Sports, as popular as they are, are still exploding. Viewership, engagement, and new teams/leagues are growing everywhere. With this, I see a few areas that have become extremely investable.
I have domain expertise in golf, but also have built up some outside knowledge in the newer areas of the industry.
The places to invest right now are golf, sports betting, and companies building the new frontier on both technology and media.
The TLDRs:
I’ll start with golf because it is really what I know the best. I spent around a year in my last job working as a product manager for a golf startup. During this time I learned a lot about the space, how the big players operate, and more importantly consumer behaviors in the industry. I learned what’s important to them, how often and where they spend money on the game, and the many different types of personas.
I worked in the consumer technology space and we were trying to build new technology products for golfers. Not to say is isn’t possible, but it is likely the hardest area to succeed. From what I am seeing, these are the segments most new companies are falling into:
Consumer Tech
As I mentioned above, this is where I worked. It is hard to build here, as with most consumer tech, but in golf it becomes a little harder. Most of a golfers time spent on the golf course is away from their phone. There is a segment of golfers who use apps for GPS and score tracking, but these operate more as tools rather than profitable businesses. That being said, there are opportunities within virtual competition, betting, and other areas that people have been trying to tap into. Despite the hills that have to be climbed, there will be companies that will be successful in the golf consumer tech space. I have seen the demand first hand and think the bigger players in the game have started to catch onto this trend as well. The new generation of golfers is very tech heavy and will continue to lean toward this demographic.
Real life experiences or “hardware”
I have been framing these products as more the “hardware” of golf. So as Snapchat is a consumer tech application, the IPhone is the hardware. This is the dynamic I am shooting for when I reference “hardware”, but the “hardware” in this situation is referring to the golf courses, par 3 courses, TopGolfs, indoor simulator clubs, and more.
With the explosion of golf over the last few years, you have also seen prices for playing jump higher. This is just simple economics, there is more of a demand for golf, with a relatively same supply. More demand = higher price. The challenge here is that it is pretty hard to try and build new 18 hole golf courses near densely populated areas. So, investors are pouring money into other areas. A few months ago, 8am golf made a large investment into 3’s, a par-3 golf course based in Greenville, SC. With this investment, they are planning to expand into other metropolitan areas like Charlotte and Charleston. This is just one example of how the golfing world has started to expand out it’s previous norm. Previously, if you wanted to golf you had to book a teetime and play an intimidating 2-5 hour round. This made the barrier to entry for new golfers extremely high, but with new “hardware” projects like 3’s, TopGolf, and FiveIron, new golfers are able to explore different areas of the game before jumping into an 18 hole round.
These experiences will continue to be built out by investors and operators willing to front the money. The challenge is predicting demand by consumers, but with a local simulator club in Charlotte selling out $5k memberships 3 months before even opening, I think it is safe to say that the demand is there for the moment.
Golf is one of the fastest growing sports in the world right now, and even more exciting is that it is growing phenomenally well in younger demographics. In fact, in the year 2022, it was the only high school sport to see growth, while all the others declined. And as Steve Cohen said, if AI continues to increase productivity, we will start to see shorter work weeks. If this happens, leisure activities will also start to see a dramatic rise, and golf is in a perfect position to capitalize here.
On March 11th, sports betting was legalized in North Carolina. In those three weeks it was legalized in March, there were more than $650+ million in wagers placed. The numbers across all states and the country are astronomical and keep growing every month. When you see this much money being moved through an industry, there is certainly an opportunity to capitalize on new products in the space.
I like to compare it to the stock market before Robinhood. Everyday trillions of dollars were being transacted through the markets, with billions coming from retail traders. Once Robinhood came on the scene, not only did they open up the door for other mobile-first fintech apps to be born, but they pushed forward an entire new generation of traders.
Fanduel, Draftkings, Caesars, and others are running the game and have a large market share. This makes sense because they are the ones who run the market. They are the book maker and have war chests of marketing and customer acquisition funds. Any new incumbent book will have trouble gaining traction, but that isn’t to say it’s impossible. Novig, for example is a new sportsbook that treats gambling like a true book maker. They have buyers and sellers of props that allows for much better lines and high-frequency betting.