billions in AUM. So it's a very tried and true product that has a ticker symbol that you can look up.

On the stock exchange, although it's taking again private companies into the public light, so it's not daily traded on the stock exchange. So we wanted to take a product that exists, that's out there. Only difference is we're providing that product and a managed portfolio in sports. That's literally the only difference. There's no fixed term.

Shares are illiquid, however, there are semi-annual redemption periods. So individuals can actually get their capital back out. So we provide kind of systematic liquidity. and that's what's very interesting about this is we don't have to be a VC player where we're waiting for an exit or a purchaser of an asset on the other side. This is something where the daily nav keeps going up, and then we are able to provide the liquidity for that. our current holdings, we already talked about Ipswich town FC.

The next one we have is emerging, which is kind of I also talked about this as well. This is looking at experiential dining. So Putchek Pool House F1 Arcade. We have Sports Illustrated Tickets, which because of the ticket master ruling is looking very good. And then an iconic brand that probably a lot of folks that are on this have had a fat head on their wall at some time and place, which is great to go out there to the public. So each one of those four.

We got in at a negotiated basis that we can kind of continue to fill up over time for upside for our individuals. I'll pause there because that's a lot to absorb. Marques, anything to add?

Marques Colston (47:40)

Yeah, I definitely want to double click on it. Just just from like the former advisor in me, for former financial advisor in me, there's the access points that you like the it's polar opposites, like you like you just described. A lot of the access that most people get are going to be the lower quality quality startup or equity crowdfunding types of deals on the other end of the spectrum are the really high entry point one-off deals.

And just seeing that from an advisor standpoint, knowing that you have client had clients with a pool of capital that is can be deployed into all kind of has this alternative allocation in their portfolio. And in order to get into sports, your choice was very binary for a long time. It was let me roll the dice on these lower quality assets or let me spend my entire alt allocation in this one opportunity.

And just seeing that over and over, we wanted to create this vehicle that sat right in the middle to where you have an opportunity to invest in sports on your terms at at an accessible entry point that you can continue to reinvest over time without the capital calls, without the long lockup, with the periodic liquidity pieces and the sis systematic liquidity you know built into the interval fund structure in a way that look it's

Sports is what it is. You I think you you started that this talk off perfectly, Eric. It is as ubiquitous as it gets. We all have a stake in it at some point. we were the players, we were the products, now we're the parents with our kids in youth sports, and we still enjoy watching it, right? We've all paid into it, but n none of us have really gotten an opportunity to get equity out of it. that's what this platform is really truly built for. an opportunity to invest in the thing that you love on your terms.

in a way that you can control the investment in world where typically as a minority shareholder you don't have any control.

Eric Cantor (49:33)

Got it. So we're approaching the end of the hour, but I do want to get into some investor questions. Just wanna before we do that, just want a quick poll of everybody on the call. are you likely to invest in sports assets? And that can take any form, products we've talked about, products we haven't talked about over the next twelve months.

All right. 89% are saying yes. That's a good, that's a good that's a good indicator. So since 89% wanna are saying yes, I mean maybe you guys could give advice to us, those of us that I would have answered yes if I was allowed to vote, who are interested in this asset class. And it's really, you know, I'm I'm gonna bucket a few questions. What what are the best ways to get hands on at the local or regional level? Are there opportunities for small investors?

how much capital do you need to get started in sports investing? And how do you identify and approach opportunities?

It was really like, give me advice. I want to get into this. I don't know what to do. Do I go diligence something? Do I rewatch your case study ten times? Do I call somebody? Like, how do I access this ecosystem today?

Nick Edwards (50:35)

I would say number one is the fur the well, the fiduciary in me says the first thing that everyone should do is really look at where does this fit in your own personal portfolio, right? So think about what portion of your portfolio is for alts for alternative investments, and then think of that as sports as the alt sleeve within there and what does that look like for you? So you need to kind of work with your wealth manager, whoever you have, to really determine is that.

$5,000 is that $500,000? There is no wrong answer in there, but you need to kind of determine that first and foremost. And then your ability, then your appetite for risk. From there, I think it's very important to gaining access to look at number one, either educating yourself, finding somebody who can educate you, or you need to find a fund manager or portfolio manager who is educated in this space. as with anything that's becoming an institutional great product, there are a lot of, there's a lot of hype out there.

And hype does not ri should not drive the change in dollars. What should move dollars is the fact that it's a stable asset class and what's available for you to access. so I think I kind of answered a few questions in there. and then for as far as where to look, there's many spots you can absolutely use Marques and I as a resource. follow us on LinkedIn, online, and socials, and then obviously follow the insights page at thechampionfund.com so that we can kind of

continue to hopefully educate and kind of give more information of what we see. I think those are probably some good starting blocks. I'm trying to answer fast just to be conscious of the time.

Eric Cantor (52:09)

Yeah, we actually have a minute left. So I want to do a couple quick things and Marques probably has something to say about this answer, but what we want to do is just hear Marques give us advice and then I'm gonna ask each of you to make one prediction for the coming twelve months and then we're gonna sign off. We have a number of unanswered questions which we'll answer via email in in a follow-up to all the attendees. so Marques, what's our advice and what's your prediction?

Marques Colston (52:33)

I would say the way that we've broken the sports asset class down into those categories, if as you're investing, think about the category itself, whether it's tech, whether it's real estate, and start to understand and underwrite it that way. Don't underwrite it as a sports asset, underwrite it as it as the underlying asset. and then this the sports premium just kind of sits on top. as far as predictions, I think the asset class is going to gain college sports.

relatively soon. I just don't think that there's a way that these cl these teams, the LSUs of the world, the Notre Dames of the world, which in my mind probably is the first one because they don't have kind of a conference that they're tied to, I think that the asset class is going to gain college sports relatively soon.

Eric Cantor (53:18)

Got it. Nick, closing prediction for our audience here.

Nick Edwards (53:23)

the only the only I'm gonna leave you with two predictions. Number one is that I think we're gonna see more and more the emergence of I'll use same word in different contexts, alternative sports. So like what hap what we saw happen with the X games to the league, I think is important. So looking a lot of those skiing, volleyball, snowboarding, I think we're gonna see a big hike in those over the next five, ten years, especially because kind of that changeover in streaming and media and broadcasting rights. But with that.

I would I'm actually thrilled to see the poll because what I would tell everybody on this call is if you are looking at this asset class, now is the time to look at it. Just because if you are waiting, there's nothing wrong with that. It will continue to grow. However, you're gonna be liquidity for somebody else. Just to call it out.

Eric Cantor (54:09)

Way to wait to give us a last comment there. This has been a really great hour. there's a lot of things I learned. There's a lot of things we covered. I think there's a whole hour of uncovered topics, which we'll have to get to next time. But I thank both of you for your time. Thank the audience for sticking with us. And everybody have a great day.

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