UP512 Other People's Money: APEX, the athlete investor trend, Red Bull Ventures, Baller and TGL

0:00People always love to know the names of Formula One drivers like Carlos Sainz, Lando Norris, football players like Rafael Varane and Marcelo, the Real Madrid legend. Cyclists like Mark Cavendish and Demi Vollering, one of the best female cyclists currently in the world. Surfers, skaters, MotoGP, riders, you name it. It's a really broad range of athletes, more than or almost 200 now from 17 different sports. That was Antonio Caccarino, who is founder and CEO of Apex Capital, who is orchestrating what might be one of the most interesting experiments in sports investment. It's best known for involving athletes in the investment process.

0:43But as we see, that isn't just what's going on here. So we get into the detail of what the Apex Fund is, where the money comes from. We mentioned Red Bull, which is a recent piece of news. Red Bull as in B-U-L-L. they have come in as a significant investor in the fund and then we ask where the money goes so this is part of a conversation that we've been having on unofficial partner and particularly in other people's money where we talk about the flows of money and where the money is coming from where it's going we are joined by my regular other people's money co-host matt rogan as you'll hear there's a lot in here and i think you'll enjoy it if you haven't heard the other episodes from other people's money, I can put those in the show notes for you.

1:25Or you can read about it in the Unofficial Partner Substack newsletter, which comes out on a Thursday every week. And it's very good, I hear.

1:36So first of all, I'm going to say hello to Matt Rogan, my old mate, Matt Rogan. Good afternoon. Good evening. Yeah, looking forward to this. And we've got Antonio from Apex. Thank you. What's a day like for you? Before we start talking about all the big stuff that we're going to talk about give us what's the day job from your point of view give us a bit of biography so people know who who you are of course well i think i'm a founder i'm a i'm a ceo but also let's say the day-to-day leader of the business here i wouldn't say there's a typical kind of day because we're at the beautiful time that we are with sports um a lot of curiosity a lot of appetite from investors, a lot of companies out there searching for capital so they can innovate and grow and not just on the venture space, but also teams, leagues, sports properties out there, which means I spend a lot of time on the plane.

2:29So there's kind of the traveling side of my day to day, which is probably half of the year I'm traveling. And then there's the other sort of day to day, which is on the grounds and the office, just making sure that while we are raising capital and investing, we're also building the right operation to do things differently. I think the beauty about what we do and how we do is that we were born out of sports. We were not kind of an investment company that decided to invest now also in sports. We were born out of sports and we set up an investment business to deploy only in sports and to make sure that we are driving the future of the sector and connecting the best investors with the best investment opportunities in sports for the better of the fan.

3:17of of of the athletes of of the stake of any stakeholder to be honest in sports so so i have my my role as a ceo and i have my role as a as a as it was hopefully as a visionary in the sector that needs to make sure to convince now other type of investors that have never invested in the sector to to trust that there's a big business opportunity here so so yeah i would say there's two hats to what I do. So explain then what is Apex and just again in very simple terms where is the money coming from for the fund and where are you spending it? Just give us a bit of oversight over that. Yeah so we are a sports investor.

4:07Our foundation before kind of speaking to the investors that we deal with today, which are more and more the kind of classic investors that a lot of investment managers out there speak to family offices, high net worth individuals, institutionals, fund of funds, pension funds potentially as well. I think what we did differently was our first investors were the athletes themselves. That was my initial vision. And that was how I believed that we would build industry knowledge, how we would build brand equity for Apex as an investment firm so people would really trust that when we are saying that we're comfortable in taking sports business risk, we really are because we have the athletes.

4:49But when we say we have the athletes, we have their capital, their involvement, their network, their industry insights. And I think that is key to our DNA and to our foundation and one of the main reasons why we really grew very quickly over the last few years. but who are the athletes that we're talking about there just give us a give us a sprinkling of the names so that because it feels like that's that is a point of difference when people talk about apex they quite often go very quickly to the athletes putting the money in on the on the investment side so let's just give us an idea who the who that is people always love to know the names i mean we're we're very open about it and so are them so happy to to name a few Formula One drivers like Carlos Sainz, Lando Norris, football players like Rafael Varane and Marcelo, the Real Madrid legend.

5:42Cyclists like Mark Cavendish and Demi Wollering, one of the best female cyclists currently in the world. Surfers, skaters, MotoGP, riders, you name it. It's a really broad range of athletes, more than or almost 200 now from 17 different sports. I would say a bit more European based in terms of where they're participating, because obviously that's where we are from and kind of where we saw a bit more the opportunity because there were that kind of athlete entrepreneur movement was already happening in the US. but more and more global a lot of u.s based athletes kind of joining um joining as well our athlete network investing in our fund or a fund that we are soon to to launch um in our deals and some exciting new names from the u.s will also be announced so we can really truly make it the best and and and strongest global athlete network investing in sports in the world okay so So, again, forgive me because Matt always gives me a sort of side eye because I ask really stupid questions.

6:55Money is, you know, just an issue for me in terms of just generally, but the understanding of finance. So just give me a sense of, so what role do these athletes play? Is that, I can see there is a marketing appeal to the famous athlete names. Just give me a sense of what's the deal from their point of view? Are you giving them a, are they leveraging their fame? And that is an appeal to other investors to come on board because you've got famous people investing. And that's a sort of quick way of establishing, I don't know what it would be, trust in the fund, that the fund is going to happen. And it's going to, there's real money involved here.

7:35Because there's a lot of, someone like me, I get loads of press releases from funds and people venture things popping up. Just give me a sense of the role that the athletes play, why that is central and why would they go with you? Yeah. So in terms of their role, we can kind of look at it in three ways. There's that they're really deploying capital. It's on something that they understand. And for them, that rational decision into I'm investing with Apex in their fund or in their deal in a sector like sports gets them more comfortable in terms of they know what risk they're kind of taking. They can, when we're showing them the thesis of a fund or what a company does, if it's a particular company they're investing in, I think they can easily understand what their business does and have a view.

8:28And for them, like any investor that gives a sense of comfort and potentially be able to take more or less risk, something for sure that in other sectors, it's harder for them to do so. That's kind of critical to get them motivated in saying yes. Obviously, whenever we deal with athletes, many times the agent, the advisor, whoever is close to them will get involved. But the decision ultimately is up to them. And many times it's driven by them. So I think that's quite unique. and with that then you obviously get their involvement so they help us a lot in diligence so when we are looking at a lot of new businesses and new sports you know nothing better than the athletes themselves to kind of on an industry perspective give you a lot of opinions around that sport around the fans around the sport around the stakeholders yeah they are born in born in a particular sport and spend their entire lives there from a young age into mature athletes that most of them are.

9:24So that industry validation is also key. And then there's a third pillar, which is obviously as well, the commercial value, right? That is the reality. You know, if I'm investing into a social media business and Mark Zuckerberg is an investor of mine, if I mention it, that will give credibility into the deal, right? Same thing if I'm investing into a sports business and a tier one athlete is also investing in that business, it makes much more sense than if they were investing in a restaurant or in anything else. So that association of them as investors with capital into something that makes sense, that they understand, is also obviously critical into attracting then potential future revenues, other investors, and just positive awareness into the transaction, which is also key.

10:17And I've got just one more before I hand it over to Matt. So just give me a sense of, I'm just getting the geography of the thing before we get into detail. So if I'm Marcelo or Lando Norris, whoever, I'm giving some money. I don't know what the average sort of deployment would be by athlete. Is that a, what level of funding are we looking at here? It's, there isn't an average one. It depends on the phase of the career. It depends on obviously what sport they're from. I mean, it's hard to say, but it's definitely, it's enough capital for them. For us, it's critical that it's enough capital for them to get them involved.

10:56Worried. But in a good way, you know. Yeah, yeah. It's not, yeah. Okay. So it's significant enough for them to get their attention. They're rich people. So your job then is to return better than alternative investments, obviously, index funds. They could put the money elsewhere. So their knowledge and understanding of sport has pointed them towards you. you're a sort of vehicle that I understand it would, from their point of view, they're in sport as opposed to Heinz beans or whatever the options are. Then you can then start to say, yes, how much role do they want and how much can you give them in that sense?

11:40That also obviously depends on, on the athlete and the phase of the career that they're at. Right. you would assume that younger athletes that are at the peak of their career and fighting for the Formula One World Championship or that next contract that they might, obviously, in terms of time, there would be less than potentially, you know, a Varane or a Marcel or someone that is on the later stage of their career where they're really thinking post-career and how actually something like this can play a fundamental role there. But the involvement is always there. I I mean, they're always a call away.

12:15If we are looking at something on the e-sports side, I will call all our athletes and I'll get their view on where it's at, on that particular business or on more of a macro perspective on the sector. They will always pick up the phone and give their opinion. But obviously, if they've got more time, if they can travel with us somewhere, then they will do so. And then if obviously they're at the peak of their career, they're probably not. So there is always involvement. That is key. It's not an obligation. Obviously, at the end of the day, their LPs were GP. They invest, they trust. But obviously, there's an element of why they're investing, why we prefer them, and why they invest with us beyond that typical kind of wealth management decisions that they make.

12:55Because those are distant to them. That's done on really kind of an asset preservation standpoint. With us, we're taking a little bit more risk, but also in a sector that we understand better. so we can also learn, so we can become entrepreneurs, so we can feel more than just a check or a face on a PR stunt because that's normally what ends up happening with them. And with us, they are much more than that, and that's what they appreciate. Okay. Matt? We're good. We talked, Antonio, in an earlier podcast in this Other People's Money series about the changing role of athlete agents. in terms of going from the maybe negotiating a transfer once every three years just to keep the money rolling in into more of a holistic support for athletes.

13:47So do you find that most of the agents you're dealing with to almost a proxy financial advisors as well now? Do you find them sort of taking a bigger role on in terms of helping them manage? I think you use the wealth management phrase in terms of managing low risk stuff, high risk stuff and a whole portfolio. or do you find yourself talking to somebody completely different on that conversation for sure they you see a big step up in terms of their involvement particularly again the younger kind of set of agencies and agents much more 360 maybe 30 years ago their role as you said was let's negotiate that next contract and make it the best possible yeah maybe 15 years ago it began And next to that, it was, let's also find brands that want to do a commercial deal.

14:41And now there's kind of that third pillar of investments, projects, future, because a lot of these athletes are brands. And that brand needs to stay relevant also post-career. So how to do that? And I think agents need to adapt to that. They are not financial advisors. So I wouldn't say they are kind of involved in that wealth management structuring of their portfolios, but they are key in saying, no, we think this would be good for you. We think this in getting involved with Apex, knowing you is something that you will like. And let's obviously then bring in your financial advisor to understand today how much we should allocate with Apex.

15:26but so that kind of economic decision is then done with with their wealth manager or financial advisor but they they do play a role in in in in designing that apex is is something that is important for for the athlete and they should do again if if it's within the athlete's kind of dna right some athletes really don't have an entrepreneurial dna they don't care for them is about squeezing the lemon as much as they can during their career and then we see and some are already really thinking post-career. Some realize that there's actually 24 hours in a day and you can do a lot of other things. And they look at the US and they look at a lot of the great examples of US athletes that have done great investments and gotten involved and asked questions and are not afraid or kind of stepping outside their comfort zone to do it while they're still peaking.

16:18Some athletes are realizing that and agents that see that in their clients will obviously push for that. And hopefully more and more of these agents start to see that Apex is a great partner for them. And we have amazing relationships with a lot of the big agency groups out there, not just individual ones, but also the AMGs, the CAAs, the Boasermans. We have great relationships with them. We bring them deals. They bring us potential clients. They bring us ideas. They bring us industry validation. In many cases, they actually have their own pools of capital, which they can also invest with us. And it just kind of brings the ecosystem tight and i think that makes kind of our investment proposition as a whole stronger it's interesting isn't it i mean we one of the things we also talked about on that last podcast was increasing private equity investment in the agents themselves so you sort of got private equity owned sports agents being brought deals by private equity sort of and that whole ecosystem sort of beginning to to work in a one would argue a slightly more mature way do you do you notice any preference amongst it so i'm assuming the athletes are a relatively small percentage still of most of the checks you write and you might have family funds as you say or other institutional investors putting money in as well um and so if you're if you're looking at an investment say of a one of your larger ones into a rights holder for example is there an ideal percentage of athletes percentage of sort of equity from yourselves percentage of debt for example that you might look to put into a deal or do you dial up and dial down the various bits of investment you're putting into something depending what you think it really needs i mean that's a great question for sure when we started our first deals and even our first commit commitments into the first fund that we launched it was 100 athlete capital because that's we wanted to validate it.

18:14We wanted to, that was for us the strongest industry validation that we would get. So for the first two years, we spoke to no other investor other than athletes. We knew that we would be on the smaller check sizes, but we hoped that we would be on the larger size in terms of value creation into the companies that we were investing in. Today, that has changed. Today, obviously, the athletes probably represent maybe 5 % of the age we have. Yeah, okay. and that will probably keep decreasing. They still represent an important percentage of the number of investors that we have, which would also keep decreasing.

18:52But they will always be critical to our DNA. So I wouldn't say there isn't, I wouldn't say there is kind of an ideal threshold. I mean, for us, it's always important that whatever they're investing with us is meaningful for them. So obviously that's, it is a real investment. but then at the end of the day we're scaling you see a bunch a lot of institutional capital flowing into sports the apollos the cvcs the aries the tpgs you name it so they start to invest on smaller things and we need to make sure that we we can do larger checks so we can keep competing and keep delivering the what we can and what we we are best at doing in sports and and for that we need other types of investors but we hope to never lose that athlete DNA.

19:42So for us it's about making sure that in every deal that we have, we have athletes. So we're now launching a new fund where athletes will represent definitely a very small part of but we will always give priority to athletes if they really want to invest. So we are much more flexible in minimum investment amounts for a particular share class we might create for them, as long as obviously we feel that they will keep adding value, they will keep getting involved, they will keep providing everything that they have always provided to us. So in terms of the, see, recently September, you, and I'm just going to read it from your press release, Apex, the sports-focused investment firm backed by 100-plus world-class athletes, today announced the final close of its elite performance fund led by a cornerstone commitment from Red Bull Ventures.

20:31that's b-u-l-l not b-a-l-l so red bull ventures the recently launched investment arm of one of sport's most iconic brands etc etc so just give us a bit of context on this what's happening there why have red bull coming give me a sense of who what it is and then what you want it to be yeah so as we all know red bull is probably one of the strongest brands in sports in the world they've Sports has been their biggest platform, right? They've indirectly been investing in sports for many years through obviously marketing budgets, but also a lot of team ownership. We see what they've done with Formula One.

21:11We've seen what they've done in football, what they've done with other kind of... And rugby have recently just bought Newcastle, haven't they? A lot of these adrenaline and freestyle sports. So they've owned and operated a lot of sports assets. But what they've never done is actually invested in early stage venture. So sports technology, sports innovation. They've obviously indirectly been around it because they've always been in the forefront of that. But really investing into startups, investing into sports tech is something completely new. So they set up this Red Bull Ventures, which is a 200 million pool of capital from their own kind of balance sheet to invest in just that.

21:50So then obviously, one, they see it as a very interesting area for returns for them. But second, they see that the more involved they are with a lot of these technologies, the more they can guarantee that they can integrate a lot of these young businesses and ventures into their ecosystem. But as any smart kind of corporate venture should do, if they're getting into something new, even though sports is not new, the venture space is, they should do it with people that initially should do it with people that have been doing it. And this is what our Elite Performance Fund has been doing for the last three years.

22:24And Apex has a business for the last five years. We've been investing in sports venture, in sports technology, in emerging leagues like TGL, like Baller. And that's exactly what Red Bull want to see. But their first decision was to invest in the right partners, the right funds, so they can obviously get access to that deal flow, learn with us, and then obviously bring all that synergies that an Apex and a Red Bull can have. So that's the purpose of that. For us, it's incredible. with a partner like Red Bull. When we thought about going beyond athletes and obviously into the corporate and institutionals of this world, we thought of a lot.

23:00But Red Bull was always kind of one of the ideal partners we could imagine. And getting them still in our first fund is obviously a great validation of what we're doing, but also of the industry as a whole. It's sort of interesting because it's almost... There's a line here, I think, between sponsorship and investment. And obviously there's a question because in the past, I imagine they're writing massive sponsorship checks and a lot of the tech is being developed on their dime, but they're just the bank. They're just giving the money in return for marketing assets and whatever. Now, this is not a new thing for them.

23:42Obviously, they've got into team ownership for a long time, but it feels like that's a shift from just writing the checks to actually having returns or the chance of returns built in? Is that part of trying to get in the heads of Red Bull's strategies? For sure, but this is not new for them. They have been investing in IP for longer than many brands that we see now. We see LVMH now putting a lot of money in sports. One of the biggest kind of sponsorship deals with Formula One. They didn't get any kind of equity involvement there, but they got involved with Red Bull then in Paris FC. So you see a lot of brands thinking, why are we just going to put in exactly a check when we can actually get a bit of equity?

24:32And then obviously, if this grows, we also benefit on the equity appreciation side of things. I think Red Bull was a pioneer in doing that with Formula One, with ownership there, with a lot of the things that they've been doing in football. So I think now it's just a third layer, which is going into the venture and technology side of things, which is where the other companies are not there yet because they're now for the first time considering the team ownership or the equity at team and IP level and league levels started to happen. But Red Bull have always been doing that. And I think it's exactly that.

25:06Why not get some equity and take ownership since we are going to be so critical in driving revenues? Because at the end of the day, a lot of sports businesses, sports properties out there, before they get really, really strong media value and they can monetize on media rights, they're doing it on sponsorships. They're doing it in a commercial value. So, you know, what you first said, the relationship between sponsorship and investment has always been hand in hand from the beginning of sports. If you look at, flip it the other way, from an athlete perspective, Red Bulls always seem to me one of the coolest brands for an athlete to have as a sponsor.

25:44Whenever I'm in an airport lounge, I pick up that Red Bull magazine that's just got advertorial about all the athletes that they partner with. British Surfer, I think, is on the cover of the last one from September. And so if you're a surfer with a limited career lifespan, say, and you can either pick up an amount of money a month for Red Bull for three years that you're at the top of your game, or you can help them co-invest in a product that might have a longer life period and actually extend your working relationship with someone like that where you're both invested in the same thing, albeit to different levels of financial exposure.

26:18It's quite interesting because it sort of deepens the relationship with the athlete and the brand potentially as well. So I don't know how many of your 100 athletes are already partners with Red Bull, but I'm sure you've got a few people queuing up to sort of put themselves in front of the Red Bull organization as well. Yeah, 100%. And I think there are two, right? They were the first movers in creating their Red Bull academies, in creating, in betting in athlete IP and giving them support. I mean, at the end of the day, the media powerhouse that Red Bull have been able to build kind of outweighs whatever you might believe and think about the Red Bull product today even, right?

27:01We're in a stage where the level of rigidness around how we see what is healthy and what is not healthy is stronger than ever. So the Red Bull kind of original product might not be considered as healthy as maybe it once was or as actually sports-like as it once was. But when you think of Red Bull, you think of healthy. You think of sports. You think of risk-taking. You think of lifestyle, you think of everything that's where the world is going today. So and that is driven through the media house that they've been able to build by betting on the right IP from the beginning. And that's athletes, but that's sports properties as well.

27:46I'm guessing you probably have that. Also, that tedious process that every business, including my own back in the day, had to go through, though, where you sort of have to start erecting Chinese walls and structure and things, because Red Bull would love all the technology that Aston Martin, you've got a piece of as well, right? So Aston and Martin, you have to have a relationship you manage over there and then the Red Bull relationship somewhere else in the Ventures Fund or am I over-egging that complexity? I think you mean with Alpine, we're invested. Yeah, yeah. Sorry, Alpine. Alpine, let's say that right now Red Bull is not very concerned with Alpine is doing on the performance.

28:25side of things. No, but that's definitely something we obviously need to manage. But that's why we invest from different kind of buckets. We are an investment business that has different strategies, different focuses. And obviously, every time we're looking into a deal, we need to understand kind of the legal framework and what conflicts of interest might arise. But at the end of the day, one thing is having Red Bull Ventures as an LP in our venture fund, which invests in sports technology. Another thing is our investment into Alpine, which comes from a different bucket, which is our growth and private equity vehicle.

28:57And I'm guessing some of most of the private equity work, I'm right in thinking that you're probably taking minority positions as distinct from the sort of venture fund that's majority and that needs different things from your team as well. Yes, correct. Up to now, most of our kind of growth private equity have been on minority stakes. That is kind of slowly shifting due to the fact that we have more and more capital in the management and obviously more kind of institutional capital, which is pressuring for us to kind of grow in terms of ownership stakes. We are not in the hunt, let's say, through that fund for buyouts.

29:38So we're not looking to acquisitions, but we are definitely now doing more strategic minorities, which is 20 to 40 % equity stakes where we get governance, get a lot of control over the business and the commercial side of things. but we are happy to kind of let that team or league be run on a sports side by the sports people that have been doing it. That is kind of what we are targeting today but it is true that all of these investments including Alpine were definitely on the minority side. Can I ask you about TGL? I'm really interested in it because we did a thing at the Open Championship this year at Portrush and we were talking about the sort of audience and market fit of golf essentially and you can imagine that at the open it's a goal for the big g it's a you know the traditional top top of the market etc great event the market fit to the audience works obviously when you drop below the the majors and the rider cup we just had golf looks very different in terms of the fit between the audience particularly its audiences it's changing so we're in this live golf moment and tgl appear you know was a response to that and tomorrow sports is the is the umbrella organization.