Alexis Ohanian: The Full P&L Breakdown of the World's Most Valuable Women's Sports Team | E1187

Intro (0s)

• The importance of telling the stories of athletes even when they are not playing is discussed, highlighting the potential for branding opportunities.
• The need for constant improvement and a relentless mindset is emphasized for both athletes and the teams supporting them.
• The benefits of in-person meetings are discussed, emphasizing the importance of having a clear agenda and purpose for such gatherings.
• The speaker expresses a preference for intentional meetings with a clear objective, rather than casual catch-ups.
• The speaker highlights the importance of guarding one's inbox and avoiding unnecessary meetings.

From Tech Success to Sports Ownership (1m46s)

• The speaker discusses his transition from a successful career in technology to sports ownership, specifically focusing on his investment in Angel City FC, a women's soccer team in the National Women's Soccer League (NWSL).
• He explains that his interest in owning a sports team stemmed from his observation that the value of women's soccer teams was undervalued, particularly compared to the earning potential of individual players like Megan Rapinoe.
• He emphasizes the strong legacy of women's soccer in the United States, highlighting their consistent success on the global stage compared to the men's team.
• The speaker describes his initial research and conversations with existing owners, noting a prevalent perception of women's soccer as a charitable endeavor rather than a viable business opportunity.
• He highlights the low entry cost for expansion teams in the NWSL, which he saw as a significant advantage, and emphasizes the potential for growth and increased value in the future.
• The speaker discusses his belief that private investment was entering the sports industry, creating a shift from traditional family ownership to a more competitive market.
• He contrasts the competitive nature of the technology industry with the relative scarcity and lack of competition in traditional sports, arguing that this has led to a decline in innovation and efficiency within many sports organizations.
• The speaker describes his investment in Angel City FC as a "contentious deal" due to his unconventional approach, which involved structuring the team like a startup with a focus on building a strong brand and community.
• He emphasizes the importance of personal investment and storytelling, highlighting how his personal investment in the team through a trust for his daughters helped to attract attention and generate positive media coverage.
• The speaker acknowledges some mistakes in his initial approach, particularly regarding board control and ownership structure, but ultimately believes that his unconventional methods were successful in creating a unique and valuable asset.
• He details the early stages of the team's development, including their focus on building a strong brand identity and community engagement, even before the team had a logo or players.
• The speaker highlights the importance of grassroots marketing and personal engagement, emphasizing his commitment to building a strong connection with fans and supporters.
• He describes the team's success in securing a record-breaking sponsorship deal with DoorDash, which he attributes to his personal connections and belief in the team's potential.
• The speaker concludes by emphasizing the importance of media distribution and the ripple effect of positive news coverage in building a successful brand.

Managing Ongoing Costs in Sports Ownership (19m40s)

• The text discusses the ongoing costs of owning a sports team, specifically in the context of women's sports.
• The speaker notes that while there are similarities to tech investments in terms of needing to invest in talent, there are also differences due to collective bargaining agreements and salary caps.
• The speaker describes two main sources of funding for the team: revenue generated from operations and future rounds of financing.
• The speaker emphasizes the importance of media deals in generating revenue and highlights the potential for increased revenue as these deals are renegotiated.
• The speaker expresses a belief that the value of women's sports is underestimated by traditional investors, particularly those focused on older media platforms.
• The speaker argues that the true value of a sport lies in its ability to generate viral content on social media, which is a more accurate reflection of current audience trends.
• The speaker mentions that the initial media deal with Lifetime was very small, paying only a "pittance" in the range of $50,000 to $100,000.

Navigating Media Rights & Negotiations as a New Sports Owner (23m3s)

• The NWSL underwent a period of significant change and reform, including a new commissioner and a focus on addressing player abuse and mismanagement. This period of change led to a new media rights deal with CBS, Amazon, ESPN, and other networks, resulting in a $60 million annual revenue stream for the league.
• The new media rights deal, along with the league's focus on player development and storytelling, has led to increased brand sponsorship opportunities for teams. This has resulted in a significant increase in revenue for the North Carolina Courage, with brand deals generating $31 million in revenue.
• The team's focus on player development and storytelling has created opportunities for players to engage with fans and brands, leading to increased brand awareness and revenue. This approach is similar to the strategies used in esports, where teams build strong brands around their players.
• The team is targeting young fans, ages 7-10, as a key demographic for future growth. This strategy aims to capitalize on the growing popularity of women's sports and create a new generation of fans who will support the team and its players.

How Much Revenue is From Merch? (30m22s)

• The revenue from merchandise sales for the National Women's Soccer League (NWSL) is in the single-digit millions, which is a small amount compared to the overall revenue of the league.
• The professionalization of the NWSL has led to partnerships with companies like Fanatics, which has centralized merchandise sales and increased revenue for the league and teams.
• The speaker believes that merchandise sales are an underinvested opportunity in sports, particularly for women's sports, and that telling the stories of athletes through a female lens can be a powerful way to connect with fans.
• The speaker highlights the success of "Drive to Survive," a documentary series about Formula 1 racing, which has been successful in attracting a large female audience by focusing on the human stories of the athletes.
• The speaker believes that women athletes are more predisposed to sharing their personal stories and allowing cameras behind the scenes, which can lead to more engaging content for fans.
• The speaker discusses a reality show they funded called "The Offseason," which features 11 national team and professional women soccer players living together for three weeks during the offseason. The show is designed to capture the authentic lives of the athletes and provide a different perspective on sports.
• The speaker believes that the lack of financial resources for women athletes compared to their male counterparts is a significant challenge, but that the potential for growth in women's sports is immense.

Media Strategy: Impact on Team Culture & Performance (38m21s)

• Media Strategy's Impact on Team Culture and Performance: The discussion explores the potential downsides of a media-centric approach to sports, specifically the risk of creating superstar cultures that could lead to rifts within the team and potentially hinder performance on the field. However, it is argued that this new era of media engagement can also create opportunities for role players to gain a wider fan base and increase their visibility.
• Financial Considerations and Revenue Streams: The conversation delves into the financial aspects of the team, highlighting the significant revenue generated from brand deals, merchandise, and ticket sales. The team's capacity and ticket pricing strategy are discussed, with a focus on maintaining accessibility for fans while balancing the need to generate revenue.
• Salary Caps and the Importance of Fair Compensation: The discussion touches upon the salary cap in women's sports, highlighting the disparity in compensation compared to men's leagues. The speaker emphasizes the need for increased investment in women's sports to ensure athletes are fairly compensated and can pursue their careers professionally.
• The Role of Software and Technology in Modern Sports: The speaker emphasizes the importance of utilizing software and technology to enhance team operations and efficiency, arguing that many sports teams are lagging behind in this area. The speaker's experience in building a tech-driven sports team is highlighted as a model for others to follow.
• The Importance of Culture and Mindset: The discussion emphasizes the importance of a strong team culture that fosters a relentless pursuit of improvement and excellence. The speaker highlights the need for owners and management to have a similar mindset and to create an environment that supports athletes' growth and development.
• The Acquisition and Future Prospects: The speaker discusses the recent acquisition of the team, highlighting the importance of finding a partner who can provide capital, control, and a shared vision for the future. The speaker expresses confidence in the team's future prospects, believing it has the potential to become a billion-dollar franchise.

How Private Equity is Shaping the Future of Sports (52m23s)

• The text discusses the increasing involvement of private equity in sports, with examples of private equity firms buying teams and investing in leagues.
• The speaker believes that private equity investment can be beneficial, bringing more capital and sophisticated management to sports, but acknowledges concerns about long-term incentives.
• The speaker questions whether there is a ceiling on team valuations, noting that some teams are being valued at extremely high amounts.
• The speaker believes that the MLS is overpriced, as the best footballers do not consider it a top league, and doubts its long-term sustainability.
• The speaker believes that the NWSL has the potential to surpass the MLS in value within the next 10 years due to its strong narrative of excellence in women's football.
• The speaker argues that sports teams should be run like tech companies, focusing on software development and utilizing technology to improve efficiency and generate revenue.
• The speaker uses the example of ScorePlay, a company that uses AI to analyze game footage and generate content, to illustrate how technology can revolutionize the sports industry.

Lack of Tech Awareness & Fan Engagement (55m38s)

• There is a lack of technological awareness and understanding of fan engagement within sports ownership and management teams.
• The speaker believes that sports teams are poorly managed in terms of technology and fan engagement.
• The speaker is presenting at an event for team owners and presidents, highlighting the importance of technology and fan engagement.
• The speaker believes that the value of sports teams will follow a power law distribution, with a few teams becoming extremely valuable due to technology and fan engagement.
• The speaker uses the example of the Clippers installing USB charging ports at every seat in their new arena as a small but significant step towards improving fan engagement.
• The speaker highlights the issue of poor mobile phone signal and data connectivity at stadiums, which hinders fan engagement and content creation.
• The speaker believes that the lack of technological adoption in sports is due to traditional revenue streams and the reluctance of sports teams to embrace new technologies.
• The speaker predicts that within the next 5-10 years, the new revenue streams generated by technology and fan engagement will become too significant to ignore, leading to a shift in the industry.

Content Creation in Sports: What Media Takes a Hit? (1h0m51s)

• The text discusses the impact of the attention economy on content creation, particularly in sports. It suggests that traditional forms of entertainment, such as scripted television and movies, may lose ground as consumers increasingly seek out more engaging and personalized content.
• The text argues that the rise of AI and user-generated content will lead to a proliferation of easily accessible and low-friction entertainment, making it more difficult for traditional media to stand out.
• The text highlights the unique position of sports in the attention economy, suggesting that its ability to provide live, emotionally charged experiences will continue to attract viewers. It emphasizes the importance of exceptional content and a strong "why" for any media to succeed in this increasingly competitive landscape.

Investing in MrBeast (1h3m9s)

• The speaker invested in MrBeast's company, Feast, pre-launch for $40 million, acquiring a 10% stake. This was considered a good deal given MrBeast's large audience and potential for high revenue.
• The speaker believes MrBeast's ability to move product is unprecedented, citing examples like Prime and Logan Paul's drink.
• The speaker highlights MrBeast's ability to control his brand and iterate quickly, learning from successes and failures. This is evident in the evolution from the Burger Company to Feastables.
• MrBeast has launched a YouTube analytics software called View Stats, which is a high-margin business and a testament to his understanding of the YouTube ecosystem.
• The speaker believes MrBeast's company is worth at least $5 billion, citing its potential for growth and the success of his Amazon Prime Video deal.
• The speaker sees MrBeast's ability to drive traffic and engagement as a valuable asset for platforms like Amazon Prime Video, which are seeking new subscribers.
• The speaker compares MrBeast's influence to that of Reddit, noting his ability to shape internet culture and directly influence his audience's purchasing decisions.
• The speaker discusses the potential for Feast to become a billion-dollar business, comparing it to Hershey's and noting the potential for a trade sale to a company like Mars.
• The speaker acknowledges the difference in chocolate preferences between the US and Europe, but believes Feast has the potential to succeed in both markets.

Quick-Fire Round (1h12m16s)

• The speaker discusses his best investments, including Ethereum, GrubWithUs, and Goat. He also mentions investments he regrets not selling, such as Zenefits and Clubhouse.
• The speaker shares his observations about Serena Williams' dedication and work ethic, contrasting it with his own enjoyment of his work. He believes that Serena's love for the outcome of winning drove her dedication, while he enjoys the process of his work.
• The speaker believes that the beauty and fashion industries should invest more in sports branding, particularly in women's sports, as it is a growing market with potential for significant returns. He cites examples of brands like Sephora, Skims, and Coinbase making smart investments in women's sports.
• The speaker discusses his relentless work ethic and how it has been both a strength and a weakness. He attributes this to his sense of mortality and his desire to maximize his time. He acknowledges that this can make him difficult to be around, but he believes it has been essential to his success.
• The speaker shares that he has become more comfortable with his relentless nature and that this shift has been beneficial to his career. He encourages others to understand what is important to them and not compromise on those values.