Super Agent Rich Paul's Push Into Athletic Wear; VC Firms Eye New Leagues

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1:51If you're playing money ball with a huge bag of money, you're going to be really, really good. Bloomberg Business of Sports from Bloomberg Radio. This is the Bloomberg Business of Sports, where we explore the big money issues in the world of sports. I'm Michael Barr. I'm Damian Sassauer. And I'm Vanessa Perdomo. Coming up, we'll hear from sports super agent and clutch sports founder Rich Paul for a conversation about the sports apparel industry and his sportswear companies deal with New Balance. The apparel business from a sports performance perspective is a very crowded space. It just is. And it's very hard to build a brand.

2:31Most companies really start to see a positive impact probably in about year seven. But we have a great partner in New Balance. We have an unbelievable team in terms of our leadership group. All that is on the way on the Bloomberg Business of Sports. But first, let's talk venture capital. That's right, Michael Barr. VC firms are seeing big value in sports, and they're pushing into new and emerging leagues. Earlier this year, Dubai-based investment firm 885 Capital took a stake in the Professional Fighters League, or better known as the PFL. Here now to take us through the deal and what VC firms are doing in the sports world are Sadiq Ramnani and Don Davis.

3:14Ramnani is founder and managing partner at 885 Capital, and Davis is founder and chairman of the PFL. Sadiq, Don, welcome to the Bloomberg Business of Sports. Great to be here. Hi, Michael. Thanks for having us. Don, I'm going to start with you. You have partnered with 885 Capital, and you are the professional Fighters League founder and chairman. And now this sport is really going to take off. Tell us more about that, please. Look, we're super fortunate to partner with Sadiq and his partner, Jay. There's money out there, but there's not money that comes from great entrepreneurs like 885. They've built their own major business.

3:56They know entrepreneurial energy, entrepreneurial ideas, and how to build entrepreneurial companies. Super fortunate what they bring to the table in terms of helping PFL in the next chapter. And Sadiq, we want to hear from you on your ethos when you're going into investments like with the PFL and other similar things like with Baller League, these challenger properties. I'm interested to hear what value you feel in those investments and what you saw in the PFL. I mean, I think we're in like a very interesting period of time in the sector in general, right? I mean, there's so many different trends that have made these leagues interesting, right?

4:31Like so many inflection points from a distribution standpoint. Of course, we've seen that like YouTube is one of, you know, is in the living room, like there's a major change, right? Cord cutting is a real thing. Like there's a major change in the way in which, in terms of infrastructure, streaming platforms have become global brands, right? So obviously there's that inflection point in distribution that we just see that the right property can scale globally very, very quickly and can reach a global audience very quickly. And then, of course, there's an inflection point in terms of how content is being consumed, you know, the fragmentation of the way in which content is being consumed by a short form.

5:07Like, what is the way, you know, what is the way to sometimes monetize that fragment in the case of that fragmentation? So where there is, where are, where there are these inflection points and changing them. And of course, obviously, the advent of AI has created a very, has created proliferation of content in general, right? Because, you know, sports is entertainment and content is, and there are other forms of entertainment other than sports, right? But with AI and with generative AI, we see so much, such a huge volume of content at the base of the pyramid that suddenly I think there's this premium on live sports, on really high quality live sports content that can't be replaced or really disrupted by AI, right?

5:45So these different kind of inflection points are super interesting and create opportunity, right? But then, of course, where there's opportunity, often you see bubbles, and you see this over excitement, right? So there's obviously definitely a lot of, you know, crazy decks coming, you know, coming our way from all sorts of people almost, you know, that want to be entrepreneurs, and let's see whether they succeed. So there's definitely going to be a lot of casualties, I think, in the space, as people also say. But in the case of PFL and Border League, I think we've encountered really solid management teams that are building real businesses for which there's just real user demand and where they're building IP for the long term and they own that IP and they have the ability to control an ecosystem end-to-end, that they're building a direct relationship with their fan and their user base.

6:34And, you know, for us coming from a from an Internet background, that's very valuable to us, like speaking to to businesses where there's a, you know, where there's an understanding of the end user. And it's simply there's it sounds obvious, but just people who are looking to create value for their customers. Right. And we found that with with great entrepreneurs and management team at both Bolling and PFL. Well, Sadiq, there's no there's no question the impact cord cutting has been having on media, you know, and media rights and broadcast rights writ large. And I believe that's how you and Don got to know each other a bit, right?

7:04By when PFL was negotiating its African broadcast rights. And I think that's what led to your investment in the league, if I'm not mistaken. Talk to us a little bit about what that experience was like. Now, you know, for our audience, you know, in addition, 885, you know, you own Africa's largest sports book, Sporty Bet and Sporty TV. And, you know, talk to us a little bit about your approach to investing in the world of sports and what drew you to Don. Yeah, of course. As you said, I come from more of an operator background and have built a multitude of businesses from scratch, including Sporty Group, but also numerous kind of fintechs across emerging markets, including Africa and Latin America.

7:39As you said, we encountered Don because of a relatively small broadcast deal, actually, that brought PFL to our attention. And obviously, we found it fascinating that PFL, an American New York headquartered company, had the bravery to go to somewhere like Africa and seek to build something, a local league from scratch, right? Because that takes long-term vision. That takes, you know, really a lot of grit and kind of visionary thinking. So that definitely drew us to the project. But of course, you can always partner with a project or just simply, you know, take a more short-term outlook. In the case of 885 Capital, it's an independent investment firm owned by us and makes independent decisions is obviously the introduction came or the way we met pfl was was through the fact that we own one of our you know africa's largest free-to-air sports broadcaster um but then we started to explore pfo for for its own merits right not just because of its um if it's f is africa project but really actually more because of its global ambition because of because of the category because of the management team and and um and yeah i mean that it was it was in is Don Davis is an interesting character, a polarizing one, but I've really enjoyed getting to know him, and I think it's going to be entertaining having this chat with him.

8:58That's a compliment from a fellow entrepreneur. I was going to ask how you liked that categorization there, Don. Don, Zadeep had said a lot there about how PFL is building into this global brand, and I heard you say in an interview earlier this year, I believe, that you think the Big Four in North America is eventually going to be the NFL, NBA, Premier League and MMA. And I'm interested to hear your thoughts on when you're building out a global brand and you're having these deep roots in Saudi, in, in the Middle East and other places, how you think that's going to help build the league here as well and stamp the North American, you know, platform and grow that as well when you're competing with domestic leagues here?

9:42Yeah, like Sadiq, I'm an entrepreneur, but unlike Sadiq, who's young at 39 and 62. So I've lived through three major disruptive cycles on the digital side. I was at AOL in the formative period of Internet 1.0, mid-90s. money always follows consumer behavior. So money always follows eyeballs and audience. MMA has the third largest audience in the world today, 650 million fans, trails only soccer and basketball. But the money hasn't followed because MMA is only a 30-year-old sport. All other sports are about 100 years old. So we know that MMA will be a much bigger commercial business. It just takes time.

10:24No different from in 1997 at AOL, people are still putting money in magazines, publishing. You know that's going to change because of behavior. It just took 10 years after that period for that to happen. So this will happen. I'm not smart enough to know is it two years or seven years, but the money has already started to move as evidenced by the massive UFC Paramount deal and also some of the other sponsorship that will follow. So MMA will be there. The only two two MMA companies are UFC and PFL because of the athlete base. Those are the only two companies that have top athletes and the global distribution base.

10:59Those are the only two companies that have global distribution. So why we love partnering with Snipe and others like them is they're going where the puck is going. Yes, football, basketball, baseball, those are great investments. They'll make four, six percent a year. But how do you make five or ten times your money if you're going to take a 20-year horizon, you have to think different. You don't make five or 10 times your money by not thinking differently. And all the trends tell you MMA is it. Have we hit the point, Don, where if you're in sports, a venture capital is critical to the whole thing in order to see a profit or to invest in the team itself?

11:40Yes. And I'll answer that two ways. Private equity money, or call it big traditional money, is essential for the bigger sports because they need to build bigger complexes, real estate and entertainment to support their sports. That's why you're seeing basketball sell at record numbers at 5 billion. They need broader revenue streams, but that's private equity. Emerging sports like the PFL or others need venture capital because they're not going to be profitable for a while. So they need true builders, true visionaries like Sadeep and 885, like some of our other investors, night head capital. So I say, yes, you need capital to build companies, but it's two very different kinds of capital.

12:21Traditional billions will go into the big four and call it those who are looking for outsized returns and are builders will be the venture capitalists that go into the emerging leagues. And Sadiq, can you expand more on that? Yeah, honestly, like I don't really, I don't think too much about the types of capital. You know, I guess that's Don obviously has been through an incredible journey with pfl and he's had to you know keep finding ways for the company to survive and raise funding and and i'm really i really admire that that resilience and persistence that's taken to get this far i don't really again i just like i like to build stuff and i like to see i like to just think what's focus on not thinking about the fundraising for the company obviously where we have capital we'd like we just like to look at a company that's creating value for customers right like as in whatever whatever capital makes sense whoever's like like is it a convenient source of capital is it on the right terms and like is that an investor that's that's creating value right like i don't i don't think it matters like what does venture mean right because they're trying to because they'll get outsized returns i'm not even thinking i don't think we're even thinking or trying to project specific returns i think we're just thinking like is there demand for this like who are the other players like can can this team succeed like it's clear that there's an opportunity.

13:35So can this team succeed? Does it have the assets? And does it have the runway to succeed? You know, like, obviously, we hope that other co-investors have that same mindset and are just focused on creating value and not being disruptive. And I think, actually, there are the guys that are supporting PFL today, like Tom mentioned, like Nighthead and others, are really great co-investors. And I think there's a bright future ahead. Our thanks to 885 Capital founder and managing partner Sadiq Ramnani and PFL founder and chairman Don Davis for joining us. Coming up, we turn to a management company that's a big part of NFL superstar Travis Kelsey's success off the field.

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15:31backslash podcast offer. This is Bloomberg Business of Sports from Bloomberg Radio. This is the Bloomberg Business of Sports, where we explore the big money issues in the world of sports. I'm Michael Barr. I'm Damian Sassauer. And joining us for this conversation is friend of the show, Bloomberg U.S. sports business reporter, Randall Williams. Athletes today are going beyond endorsements and media appearances. Travis Kelsey is a great example of a current NFL star that is looking to make himself into a cultural and business powerhouse beyond sports. Andre Ains is one of the guys behind the curtain helping Travis Kelsey.

16:11He's co-head of Three Arts Sports and joins us now to discuss the evolving business of being a multi-platform superstar. Andre, welcome to the Bloomberg Business of Sports. Thank you. Thanks for having me. You are giving advice to athletes. It used to be the big thing was get an endorsement because you're going to get some money. Now you're saying, look, it's equity over endorsements. Explain that, please. Yeah, I think it's one of those things where this industry is evolving. It's changing a lot. And I think, you know, athletes are starting to recognize the value that they can bring to a lot of these consumer brands and products and things they promote and endorse.

16:55you know so oftentimes you know you have to it's a learned behavior right you have to go through a career where you understand what it's like to be a brand ambassador you understand what it's like to promote products being on set you know shooting commercials doing interviews and really being a very at value add partner to the brands that you're working with and then i think that is what gives you know clients the ability to own their own brands build their own products you know and create their own things, you know, but I think it's something you have to go through. Right. So, you know, we've worked with a lot of clients.

17:28We've been in this business for a very long time and, you know, credit to the clients, you know, the guys that came before us that, you know, the LeBrons of the world, the Kevin Durants of the world, that you really set the tone for athlete ownership and being, you know, and I quote more than an athlete. Andre is Randall Williams here. And I'll start by giving you a hard time because I have been trying to get in touch with you for a very, very long time. And I thought, you know, because I'm from Ohio, just like you, I thought that there might be a special place for me, but you know, that's neither here nor there.

18:01Nice. What part of Ohio? I have to ask. I'm from Columbus. Okay. Very nice. Very nice. You're from Cincinnati. I think I know that pretty well, right? So from Cleveland. Okay. Went to St. Edward High School in Cleveland and went down to Cincinnati, went to school there, graduated there, and spent a lot of time there, for sure. So let's stay in Ohio and talk about arguably your most popular client, and maybe that isn't an argument at all, but Travis Kelsey, earlier this year, you negotiated a nine-figure deal that is absolutely monumental. I mean, you don't see that from athletes too often. You see a lot of deals that are out there, but of course, with that huge number, I wonder what went into that, how much work they put in and from your vantage point, how, how easy was it?

18:51Because I imagine with all of the hype around the Kelsey's the last couple of years that maybe, maybe this wasn't as difficult as, as, uh, as it may have been. Nice. So not your work to we're referring to the podcast. Yep. Okay. So that was a couple of years ago. Um, but I would say it's, it's one of those things where, you know, it was when athlete podcasting was becoming a thing a couple of years back. And I think one of the things that we wanted to make sure was that the brothers knew the amount of time and attention that it was going to take to be able to be successful in the space. And we didn't rush it.

19:26You know, we spent years meeting with companies, meeting with producers to understand what the landscape looks like and how we can best position our clients to be successful. And I think that was a key difference in why they were able to become successful. There's a lot of athlete podcasts out there, but, you know, their dynamic is insane, you know, and their brothers and their chemistry also insane. And it also helps, you know, the year we launched the podcast, they both made it to the Super Bowl. So it put a lot of eyeballs on what they were doing. And, you know, the week, the weekly banter and conversations is something that I think a lot of people can resonate with.

20:04And it worked from there. But I think it goes back to our pitch, always having ownership. Right. The brothers own new heights. That is their IP. we helped them create the IP, but they own it. And I think their ability to be able to build something like that for their family is ultimately what drove us to be able to work with Wondery and be able to negotiate a deal of that magnitude. Andre, you've been representing athletes forever, right? I mean, A &A Management recently acquired, I think earlier this year, by 3 Arts Sports. You've worked with, I mean, Spotify, Hugo Boss, Louis Vuitton, EA Sports, you name it.

20:37Let's go back to growing up, your parents owned 17 Burger King franchises in Cleveland and Cincinnati and Atlanta, I believe. And, you know, take us back, take us to those days and how that prepared you to deal with some of these, you know, large partners that, you know, you know, you guys, as a startup have really gotten close to. And I mean, like, kudos to you all for doing it. But I mean, what'd you learn from those early years? We've come from an entrepreneur family. I think we spent a lot of time in the back of Burger Kings, you know, in the offices, right. And watched our mom and dad, you know, manage and build the business.

21:09We were involved in their expansion to Atlanta. We were involved in the expansion to Cincinnati. And when I say involved, we're in the back seat, you know, when they would go visit sites and meet with people to kind of build and grow the business and things like that, right? We didn't know what was going on. We were kids, right? But what our ability to be able to be exposed to that type of lifestyle at such a young age, I think resonates with how we work now, right? We watched our parents do the work. We watched our parents walk the sites. We watched our parents go through the things they had to go through, you know, managing, you know, a franchise like Burger King in the early 90s, you know.

21:43And one of the things that, you know, stands out to me the most is like a lot of my dad's partners were Browns players, Indians players, you know. And we were we got to go hang out with Indians pitchers and their families and we would go hang out and we would go to Detroit with, you know, like, you know, where investors play for the Pistons back in the day. Like I was at the 04 Pistons finals, you know, when I was a child, right? You know, and it's just like looking back, it was like one of those things where I'm like, you never know, like the rooms that you're in and why you're in those rooms.

22:12But I think that was what propelled us into being like 14 years ago when athlete management wasn't a thing. It was always agents were doing this and doing everything right where we were like, no, let's flip that. We think we can be more managers. We can help them build businesses. We can help them, you know, create strategy around the things that they want to do. Right. And we grew up without social media. We didn't even know what social media was. I think Facebook was just coming into play when I was headed to college. So being able to come up with social media strategies and digital media strategies is a fairly new thing, but it still kind of fits along with owning your IP, having ownership in the things that you do, and having a strategy when it comes to doing that.

22:51And early on, we learned that agents just didn't do that. They didn't focus on that. They didn't have the capacity for that. And it's not a problem, but we saw a void and we worked for years to try to fill that void. And, you know, luckily, somebody like Travis Kelsey trusted us early on to be able to build that out. And now looking at how it is today, we had a 10 year head start on the way the industry is going, in my opinion. Well, Andre, I love that analogy of you, you know, in the backseat, you know, looking at, you know, potential Burger King franchise sites. I mean, do you think that experience helped you identify, you know, some of these properties that you work with?

23:23I'm talking like, you know, Casa Azul, Garage Beer, Accelerator Active Energy. These are new properties. They're not household names or they are now, but they weren't then. And, you know, take us through, you know, your ability to kind of identify these kind of new properties, these up and coming properties to affiliate yourselves with them or rather your clients with them and take things forward and just absolutely explode. Yeah, that's another great question. I think the experience with Burger King was like we got to see the things that my mom and dad didn't know. Right. We got to see the things that failed and why they failed.

23:55Right. And I think a big part of what we do for our clients is creating a moat around the opportunities. Right. We take it. So that's a word that's used in finance. Right. you when you do it, making it do it, put together an investment strategy. You want to look at companies that have a mode around what they're building. Warren Buffett, man, what a legend, you know, and I have been lucky enough to be able to have the right partners to show me what a mode is, you know, from, from, you know, distribution to understanding a management team and how they want to work and, and understanding marketing and strategy behind that.

24:29Right. And I think that's the kind of approach we take when it comes to things like accelerator, right. One accelerator, the moat we saw there was NSF certification. Back when we started investing, energy drinks were not NSF certified. So most athletes, maybe people don't know this, but most athletes weren't able to drink energy drinks because of the ingredients that were in those products. And I think garage beer is another one. It's in the light beer category. And the light beer category has not been disrupted for years. Everyone's been drinking the same beer all the time. And I think the garage beers, and it's always, you know, not to name any of the other brands, but it's one of those things where you see the boom of like ready to drink categories of like seltzers and things like that.

25:13We took that same approach with the beer. People drink beer every day. People can relate to beer. Also, you know, it's a great story behind garage beer. I met, you know, we've we invested in a company called Hilo Nutrition and the CEO of that company is now the CEO of garage beer. And we had a pretty successful exit in that company early on. And when that company exited, Garage Grill was his next venture. And we've built such a great relationship with him that when it was time for us to get involved, you know, they hit a certain inflection point. That moat that we're talking about was built. And we were able to add, you know, the brand value that the Kelsey brothers bring.

25:46And they were ready and prepared for that. Right. Because a lot of times, you know, I think where we have a lot of success is we're talking to brands. we are able to sit down with them and talk about a marketing strategy from our client standpoint. So sometimes you turn on the engine before the company's even ready, right? And we're one of those people where we're like, we want to make sure that the company is ready for the amount of attention that they're going to get by aligning their name and their product with somebody like Travis and Jason Kelsey. And I think GarageBear, we hit a perfect inflection point.