When Major League Baseball took over Los Angeles for its recent All-Star festivities, the city was filled with youth-focused sports tech startups with its wide activation footprint. swing-tracking firm Diamond Kinetics Batting cage ready with sensor-enabled bats, youth training company EL1 Sports Instructional programming and league management platform offered leagueapps Provides back-end data services and operates a youth playing field.
All three of those companies have partnerships with MLB, which League Baseball is leveraging to increase youth participation. But they also count Startup League as an investor, a key component of MLB’s long-term business strategy.
“When we find something we like, we want to make a statement by investing cash or taking equity in a business,” said Chris Marinaki, MLB’s chief operations and strategy officer. “Baseball is taking a partnership approach with them. And by creating that alignment with their business, they can divert resources from other projects to baseball. We think it’s a tool that’s really helpful, especially when That’s when many of these early-stage companies are trying to get a foothold in the game.
MLB has historically completed about half a dozen transactions annually, involving both cash investments and extensive partnerships, through which the league has taken equity stakes. In its cash deals, MLB has invested anywhere from $1 million or less for more mature businesses in the range of $20 million to $30 million for early-stage startups. The league was part of a $15 million Series B for LeagueApps last year, as well as fanatics‘ $ 1.5 billion funding round in March.
Play Ball Park at last month’s MLB All-Star Game in Los Angeles held a number of startup-related activities the league has partnered with.Getty Images
The financial return on those investments, while important, is not the guiding principle. “We’re not doing this to go out and try to be a hedge fund. We have extra cash that we can invest in third-party financial resources outside of baseball and generate returns. That’s not what we’re trying to do,” Marinque said. “We want to leverage investment capital and growth capital to improve our fan experience, create a better baseball experience and better baseball products.” MLBs typically assume small, passive positions — say, 5% to 10% of a company’s equity — with no definite road map toward exiting their investments.
It has completed dozens of deals over the past decade, with MLB also a partner. Global Sports Venture Studioa joint venture between R/GA Ventures And Elysian Park Venturesand is a limited partner in sapphire gamea division of Sapphire Ventures,
MLB is far from alone in deploying its resources. In fact, pro leagues, teams and other sports properties have increasingly invested in startups as a way of bolstering their growth potential.
The NBA launched earlier this year nba equityA new division managing direct startup investment, and in recent weeks the league has taken a stake in
quintevents And 15 seconds of fame, The NBA now has more than a dozen such partners, and its recent deals follow the announcement in January of five companies participating in its new Launchpad initiative, aimed at potential solutions around injury prevention and youth performance, among other areas. Offering to support startups.
“The NBA is constantly looking for new ways to improve our sports, business and fan experiences,” said David HabereIn a statement to the NBA’s chief financial officer, SBJ.
PGA of America recently partnered with Elysian on a new fund, EP Golf VenturesWhich has already taken stake in two startups, Mobile Golf Simulator drivebox and motion capture app developer Sportsbox AIHowever, it declined to comment on the specifics. “Being able to invest in companies capable of creating” [our members’] Stays better and improves the game of golf, this will improve our association as a whole,” added Chris HartoSenior Director of Development and Enterprise of PGA.
Comcast Takes a $25,000 equity stake in each startup selected to participate sportstech The accelerator programme, which is soon entering its third year. “We become part of the cap table, part of the ongoing investors and advisors. We often say that once we sign that stock purchase agreement, you are part of the team,” he said. Jena Kurathi, Comcast Vice President of Startup Partnerships. The accelerator program has facilitated dozens of relationships between startups and major assets such as NASCAR, the PGA Tour, US Ski & Snowboard, and WWE. According to Craig NeboNASCAR’s chief development officer, Race Series involvement led to deals with CART Keyless Ignition Company shiqoo and touchless payment startups tiptop,
For startup founders and sports VC veterans, significant league-level commitments have been welcomed. “They have so much experience, and they have so many relationships and contacts,” said Wayne KimeleManaging Partner of Sports VC Firm Seventies Capital, “They know what the sponsors want. They know what the clubs themselves want. They understand the priorities of the league. Those are things that, as an outsider, you just guess or expect to read. Huh. “
Even as an economic downturn puts the brakes on broader VC investment, there is an industrywide expectation that the league will continue to put more skin into the game in the future. For MLB, it was a lesson learned the hard way, but is now expected to generate long-term value for the league and its partners.
“Initially, sometimes we take equity or warrants as part of a partnership and treat them as throw-ins,” said MLB’s Marinak. ,[But] Without a real connection between the businesses, we weren’t taking full advantage of this opportunity. The deals that have been most successful are those where it’s a multifaceted relationship; It is we are providing the company with value and resources, and the company is doing the same in return.”