SBJ/October 17-23, 2011/Leagues and Governing Bodies

NFL plans to start venture capital fund

The NFL is planning to form a more than $32 million venture capital fund to invest in startup media, technology and entertainment businesses that tie into football.

Owners were briefed on the concept last week at their meeting in Houston. The subject is expected to come up for a vote at the owners’ next gathering, possibly in December.

The NFL would be the first league to pool owners’ money to invest in outside businesses.

“We are in conversations with venture capital firms,” said Robert Kraft, the New England Patriots owner, who described ownership as committed to moving forward. “We can drive new technologies and hopefully invest in our fans.”

Each team would be called on to set aside a sum of more than $1 million, a league source said, to be available when the NFL is ready to invest. The cash would be the owners’; it would not be taken out of money shared with players.

However, the NFL Players Association might be given the opportunity to invest alongside the league, the league source said.

“Our assumption is we would work in tandem with other venture capital funds,” the source said. “This is really an outgrowth of trying to grow revenues.”

Venture capital fund representatives might be invited to make presentations at the next league meeting. Representatives might also be asked to join an advisory board the league may form.

While no other sports league is believed to have its own venture capital fund, there are examples of such funds elsewhere in the corporate world, such as with Comcast, Intel and Adobe, the league source said.

If the NFL indeed becomes an investor in sports-related media and technology, it would join a growing number of investment firms that have targeted sports, including Providence Equity and Falconhead Capital. However, those firms tend to take large stakes in existing companies or buy them outright. The NFL is looking at what might be called “angel investing”: getting in at the ground floor of companies as they launch.

It’s unclear precisely what the NFL might invest in, though the array of technology and media companies tied to sports has grown greatly in recent years. The league source even pointed to Twitter as something the NFL four years ago could have invested in because of its reach into sports.

The initiative is commissioner- and owner-led and spearheaded by Neil Glat, an NFL senior vice president, and the corporate development team he leads.

The investing decisions would be handled in-house, though the idea is to work alongside other venture capital firms.

The more than $30 million the league would deploy is not considered a huge sum in the investment world. However, the league source said if the league found a startup it liked that needed more funding, the owners could be asked to put more money in.

The new initiative would not have occurred without the new collective-bargaining agreement, the league source said. The new CBA gives the owners a greater share of revenue than the old deal.

Insiders at the league often talk about watching brands like ESPN grow on the back of the league. In part, the potential new fund is a chance to capitalize on outside businesses that may profit from the NFL.
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