Boehly explains his sports investment philosophy: ‘We are always looking for the structural advantage’

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The four days Milken Institute Global Conference 2022which “brings together individuals with the capital, power and influence to change the world with those whose expertise and creativity are rethinking health, finance, technology, philanthropy, industry and media”, is currently taking place in Beverly Hills, California, and one of the guest speakers is future Chelsea owner Todd Boehly.

Boehly hasn’t said anything publicly in the past two months to specifically address Chelsea’s offer from his consortium, although what he has said in recent years capitalizing on success on the field, on the pitch or on the court certainly holds promise for our competitive future.

Yesterday I was one of the guests of a panel titled “The Mega-Trends Shaping Asset Management” – exciting! – Boehly talked a bit about his sports investing philosophy (apparently ‘sport’ is a big money mega-trend), again touching on the main point that to get the best return on your investment, you need to insure a) success and b) fan engagement and happiness.

And it certainly helps if you start with a team that’s already at the top.

“There is nothing like sport to excite passion. And if you have passion, then you have people who care. And if you have people who care about things, you have a great opportunity. And really, it’s about retaining that experience, that access, that opportunity.

“[For example] we will have 4 million people coming to Dodger Stadium this year. Our goal is to provide them with the best possible experience. We always have the most affordable tickets in the league, for a stadium that is regularly full.

“So when you look at how we think about prices and how we think about sports, we just think they don’t do more, which implicitly implies scarcity value. [And] we focused only on very big brands. In some sports like the NFL, they share all the media money. In baseball, you are really a derivative of your local market.

“The Premier League is similar. If you look at the way it works, to be part of the big brands you have a structural advantage. And for us, we are always looking for structural advantages.

If that sounds purely capitalist, well that’s because it is. Unless you belong to a mysterious Russian oligarch to be a plaything and a diversion, or you belong to a state government with virtually unlimited funding, you have to play Wall Street’s game.

But the way Boehly has approached its sporting investment over the past decade has been that it can be a win-win situation: a win for the fans is an automatic win for the owners, especially when, as he said it, you have the “structural advantage”. From this base, you can then increase your reach, your income and, yes, even your rewards (on and off the field).

Asked about the role that NFTs and “tokenization” could play in future asset management, Boehly again framed it as something that can benefit the customer (i.e. the fans) and, at in turn, to the team, rather than the other way around.

“You just characterize it as ‘tokenization’ because it’s digital. But the reality is…if you want to buy stock in the Green Bay Packers, this for me is a “tokenization”. You have no rights, you have no control, but you can say you have an “interest” in the Packers.

“I think loyalty programs, whether it’s Vivid Seats, Dodgers, Lakers, Chelsea, we’re all thinking about how to build direct customer relationships that we can then build on. And if any form of that comes in the form of “tokenization” then so be it, but what we really care about is direct access to our fanbase.

“And if we have direct access to our fan base, [then] we can start thinking [having] lots of different levels of fans who want different products. So we’re starting to think a lot about what we really want to give to our “super fans” and how we grow the fans.

-Todd Boehly; source: Milken Institute Global Conference 2022

As for what he means by “developing the fans”, Boehly gives the example of the Chelsea-sponsored camp in Greece where people can pay to stay at a complex and have their children coached by (former, current) players from Chelsea – you may remember Eden Hazard, of all players, appeared there one summer a few years ago! Again, purely capitalist and commercial, but also for the benefit of the fans, the club and the money men.

Welcome to modern football! (Or maybe not so modern considering that football at the highest level has always been about profiteering.)

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