A recurring theme in sports business…
Marketplaces that start with a pure tech-driven approach often evolve into full-fledged agencies.
It’s a shift that plays out across different sectors:
- media
- training
- investing
- recruiting
- collectibles
- sponsorships
What begins as a scalable, low-touch platform inevitably morphs into a high-touch service business.
But why does this keep happening? What does it tell us about the realities of building in sports? Where are the opportunities?
Let’s Dive In????
The Marketplace Model in Sports
Marketplaces thrive on one core idea — connecting supply with demand.
The goal is to create a seamless, efficient platform where transactions happen with minimal friction (and the only middleman is the tech).
In sports, this often means:
- Teams & Talent (scouting, recruitment)
- Athletes & Brands (endorsements, sponsorships)
- Trainers & Clients (fitness coaching, skill development)
- Content Creators & Advertisers (monetization, partnerships)
The dream is that by building a technology-driven solution, companies can remove inefficiencies, scale quickly, and take a small cut of every deal.
But the reality?
Most sports business transactions are not purely transactional.
Unlike traditional e-commerce or gig economy marketplaces — sports deals are deeply relationship-driven.
Athletes, teams, and brands don’t just want a match—they want trust, negotiation, and strategic insight.
And that’s where the pivot to an agency model begins.
Examples of Agency Evolution
The name, image, and likeness wave that hit the United States is the perfect example.
In 2020/2021, over $50m in private equity was raised to capture the influx of new athletes eligible for brand deals.
Fast forward to 2025…
A few of the companies above have closed down — but most have pivoted purely to the middle bucket, serving as agencies first.
Many are still decent businesses, just not venture-scalable like their VC investors had hoped. I expect to see further consolidation here.
Other places we’re seeing this:
- Athlete Investment Platforms: initially built to connect accredited investors with opportunities to invest in athletes — are now removing the tech layer and taking a more hands-on approach.
- Collectibles: marketplaces meant to connect buyers and sellers went back to agency and expo-type models, most of the NFT marketplaces have fizzled out.
So why is this happening?
4 Major Reasons Marketplaces Shift to Agencies in Sports
When analyzing this shift…I’ve identified a few primary reasons.
1. High-Touch Deals Require More Than Just Tech
In sports, most deals aren’t transactional; they’re relationship-driven.
Trust, negotiation, and strategy play a major role — things algorithms struggle to handle.
Buying clothes from a stranger online can be done with just an app, but closing a six-figure brand deal with an athlete needs a human touch.
2. Pareto’s Principle
The top 20% of users generate 80% of the value. These users want white-glove service, not just a platform.
To retain them, the marketplace starts offering customized solutions — aka agency work.
Related to athletes in sports…I’d argue that 2% of athletes generate 98% of the value.
3. Monetization Pressure
Marketplaces charge small transaction fees → Agencies charge premium retainers.
Founders realize it’s often better to have five brands paying $20,000/month to source deals for top talent than connecting 100 brands to 100 low-tier athletes for small percentages through a marketplace.
Investors push for revenue → The pivot to an agency model boosts profitability, whether it is actually scalable or not.
4. Marketplaces Can’t Fully Replace Relationship-Based Sales
Brands, athletes, and teams prefer working with people they trust, not just software.
The human element in negotiations, PR, and reputation management is irreplaceable (at least for the time being).
Looking Ahead
I get it…it’s easier to raise capital on the marketplace concept of what technology can provide.
However, I’d say that for most sports marketplace ideas, taking an agency approach first is better.
- generate cash flows
- learn your customers better
- leverage AI to enhance human-led services
- then raise capital to build technology later (if you want)
My main takeaway: hybrid models are the future of sports marketplaces (no matter what vertical they sit within).
I’m extremely curious to see the impact of Vertical AI Agents on the space — more on this in a future briefing.
