January 3, 2024
Andrew Petcash

Everything You Need To Know Heading into 2024

The gap between Christmas and New Year’s is great for looking back (and ahead).

We’ve already covered 2023 in sports…

So what’s coming in 2024?

Let’s Dive In 👇

Macroeconomic

Like most industries, sports are impacted by macroeconomic conditions.

Last year, this heavily impacted the ability of startups to get funded.

2024 is looking like it will have ups and downs:

most likely some fed rate cuts
rocky political climate with the US presidential election

Private markets typically lag public markets so 2024 should be better for startups (especially ones that survive as profitability is currently trumping speculative ideas).

Technology

Years like this are when billion-dollar ideas are crafted…

To note: This is me passing along the sentiment I’ve heard from many seasoned people in the investment and finance worlds.

So why is this a great year for building?

Startup funding improving
More alignment between investors and companies
Maturing technologies with lots of upside in AI and web3
Influx of talented folks from ancillary industries entering sports

What am I keeping an eye on?

If you have unique data, building LLMs on top of the solutions is a huge opportunity.
The increased attention towards merging the digital and physical world (VR headset by Apple Vision Pro will be interesting)
Increased consolidation within the sports verticals of betting, NIL, and media.
More startups building in the fan engagement category.
Venture studios popping up to build specific sports tech solutions and additional teams/leagues with innovation centers.
Crowdfunding and its use cases for teams.

Excited to see what new ideas emerge in 2024.

Web3

When looking at history, you’ll notice digital innovation was typically pioneered by:

scams
or pornography

Web3 has flushed most of that out — and it seems as if the “true builders” are now working diligently behind the scenes.

Blockchain is interesting to me because it seems to be a backbone technology.

Uber and countless other apps became unicorns because of Apple and Google (e.g. smartphones and the app store).

The most valuable internet companies have been ones in which other huge companies can be built on top of.

To me, that is what blockchain is trying to create — a new “backbone technology” to improve upon the inefficiencies of web2 and tie together data, ownership, and community optimally.

Relating this to sports…a lot of the web3 technologies are using athletics as their testing ground.

Globalization

The cat is out of the bag…

What Saudi Arabia did in sports last year will continue (and more regions/regimes could take part).

As the internet provides additional information on the importance of sports/fitness — more and more participants will continue to get involved.

With old thought structures collapsing and people “waking up” to the nonsense of agendas driven by linear media…

One of the last resorts to influence the general population in real-time is sports.

The United States and Europe have done this for decades — China attempted a decade ago and now Saudi Arabia is giving it a shot.

With the 2024 US Presidential Election upcoming, we’re sure to see civil unrest and mainstream agendas, which will undoubtedly carry over into sports.

Sports Agencies

We will witness more consolidation in the agency space with the 3-letter agencies getting even larger.

Seeing lots of groups emerge to provide athletes with investments, ownership, and family office-type services.

Just like certain financial advisors have screwed athletes in the past, some of this will inevitably take place in the “business manager” space.

It’s mind-blowing how much money athletes are starting to make — it’s like a founder exiting a startup every year.

As the supply of athlete investors continues to increase, the demand will decrease and so will the overall value of having athletes on the cap table.

Traditional Sports Leagues

While recession-proof throughout history I think traditional sports teams are starting to reach their peak unless other innovation takes place.

Natural evolution:

downstream (college and high school)
horizontal (alternative and international)

price return of select sports leagues vs s&p 500

Mark Cuban’s recent move to sell his majority stake in the Dallas Mavericks says a lot without him saying anything…

Taking his gains off the table and potentially looking towards building a casino if sports gambling is legalized in Texas.

Scrambled Thoughts

I still believe European soccer with promotion and relegation is the best model we’ve seen in sports — current U.S. sports leagues are doubtful to enable it because of valuations but 2024 will have more discussions around it.
Tennis will go through what golf went through last year.
Wouldn’t be surprised to see wealth funds and private equity firms take a crack at pickleball, padel, college athletics, and more.
Huge opportunity for leagues and women’s sports to build from the ground up using new technologies and models.
Fans follow players more so than you think — especially GenZ.
Gambling has been huge for the industry in the short term, but in the long term it could be hurtful — a lot of conflicts of interest.
Will we see firms that announced massive PE funds actually do a deal this year?
Sports tech is poised for another strong year of consolidations in 2024 driven by strategic and financial buyers (thanks to increasingly converging price expectations.)

Downstream Will Pick Up Steam

Pro sports owners are starting to invest in youth sports…

Josh Harris and David Blitzer (owners of the 76ers & NJ Devils) have recently made two interesting downstream plays.

Acquired “We Are Camp” a youth sports action camp in Oregon for $10m.
Acquired an 80% stake in a 115-acre youth sports facility at the Hall of Fame Village in Ohio.

Youth sports are on the path to complete commercialization…

And with traditional pro sports teams most likely overvalued (some owners are planting their seeds downstream).

For Founders/Early Stage Companies

Last year was about as painful as it can get — 2024 will be hard, but better.

Seeing some interesting things founders should be aware of:

lots of agencies disguising themselves as investors
- are you pitching them? or are they pitching you?
lots of “fundraising gurus” in the market (supply is there since it’s hard to raise)
- just a heads up to be careful and prioritize performance-based models
valuations are on the decline
- down rounds will be prevalent in 2024 (not always a bad thing as the balance is restored)
throwing AI on the roadmap might get you investor calls
- but it will also heighten suspicion, especially if you’ve been around for several years without it

money in hand headed toward sports balls

In terms of fundraising…

Having now been on both sides of the table, it’s generic advice but it mostly boils down to:

The Narrative — how this came to be and the problem it’s solving
The Founder(s) — what qualifies you as the subject matter expert
The Whys — dynamics in the market that make NOW the optimal time
The Model — is the target market big enough for it to matter? is it scalable? how much more capital will be needed?
timing is everything (also why it’s important to follow up with people) and momentum moves mountains

Profluence in 2024

What are the goals for us in year two?

Add more media properties
Be at more in-person events
Continue staying ahead of the trends (and posting insightful content)
Continue spotting and funding talented founders through Profluence Capital
Continue building behind the scenes (we have some initiatives we’re excited to launch)

Ultimately it comes down to this…

VALUE and IMPACT — if we can provide that to you in various ways then everyone wins.