The penultimate round of panels at this year’s Wharton Sports Business Summit featured an impressive group on Investment Opportunities in Sports. The panel was moderated by David Abrams (W’80) of Inner Circle Sports. Panelists included Sabrina Hannam (L’03), Executive Partner at the Law Office of Sabrina N. Hannam, LLC, Akshay Khanna (WG’15), Vice President of Strategy at the Philadelphia 76ers & New Jersey Devils/Prudential Center, Vasu Kulkarni (ENG’08), founder of Krossover and Courtside VC, Ted Reid, SVP/Wealth Advisor/Sports & Entertainment Director at Morgan Stanley and Jeff Volk (C’97), Senior Vice President, Business Development, BAMTech Media.
After all panelists introduced themselves and explained their backgrounds, Abrams started the discussion asking panelists about their experiences with sports transactions, particularly team purchases and sales. Although there was talk of how team valuation is determined, one of the key points made by Hannam was the importance of relationships surrounding these transactions. Simply discovering that a team is for sale (later reiterated in the afternoon keynote by Josh Harris) and having the opportunity to be involved in a deal is a result of building networks with peers. It was emphasized that a lot of opportunities in sports, not just in purchasing a team, are the result of building and retaining strong relationships.
The discussion then shifted to why people invest in teams and what value this investment provides. Khanna quickly pointed out that with 123 teams in the big four sports, the opportunity to own a team, even for investors with the financial resources, is very scarce. Further, this scarcity and the popularity of sports makes teams a trophy asset, rather than an asset bought to accrue capital. This point was later emphasized by Kulkarni, who described that investors are already rich and if they wanted to make the most money possible there are better alternatives. Instead, ownership functions as a powerful tool for visibility. Kulkarni quipped that nobody knows who someone like Tilman Fertitta is (Owner of the Houston Rockets for those that still don’t) until they buy a professional sports team. Ownership helps their personal brand, which gives them access to important people and influence in society.
A large portion of the panel was then spent talking about the future landscape of sports investing. Jeff Volk, demonstrating his expertise in sports media, emphasized that direct to consumer content (MLB.tv,Twitch,etc.) is one of the main areas to expect growth. He also explained that the best way to consume sports is still being figured out, and the demand for a live platform will keep it relevant amongst national and regional TV providers.
One of the main future areas of growth focused on by all panelists was eSports. Kulkarni described his partnership with the Cleveland Cavaliers building a team from scratch. He also explained that as an investment, eSports needs to gain complexity in its structure. Established professional sports leagues have regulations on spending (ie. the use of a salary cap), a unified governing body and CBA agreements. He joked that in managing an eSports team, “you cannot just sue a 13 year old Korean kid for deciding to change teams.” Hannam also referenced the NBA 2K League beginning in 2018. She explained that the current focus is on how to market the league and obtain sponsors, but looking forward, these investments need to be treated in the long term 10+ years.
Reid provided perspective on how players handle their money. He pointed out that most eSports competitors are very young and although they make impressive wages, most of this wealth is being accumulated instead of the lavish spending seen in traditional sports. This built off of Reid’s earlier discussion that most athletes make all of their money in a 3-5 year span, and that as an advisor, he usually recommends a conservative/traditional approach until they are in a comfortable position.
To provide advice for the young audience members the panelists explained their individual career paths and background. Hannam began, explaining that her experience began in corporate law and how she became involved in sports through a chance encounter. Khanna similarly started working in a different field (private equity) but decided to pursue his passion in sports, beginning with connections he had made while in school. Kulkarni always knew that he wanted to be involved in basketball, including playing for the JV team at Penn his senior year. After graduating he immediately pursued his passion by starting his first business in basketball. Continuing a recurring theme, he explained that a chance meeting with Dan Gilbert at an NBA All-Star game led to a generous investment which allowed him to continue forward. Reid added another unusual path, explaining that while working in investing he roomed with an injured NFL player, whom he helped with finances. This experience led him down a path to his current career. Volk, unable to follow up with a remarkable origin story of his own, explained that the key is to have passion, develop unique skills and network. Abrams added on that finding a mentor leads to great opportunities.
The panel concluded with questions from the audience. The first question asked panelists to speculate on if the sports market is currently in a bubble. Hannam first remarked that live content has an intrinsic monetary value, and thus the market isn’t being propped up. Khanna agreed, adding on that it's generally impossible to predict a bubble especially since the panelists are inside the industry.
Overall, this panel provided audience members with a great learning experience. The expert panelists certainly demonstrated why they are successful in each of their respective fields. Their insightful discussions coupled with humor and great advice offered a lot of valuable information on the many facets of investing in sports.
USBC Journal Writer
Class of 2021