Departure of venture unit head, Kevin LaForce, leaves 32 Equity in apparent limbo.
It should be one of the star turns at today’s American football finale to showcase its strategic investment fund. But with the departure last summer of its head, Kevin LaForce, to Redbird Capital Partners to be its managing director, the firm has yet to announce another new deal since secure identify provider Clear’s $100m round a year ago.
One of LaForce’s first actions at RedBird was to support one of his previous portfolio companies, Mythical Games, a US-based gaming technology studio, which in November raised $150m in its series C round led by Andreessen Horowitz, bringing the company valuation to $1.25bn.
The National Football League (NFL’s) 32 Equity corporate venturing unit had previously backed Mythical but LaForce’s departure came with expectations another entity would be set up. Mike Ozanian, assistant managing editor at Forbes, told SportzPower: “In the months ahead, the NFL will likely form a new corporation with media, sports betting and investment companies to further monetize their powerful brand and content.”
This follows a storied track record for its near-decade-old existing strategic investment unit that had, along with lucrative new media deals, driven the NFL’s 32 teams average net worth to $3.48bn, according to Forbes’ 24th Annual NFL Team Valuations report.
Each NFL team kicked in $1m to launch 32 Equity in 2013 with another round of $2m per club in 2019 brought invested capital to $96m.
Profits from 32 Equity have been reinvested rather than distributed to the teams, but the portfolio has generated average annual returns in excess of 30% and is now worth well over $100m per team, according to team executives who requested anonymity last year to journalist Andrew Stockley.
32 Equity was behind the formation of On Location Experiences (OLE), a hospitality and entertainment business that provides tickets to the Super Bowl held today in Los Angeles. In 2020, Endeavor, another event- and talent-focused business, bought majority control of OLE for an enterprise value of $660m with 32 Equity increasing its stake in the deal.
Similarly, 32 Equity invested an undisclosed amount in mobile gaming application Skillz in its Series D round in 2019 before December 2020’s acquisition by a special purpose acquisition company (SPAC) effectively took it public at a $3.5bn valuation.
Other SPACs to take an interest in 32 Equity’s holdings include sports data and gambling technology duopoly Genius Sports (acquired by a SPAC in April 2021 for nearly $500m) and Sportradar, which Horizon Acquisition II Corp had tried to buy before its turned to an initial public offering at a reported $8.3bn valuation after the summer.
Other 32 Equity deals include backing Hyperice, an athlete recovery technology backed by quarterback Patrick Mahomes, Appetize, a point of sale operating software company, Stack Sports (sold to software provider Blue Star Sports in which 32 Equity followed-on in 2017), STRIVR (a virtual reality tech provider), and reportedly purchasing a 3% stake online gambling app Fanatics for $95m in 2017.
The 32 Equity model has been so successful other sports associations have looked to copy it.
National Basketball Association (NBA) has backed a few deals publicly, including Hyperice, while Major League Baseball (MLB) was setting up a pilot a few years ago, according to Sports Business Journal.
Internationally, Tennis Australia, the national governing body of the sport, recently set up Wildcard Ventures as its corporate venture capital unit, whose first deal was SwingVision.
Individual teams are also active investors, including soccer club Barcelona in Spain, baseball teams Los Angeles Dodgers, and most recently Minnesota Twins, NBA’s Boston Celtics and Golden State Warriors, and the NFL’s Dallas Cowboys, Miami Dolphins, Minnesota Vikings and San Francisco 49ers.
And sports stars are increasingly active angel investors. Golf star Tiger Woods, tennis star Caroline Wozniacki and retired NBA player David Lee filed to raise $150m through a SPAC, Sports & Health Tech Acquisition, to bring another company public.
And soaring interest in top sports is creating a fertile market for venture investment in the leagues themselves.
The Women’s NBA raised $75m from a syndicate including clothing maker Nike as part of its revamp and new valuation of the league and its teams to $1bn.