Don’t call, don’t text — I get married tomorrow.

This edition of 🧭 At the Center comes to you (very much) automated because I am (very much) not working today.

As you read this, I am likely in the middle of our ceremony walkthrough and/or getting ready for our rehearsal dinner tonight.

I will be honeymoon-ing in Maui through the end of the month and will be back in the saddle come September 1st.

A note before we begin -

In August of 2023, while I was bouncing around the NFL, I took my first job in sports, media, and entertainment investing.

By this point, I had a firm grasp on the broader VC world, especially its intersection with human performance technologies and other sport-adjacent categories, but nothing had prepared me for what I was stepping into.

The institutionalization of sports as an asset class was happening in real time as the Big 4 was fresh off of opening up to private equity investment, dozens of emerging leagues were launching week after week, and new funds began flooding the zone.

I wanted to better understand the industry from the ground up, and I had just written my 60-page Senior Thesis on “Venture Capital Decision Making Following the Burst of the Dot.com Bubble” at Princeton University, so naturally I felt the compulsion to dive into the data in search of the patterns underneath it all.

Over the following two months I wrote a research white paper on the “Future of American Sports Investing,” and I titled it Evolution.

This white paper set out to articulate my understanding of the evolving landscape of the burgeoning sports, media, and entertainment asset class.

I didn’t know it at the time, but this exercise would go on to build the foundation of my career as a sports investor and lay the groundwork for what would eventually become this publication, 🧭 At the Center.

It’s now three years later, and I get married tomorrow.

As I step away for a while to marry my bride, I am publishing that paper here exactly as I wrote it.

No edits, no retroactive wisdom. The version of me who wrote this had a thesis, and I want you to meet him on his own terms.

Evolution is a four-part essay series.

Parts I - III are the paper in full, exactly as it was written.

Part IV, when I am back from my honeymoon, is the debrief. Here, I will hold my years of experience up as a mirror to my initial theses, guiding you on where it held up and where it broke.

You will see seeds of my 🧭 At the Center register come through in these writings. Understand that Evolution, at the time of this publication, is 3 years old, and uniquely is the last essay I ever wrote which remains completely untouched by AI.

This essay, Part II, investigates the three American institutions I studied most closely in 2023: the NCAA, the NBA, and the NFL.

Each one is a case study in how a league accrues a kind of power that stops looking like sport and starts looking like the monopoly I described in Part I.

Read these the way I wrote them, as a younger analyst trying to reverse-engineer why these institutions endure, and predict where they might go next.

Class is in session, let’s begin. 📝 📝 📝

🎙️ Check out the latest episodes of our All-In-style sports business riff show Clubhouse with my good friends Brent Peus and Dominyck Bullard

Our first in-person Clubhouse link.

FIFA's Failure; Private Credit's Sports Takeover; NFL Ownership Consortiums; The NCAA's Incentive Problem

FIFA's Fallout; LSU's $100M PE Deal; World Building as Marketing; Immersive Fandom and Fan Cults; Always-On Content Machines; and Amish Softball as a Cultural Moat

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The capitalist society in which we live in, and the tendency by which markets trend towards the specialization of labor in order to operate more efficiently, make it so that amateur leagues seldom remain amateur for long.

History repeats itself, and by looking to sports history, we can properly examine and forecast the future of amateur leagues in the United States.

Looking at the English Premier League (EPL) now, it’s hard to believe that UK football was once an amateur sport.

In 2022, the EPL secured a 3-year broadcasting deal worth $14.2 billion, which was warranted, considering it is the top football league in the world, boasting over 3 billion fans worldwide and over 40,000 spectators per match.

English football has 5-tiers of leagues and carries a promotion / relegation structure, with the Premier League being the top tier. Considering the audience this league commands, it’s no secret why franchise valuations are now in the billions.

In fact, these franchises are set to grow in stride with its ever-increasing international audience, with most of the EPL TV rights coming from foreign broadcasters. But how did this league grow to become the most prominent league in the world’s most famous sport?

By looking at the history of the EPL, we find that it had humble beginnings: a once amateur league turned pro.

With the creation of the English Football League (EFL), professional football traces its roots back to 1888. Before this time, as football began to gain popularity, amateur teams would play one another as a hobby or for exercise.

These teams were typically brought together in a number of ways – churches would play churches, labor unions would play labor unions, or schools would play schools.

In 1863 the first Football Association was formed when eleven London schools and clubs came together at a tavern to establish a single set of rules to administer any football match that were to be played among them. Later in the year, the first-ever English soccer match was played between Barnes FC and Richmond FC.

Over the coming years, with growing popularity, individuals within this English market realized that they could lease out their “pitch” for these amateur teams to play on, in return, the owners of the fields would sell tickets and make money off the matches.

But as all markets do, eventually players – who up until this point remained amateur and were working full-time – realized that there was money to be made as a footballer.

These individuals began to specialize their labor, understanding that good footballers were inherently valuable – winning teams translate to more ticket revenue and thus demands payment for services rendered.

Thus began the professionalization of the English Football League. Over the next 100 years, until the establishment of the EPL in 1992, football slowly became increasingly professionalized as more people quit their jobs to become full-time football players. The World Cup and the Olympics soon captured the attention of the globe, and demand for great football players had never been higher.

During the 1980s, major English clubs had begun to transform into business ventures, applying commercial principles to club administration as a way to maximize revenue.

This commercial imperative led to the top clubs seeking to increase their power and revenue. With a rocky decade for the EFL in the 1980s, the top tier teams (the First Division) realized that there was more money to be made if they banded together and broke away from the EFL.

In 1992, the Premier League was formed, signing a historic 5-year, £304 million broadcasting deal with Sky. Over the last 30 years, the EPL has grown into the top professional football league, attracting top talent, top broadcasting deals, top commercial partnerships, and the largest audience of any sports league in the world.

The capitalist society in which we live in, and the tendency by which markets trend towards the specialization of labor in order to run more efficiently, make it so that amateur leagues, much like English football, seldom remain amateur for long.

In the last two years, we have already begun to see the NCAA, historically an amateur league, professionalize to some degree. Although the NCAA consists of over 40 sports nationwide, because of the unique hold American football has on the American population and the sports economy, NCAA football is ultimately what’s driving all of the professionalization we are seeing within the league.

Beginning in July of 2021, the introduction of NIL and the transfer portal allowed players to openly and legally profit off of their own brand and play. This brought with it a spike in the use of the transfer portal, as players (who are now essentially free agents) realized that they could maximize their earning potential elsewhere, while programs realized that they could now attract top talent by offering these players NIL deals that outpace that of those program’s rivals.

The consequence of this is best displayed by what has happened under Deion Sanders at the University of Colorado: having gone 1-11 in 2022, Coach Prime took over the reins of the program and fully embraced NIL and the transfer portal. The Buffs brought in 80 transfers, shelled out millions in NIL deals to their players, and are now a top ranked program in the nation while Deion is an American hero and icon.

This is what we’ll call the first wave of professionalization within the NCAA. NIL and the transfer portal directly professionalized the league when players started to maximize their earning potential at other programs while simultaneously, programs began to attract top-talent by offering transfers NIL deals that were more lucrative than their rivals. The combination of these two have already completely altered the landscape of college football.

Alongside this, we are currently seeing conference realignment occur on an unprecedented stage in the NCAA. This is directly a consequence of conference’s abilities to secure lucrative broadcasting deals – the revenue from such deals are ultimately funneled down and shared amongst the Universities that make up the conference.

Two years after the introduction of NIL and the transfer portal, where we originally saw players leaving programs to best maximize their earning potential, we are now seeing the same at the program level: programs leaving conferences to best maximize their own earning potential.

The PAC-12 recently dissolved because the conference was unable to land a lucrative broadcasting deal that rivaled that of the Big Ten, Big 12 or SEC. Top programs like USC, UCLA, Colorado and Utah realized that their school’s brand, legacy, and play are now worth hundreds of millions of dollars, meaning that these programs refuse to remain a part of a conference that does not adequately partake in sufficient money creation by securing top-dollar TV deals.

This is what we’ll call the second wave of professionalization within the NCAA. With conference realignment, programs are acting to maximize their University’s earning potential by participating in the revenue sharing of other conferences that have secured billion-dollar broadcasting deals.

But what happens in a few years when top programs like Ohio State and Alabama look around and realize that they are sharing revenue with inferior programs like Northwestern and Vanderbilt?

Looking forward, the third wave of professionalization of the NCAA will be the following – 1) the creation of a “Super League” that is composed of the top programs in the nation, and 2) the unionization of college athletes, via a CBA, that guarantees players a percentage of all future generated revenues.

This Super League would be able to sign the most lucrative TV deal in NCAA history, and the NCAA could then exist in a promotion / relegation structure (modeled after European football), with each lower conference signing slightly less valuable TV deals.

Games that decide promotion / relegation would suddenly become the most watched sports broadcasts throughout the season, and teams would have a real incentive to be promoted in order to get a share of the best league’s broadcasting revenue.

And for those who argue that this would create a “rich get richer” structure, take Luton Town FC: 9 years ago the club was in the 5th tier of English football. This year? They just got promoted to the English Premier League.

At the same time, unionized college athletes would essentially become salaried employees, earning a share of all the revenue that they bring in. This completely professionalizes the NCAA.

The fact that there are only 5 players on a basketball court at any given time extends NBA players an outsized voice and influence which warrants adequate representation. Unlike the NFL, MLB or NHL, where teams have at least 9 players on the field at once, the atmosphere around the NBA is uniquely player-centric.

By looking at the history of the NBA, we find clearly that given this dynamic, the league developed as a labor organization and thus carries a unique relationship between the corporate office and its players.

NBA players unionized in 1954, just 9 years into the existence of the league. Their union, the National Basketball Players Associate (NBPA), at its founding was the oldest trade union for a professional sports league in the USA.

With the introduction of a collective bargaining agreement (CBA) 10 years later, the NBPA began by seeking basic improvements, such as being paid for promotional activities, limiting the number of games per season, and having player’s moving expenses covered if they were traded.

Eventually, the NBPA was able to secure per diem payments and covered travel expenses. These gains in working conditions slowly incentivized more athletes to join the NBA, and by the Bill Russell era of the 1960’s, pension plans were the next item up for negotiation.

By 1983, the NBA introduced the “salary cap,” a historic agreement, which paved the way for other professional leagues in the USA to adopt the salary cap as a best practice.

What we have seen throughout the history of the NBA are player strikes and/or NBA lockouts occur if the demands of the NBPA are not met. This first occurred the night of the All-Star game in 1964, a move that ended negotiations over player pensions.

As CBA negotiations reopened ahead of the 1998-99 season, a 204-day lockout ensued and wiped out 464 regular-season games, after which the NBA and NBPA agreed to new terms and a 50-game season.

The moment the new CBA expired ahead of the 2011-12 season, another lockout occurred, this time limiting the regular-season to 66 games. While other professional leagues have gone through lockouts before, the NBPA has a unique history with the depth and breadth of these lockout occurrences.

It should be no surprise that the league that developed as a labor organization has, on multiple occasions, bent the knee to its labor union. Not only has the NBPA been the most active players union, they have also secured the best terms for whom they represent.

In 2018, the NBPA unveiled its new marketing and licensing arm, THINK450, in which the union controls the intellectual property rights of the 450 players as a group off the court, leading the way for brand partnerships and sponsorship opportunities.

In 2020, when the COVID pandemic made players weary of playing a season, the NBPA was instrumental in negotiating the 72-game bubble season. That brings us to now, where in April of 2023 the NBA and its players association negotiated the newest CBA, set to expire after the 2029 season.

The newest iteration of the NBPA’s CBA gives players a substantial amount of rights when compared to other professional leagues. Players and owners in the Big 4 leagues split all revenues essentially 50-50, the player’s 50% is distributed throughout the league and trickles down to the salary cap.

But the size of the NBA means higher paydays and a growing salary cap – NFL players split their 50% revenue share amongst almost 2,000 players, compared to just 450 in the NBA. But beyond this, the new 2023 CBA now guarantees NBA player’s not only that 50% of revenues, but also 60.5% of the amount by which revenues exceed the forecasts.

Moreover, in a major concession by the league, licensing revenue, which is projected to come in at around $160 million next season, now counts as basketball-related income. This allows players to share in that revenue, a move that will ultimately grow each team’s salary cap by over $2 million.

The NBA salary cap jumped 75% from 2015-20, and under the new CBA agreement, that figure is only likely to grow.

In a major move, the NBA is now allowing players to own minority shares in NBA and WNBA teams as LPs through private equity firms, becoming the only league that allows its employee base to own equity in their league.

Other negotiations by the NBPA have made it so that veteran contract extensions have been expanded from a minimum of 120% of their previous salary to as much as 140%, and the fact that the NBA uses a “soft cap” as opposed to the NFL’s “hard cap” means that many teams exceed the salary cap under a variety of circumstances. Most importantly, the vast majority of all NBA contracts come in the form of guaranteed money, a stark difference from the likes of other leagues.

Ultimately, the NBA has a unique relationship between the corporate office and players. In other leagues, contracts often include fewer guarantees, longer terms, more complex financial structures, franchise tags and restricted free agency.

The combination of these factors means that players in other leagues typically have less control and flexibility when it comes to choosing their next team compared to NBA players.

The longer average career span in the NBA when compared to other leagues clearly impacts negotiations related to player benefits, pensions, and long-term healthcare.

The history of the NBA developing as a labor organization, and the unique structures that have been put into place by the 2023 CBA equates to more money, more rights, and more authority for the players.

Taking a step back from the unique relationship between the NBA and its players, in recent years, we have seen a shift in the roads to which top talent gets to the NBA.

In 2006, the NBA stopped drafting elite prospects straight out of high school. This ban immediately changed the relationship between top talent and the NCAA; the period of the “one and done” was set into motion.

Rather than attend college for the sake of a free education and developmental experience, these players would reluctantly join a top program like Kentucky or Duke, stay for one year, and then declare for the NBA draft as soon as they could. Until the introduction of NIL in 2021, these prospects were never able to profit off of their own skill and brand in college, while the Universities and NCAA could.

This, in conjunction with the NCAA President’s adamant opposition to the one and done, repeatedly saying that he doesn't believe players should come to college if only to use it as a pit stop toward being in the NBA, has led to the rise of “feeder leagues.”

These feeder leagues are either overseas professional basketball leagues, or more recently, domestic leagues such as the NBA G-League or the Overtime Elite league (OTE) that offer top high school prospects an alternative to the NCAA. In these leagues, players are salaried professionals and are able to develop their skills in a way that is starkly different from the collegiate environment.

With the rise of these feeder leagues, we are seeing an increasing number of NBA prospects forgo their NCAA eligibility in favor of playing professionally elsewhere. In 2020, the world saw Lamelo Ball join the Illawarra Hawks in the Australian NBL, a year later becoming the third overall pick and winning Rookie of the Year in 2021.

Proof that this was not a unique case, perhaps the most compelling evidence for the increasing popularity and credibility of these feeder leagues comes from the most recent NBA draft, where four out of the top five draft picks came from a feeder league.

Victor Wembanyama, regarded by many as the greatest basketball prospect since LeBron James, played in France’s Pro A league before being selected first overall in the 2023 draft. This is someone who could have played in the NCAA and made millions in NIL but decided not to.

Third overall pick, Scoot Henderson, elected to play for the NBA’s G-League Ignite team, while fourth and fifth overall picks, twin brothers Amen and Ausar Thomsen, opted to play in the newest feeder league to pop up, OTE.

These four players, the top prospects in the world, proved that real professional talent can come from feeder leagues, ultimately undermining the importance and necessity of the legacy institution at play, the NCAA.

Beyond this, it is important to remember that because the NBA is the best league with respect to other professional basketball leagues around the globe, the NBA has a de facto monopoly on all professional talent.

The best prospects from all across the globe flock to the USA in order to play for the NBA, effectively turning all international leagues into feeder leagues. The NBA has the most talent, meaning that the competitive landscape is unmatched; more talent translates to more excitement and thus, more fans, more sales, and more revenue.

The history of the NBA’s development as a labor organization, and the strength of the NBA’s player union, further drives international talent to the States because these elite players from overseas receive a better salary, benefits, and most importantly, increase their chances of becoming superstars and capitalizing off of their brand and fame — just look at Luca Doncic or Giannis Antehekumpo.

As we already understand, sports have a unique monopoly over American culture and the American psyche – this dynamic is no better represented by the relationship between the NFL and the public.

Being the most popular sport in the world’s richest nation, the NFL has grown to become the most lucrative sports league in the world, bringing in over $19 billion in annual revenue.

The league recently signed 10 years worth of media rights contracts that total $113 billion, which was warranted, considering that 20 million fans attended an NFL game in the 2022-23 season and 115 million people watched the 2023 Super Bowl alone.

But this unique hold that the NFL has over the nation has significantly changed the way that the league has developed.

Contrasting sharply to the history of the NBA, who developed as a players-first labor organization, the NFL has developed its league as a corporate organization.

This corporate entity has grown to one of such prominence that the NFL has been able to exert significant corporate power over 1) their players, 2) the government, and 3) other corporations.

The nature of the game of American football, along with the NFL’s incredible wealth, allows for the league to operate with significant corporate control over their players.

With 22 total players on the field at once, while game day rosters now have 55 players per team, it is not the players that have historically had the power, but the NFL.

Because NFL players have more injuries and shorter careers, NFL franchises are able to negotiate less guaranteed money in their player’s contracts and less flexibility in free agency.

Further, because the NFL is the most lucrative league in the world, and NFL players would never be able to make the kind of money they do in other leagues, players are forced to be willing subjects to this power, playing until their last leg, in order to maximize their earning potential.

With a stronger team-centric focus than the NBA, NFL players take a backseat to the success of the franchise.

For example, Saquon Barkley, the superstar running back for the New York Giants, recently signed a 1-year contract worth $11 million in July of 2023. Chasing after a multi-year contract with a franchise tag, aiming to be paid what he’s worth, Barkley had to settle for a one-year extension.

Barkley could have protested, sat out from training camp or even the season, but he didn’t. Why? Once the franchise tag deadline passed on July 17, signing the extension revealed that all of Barkley’s leverage had gone out the window once a long-term deal was no longer on the table.

Running backs, who usually have the shortest careers due to high injury rates, have been protesting their under-compensation for years to no avail; NFL franchises continue to exert their corporate power over these players because they have no alternative.

Joe Mixon, running back for the Cincinnati Bengals, recently took a 50% pay cut to avoid being released by the team, while many executives believe that even if Barkley has another great season, his value likely decreases in 2024 because he's a year older with more wear and tear on his body.

The nature of the game of football and the incredible wealth of the NFL makes it so that the league has significant corporate control over their players, but how did this corporate power grow to such magnitude?

The history of the NFL as an entity wielding significant corporate power dates back to the 1960’s.

When a court ruled in 1961 that NFL teams could not negotiate broadcasting rights as a group, citing antitrust laws against monopolization, NFL Commissioner Pete Rozelle got a New York congressman, Emanuel Cellar, who chaired the House Judiciary Subcommittee on Anti-Trust and Monopoly, to introduce what’s become known as the Sports Broadcasting Act of 1961.

This law provided the NFL with a limited antitrust exemption, allowing teams to pool their efforts for the sake of negotiating TV deals; it is from this law upon which the NFL would build an empire. Once President Kennedy signed the legislation, a $4.65 million broadcasting deal with CBS was shortly thereafter executed.

While the MLB, NHL and NBA all carry the same antitrust exemption from this act as well, the NFL has grown to receive outsized benefits because the NFL exclusively and collectively sells all its TV rights through monopoly pooling, and then distributes those revenues to teams equally. Over the years, this corporate structure, accelerated by ever-increasing broadcasting deals, led to explosive growth for the NFL’s franchise valuations and bottom line.

At this point in history, football had already grown to become the second most popular sport in America behind baseball, whose unified professional league had been operating since 1901. Recognizing the commercial potential that a unified professional football league carried, the AFL and NFL, who were competing leagues at the time, merged. This merger was met with anti-trust lawsuits, the efforts of which were ultimately unsuccessful, as Congressmen whose states had NFL teams knew that their economies would significantly benefit from the merger and expansion of professional football.

The antitrust exemptions that the NFL received allowed for such singular NFL successes such as Monday and Thursday Night Football, and as recently as the 2023 season, an all new Black Friday game broadcasted by Amazon Prime Video.

Because of the amount of money the NFL brings in, the legal structures America has created around the NFL is starkly different to every other league. A consequence of this is the amount of taxpayer dollars that NFL teams are able to secure for funding future stadium construction.

The Buffalo Bills are building a new $1.4 billion dollar stadium, $850 million of which comes from public funding: $600 million from the state of New York, and $250 million from Erie County. The Tennessee Titans are building a state of the art indoor stadium costing $2.1 billion, $1.26 billion of which stems from public funding: this is the single most taxpayer money spent towards a US stadium ever.

Coincidentally, franchises understand that they see their valuations increase following the construction of new stadiums – once among the least valuable franchises in the NFL, after securing $750 million in taxpayer funding for a new stadium in Las Vegas, the Raiders catapulted from a $1.4 billion valuation in 2015 to more than $4 billion today.

Cities that have NFL teams know that shelling out hundreds of millions of dollars in taxpayer money to further the success of their franchise pays off economically. In no other Big 4 league do we see corporate power be exerted with such grandeur.

The last avenue in which the NFL is able to exert its corporate control is over other corporations.

Broadcasters, drink companies, merchandisers, and online sports bettors are heavily reliant upon the NFL in order to grow their own businesses. The NFL has 37 non-broadcasting title sponsors for the 2023 season, estimated to bring in close to $3 billion this year.

PepsiCo recently renewed their sponsorship rights with the NFL for an undisclosed amount, certainly one that surpassed their previous 10-year, $2 billion agreement. Their subsidiary, Gatorade, has been the “official sports drink of the NFL” since 1983, a sponsorship that has grown the company to 80% market share and $2 billion in annual revenue.

Anheuser-Busch and the NFL renewed their partnership in December 2021, covering beer and hard seltzer rights, for more than $250 million per year. Being the “official drink of the NFL” since 1989 – exclusively selling Bud Light at concessions and advertising in commercial slots – has certainly helped propel Anheuser-Busch to a near $100 billion market capitalization.

For clothing retailers, Nike offered the NFL $1.1 billion over 10-years in 2011 to supply the league’s apparel, having just recently extended that partnership through 2028 for an undisclosed amount. And even though sports betting was only legalized in 2018, by 2021, the NFL’s consumer demand warranted $1 billion over 3-years from sports betting corporations DraftKings, FanDuel and Caesars for sponsorship rights. But this corporate power is exhibited nowhere more clearly than with the relationship between the NFL and its media rights providers.

Legacy broadcasters like ABC, NBC, CBS and FOX, despite waning profits, are forced to pay over $2 billion each for their share of rights to broadcast NFL games. The demand for media rights is so high because the NFL’s audience warrants it.

In 2022, the NFL represented 82 of the top 100 most-watched US TV broadcasts, including 23 of the top 25. Over 50 million people tuned into each of the 2023 Conference Championship games, while 115 million people watched the Super Bowl.

The size and scale of revenue that these media corporations can charge advertisers for slots in their NFL broadcasts are what is driving the overall bottom line of their business. With the introduction of big tech and streaming services into sports broadcasting – Amazon paying $1 billion for Thursday Night Football and a Black Friday game, YouTube TV paying $2 billion for the rights to NFL Sunday Ticket, Apple TV+ bidding the NFL after securing streaming rights for the MLS – the NFL is only increasing their leverage and corporate control over legacy broadcasters.

Forced to pay higher and higher bids for media rights that they need in order to remain in business, media companies have officially bent the knee to the corporate power of the NFL.

There is a unique power that the NFL has over American life, resulting in an outsized cultural influence that is reflected in the strength of the league’s bottom line. The depth and breadth of control the league has over the American population, and thus other corporations, is unparalleled.

By developing their league as a corporate entity rather than a labor organization, the NFL has monopolized the world’s most lucrative sports market and grown into an empire.

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