The NFL's $100 Million Venture Fund

As the most profitable sports organization in the world, the NFL makes a lot of money — but where do they invest it?

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Friends,

The National Football League (NFL) is the most profitable sports league globally, bringing in more than $15 billion in revenue during a typical year — or about 2x as much as the National Basketball Association (NBA).

Here’s a look at their annual revenue growth (Source):

The part you didn’t know?

They’ve quietly been building a $100 million venture capital fund, allowing them to participate in the profit of their most high-upside partners.

What do I mean?

Let’s check it out…

For those who aren’t already aware, the NFL makes a lot of money.

Not only has the league seen their annual revenue almost double over the last decade — from $8.35 billion in 2010 to $15.26 billion in 2019 — but overall franchise valuations have followed.

Here’s an example…

In 2013, Forbes listed only one NFL team’s value at $2 billion: the Dallas Cowboys.

What about now?

Every team is worth that much, including the Cincinnati Bengals, who rank last in the NFL with an operating income of $60 million.

The point being, business is booming.

Even more interesting?

Their corporate partners that have tagged along for the ride.

In 2019 alone, more than 30 corporate sponsors paid the NFL $1 billion collectively.

Here are the Top 10 (Source):

  1. Verizon: $300 million

  2. Anheuser Busch: $230 million

  3. Nike: $120 million

  4. Pepsi: $100 million

  5. Oakley: $75 million

  6. Amazon: $75 million

  7. Fanatics: $50 million

  8. Caesars Entertainment: $30 million

  9. Procter & Gamble: $15 million

  10. Gateways Casinos & Entertainment: $12 million

While it’s impossible to accurately predict how much tangible value was created from their partnership, one thing is clear:

It’s been a mutually beneficial relationship.

This leads me to my next point — the NFL’s response.

In 2013, the National Football League created “32 Equity” — a venture capital fund designed to utilize their knowledge and invest in entities that profit from their businesses.

NFL owners originally invested $32 million — or $1 million each — into the fund in 2013, but after the original capital was invested, they have since added another $64 million — or $2 million each.

Here are a few of their investments since 2013:

  • Stack Sports — Originally branded “Blue Star Sports,” Stack Sports has 500+ employees in 35+ countries and sells software solutions to teams and athletes — including everything from payments & recruiting to media & sponsorships.

  • STRIVR — The NFL participated in a $5 million Series A investment round for STRIVR in 2017, a virtual reality (VR) platform that companies use to train employees. The company has subsequently raised $30 million in a Series B funding round.

  • Appetize — In 2018, the NFL’s investment arm 32 Equity invested in California-based point-of-sale company Appetize’s $23 million Series B funding round. Appetize is used in various stadiums across the NFL, including Metlife Stadium (NY Giants/Jets) and Ford Field (Detroit Lions).

  • Skillz — Last year, 32 Equity invested in competitive mobile games platform Skillz. The company went public via SPAC in December 2020.

Outside of the investments listed above, I believe there are two that present tremendous upside:

  1. Fanatics

  2. Hyperice

In 2017, the NFL bought a 3 percent equity stake in Fanatics — an online sports apparel and memorabilia retailer — for $95 million, which valued the company at $3.17 billion.

The interesting part?

After Fanatics has spent the last few years raising about $1.5 billion in funding and securing exclusive merchandise contracts with all the major US professional sports leagues, the NFL’s investment has exploded in value.

In August, Fanatics closed a $350 million Series E funding round, which valued the company at $6.2 billion — a roughly 2x jump from when the NFL invested.

Not bad…

As if that wasn’t good enough, the NFL is also making a significant bet on the future of rest and recovery technology.

What am I talking about?

In October, performance technology company Hyperice completed a $48 million Series A funding round, which put the firm at a $700 million valuation and included investors like the NFL, MLB, NBA, and athlete investors like Anthony Davis and Chris Paul.

Shortly after the investment was announced, Hyperice became the official recovery technology partner of the NFL.

Now that’s incentivized upside!

In the end, I firmly believe Hyperice will be a multi-billion-dollar company.

Given the early success that the NFL has seen with their $100 million venture fund, other professional sports organizations have followed.

In the last few years, the NFL Players Association (NFLPA), Major League Baseball (MLB), and even some individual NFL teams have also launched venture funds using the same model — occasionally investing alongside each other in companies like Hyperice and WHOOP.

While it’s still relatively early in the funds life-cycle, the upside is clear.

By aligning financial interests with companies like Fanatics and Hyperice, the NFL can leverage their partnership for equity — eventually capturing some of the financial upside they inherently helped create.

Simply put, the model works.

Now it’s all about picking the right investments, deploying capital intelligently, and creating effective partnerships to watch their capital multiply.

Have a great day, and we’ll talk tomorrow.

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