Billionaires Want to Own Your Kid's Little League Team
And why that's opened a Wealth Window most investors just don't see ...
It was late August 2016, and Joey, my wife RK and I were in the San Francisco Airport, on our way back from our Muir Woods vacation, when the local rec council called and drafted me to run one of its 9-10 Fall baseball teams.
I’d coached before — I ran my sister Carol Ann’s tournament-league softball team. But that was in 1982. I hadn’t coached since. But I loved coaching, had always wanted to return to it, and immediately said “yes.”
It was a great experience. The kids and parents were great. Our team was really good — especially our pitchers. Heck, I even got to coach a real no-hitter.
In our area, the Fall league is aimed at helping kids build their skills for the year to come, and tends to be for more “advanced” players.
Initially, Joey struggled.
At the plate.
A lot.
After one practice — after everyone left — he looked up at me with a quavering voice and asked: “Do I even belong here?”
It was one of those “best-of-times/worst-of-times” parenting moments. Coaching your kids in little league (or other rec-council sports) is a parenting rite of passage. But watching your kid struggle is heartbreaking.
“Buddy,” I said, hugging him and saying with all the conviction I could muster, “we will figure this out.”
I worked with Joey … pitched to him … coached him. But I also turned to a professional. There was a local coach I knew of — a true “hitting whisperer” named Raffy Marrero — who runs his own baseball facility near us. Joey and I started going every week — at $65 a visit.
The change was (excuse the cliché) breathtaking.
Coach Raffy played to Joey’s strengths — and rebuilt his swing. Turns out, Joey’s got tremendous bat speed through the hitting zone. He’s not a home run hitter. But he’s got great “gap” power. Raffy saw that immediately, and that’s what we three worked on to refine.
By the time he was 11, Joey was hitting the ball as well as anyone … on our team … across our league. In 2019, when he was 12, our team (which I helped coach) won the league championship. Joey’s hits were key all year — especially in our next-to-last playoff game, against a team ranked higher than us, and the win we needed to get into that championship match.
In the bottom half of the last inning, I watched from the third-base coaching box as Joey — on a 3-2 pitch, with two outs, the bases loaded and our team down two runs — drilled a shot between short and second to tie the game. I screamed so loud and jumped so high that … as the runner from second came to third … I almost forgot to wave him around to score.
Thing was … I knew Joey was going to get that hit. And (as he told me later) so did he.
If I sound like a proud Dad … well, I am. No apologies.
But please understand: This wasn’t a case of me “living through my son.” I knew Joey would never play pro ball … college ball … and perhaps not even high school ball.
In fact, having “aged out” of our local rec council offerings, Joey no longer plays organized baseball — and now runs track and cross-country for his high-school team. However, we do see Coach Raffy every week: For Joey, hammering 200 baseballs is a great stress reliever — and is a great exercise for his running efforts. And Coach Raffy stands as a terrific additional role model for my son.
This is more than just a trip down memory lane.
There are important lessons or reminders — for Joey … for me … and (most important for what we do here) for you — the members of our Stock Picker’s Corner (SPC) family.
For Joey, the lesson was a life-experience one: If you’re willing to do the work, great things can happen. Learning to hit wasn’t the ultimate goal here … not really. The real objective was self-confidence — even self-esteem. I’ve seen that — many times in many ways — in the years that followed.
For me, it’s a reminder of what a special journey this was — one that only lucky fathers get to share with their sons. Like lots of Dads, I coached. And I got to coach my own son. After that surprise fall league request, I coached every spring and fall that followed — until Joey stopped playing.
And like lots of Dads, I paid. My wife and I recently calculated that we spent between $25,000 and $30,000 in those valuable lessons alone.
The memories … the shared time … it’s worth so much more than that.
And that brings me to the final lesson — the one I want to share with you.
You see, the American Dads (and Moms) of the future … well, those folks may not get to create the same memories I did.
The fact is that a wave of change is coming. And it’s a tidal wave of “private-equity” cash that is almost certain to turn American sports upside down.
And I’m talking about American sports at all levels — from kids on the Little League diamond to the pros on the National Football League (NFL) gridiron.
And everything in between.
That’s not hyperbole. It’s the literal truth.
And most folks have no idea what’s coming.
I do. I see the “big picture.” I understand that change brings opportunity. I believe that if you find the best storylines, you’ll find the best stocks. And this storyline that we already were following — that our SPC Premium family members are already making money from — just got stronger.
Call it “Private Equity’s Sports Tidal Wave.” And I’ll tell you about it in two installments.
Here in today’s installment, I’ll share the all-important lowdown. There are two powerful stories unfolding right now that most folks see as separate.
But it’s really one story.
It makes for one heck of a narrative. And it’s creating one heck of a moneymaking opportunity — supercharging a storyline we’ve already been following here.
A PRIVATE POOL OF CASH
I said there are two stories … headlines that most folks see as two different stories.
In the first of those two, the NFL has now agreed to let private equity firms take team stakes as high as 10%. This is a big deal, with many facets. And I’ll circle back to that one next time.
That brings me to the second story — a Bloomberg investigation with this headline: “Private Equity Targets $30 Billion Youth Sports Industry.”
If you’re an American sports fan or an American investor (or both), this is actually an even bigger deal than private equity’s NFL foray.
By going after youth sports, private equity is getting in on the “ground floor” of U.S. sports. That gives it a grip that potentially makes it a place in every facet of sporting America.
In private equity (PE), we’re talking about investment partnerships that controlled $8.2 trillion last year, says consultant McKinsey & Co. For context, that’s what you’d have if you combined the economies of Japan ($4.2 trillion) and Germany ($4.01 trillion).
In short, that’s not tiny.
I’m super-simplifying this on purpose, but we’re really talking about big pools of cash that are used to buy companies or related assets — usually with a strategy in which the PE players add value by providing professional management, or by stringing together a series of similar small companies to create a big new one.
The ultimate goal is to eventually sell those firms — to other big suitors, or to investors via initial public offerings (IPOs). Many of the most powerful PE players are private. That means they’re not publicly traded, a fact that gives them the ability to maneuver out of the spotlight.
That’s not saying it’s all bad: One of our favorite stocks — one we’ve written about many times — is a PE firm.
But with the dollars they control comes considerable clout. Market-shaping clout. For youth sports, that means a way of life that we all knew and were comfortable with could soon be no more.
“Private equity is coming for youth sports,” reporter Ira Boudway wrote in that Bloomberg youth sports story I referenced. “The sandlot era when kids played sports unsupervised is long gone. And the days of parent-coached recreational leagues are fast receding.”
I’m a product of both — of the sandlots and the rec leagues. As a boy who grew up in the Pittsburgh suburb called Murrysville, I was a hardcore “sandlot” player. While rooting for Willie Stargell and Roberto Clemente, and playing Little League games two evenings a week during the spring, we played semi-organized daily ballgames from March to November. Like the kids in the eponymous movie, We biked around our hilltop community looking for pickup sandlot games.
A $50 BILLION BULLSEYE
A couple summers ago, I took Joey back there, sharing those memories as we stood together on the field I last played on in 1976.
And — as my opening tale recounted — I coached.
As pickup games fade to history, parents are abdicating rec leagues for more organized paid “travel” leagues. And pro-stye camps — like the Cooperstown All Star Village, which last year hosted a 763-team tournament with 12,000 players (at $1,300 each). Before concessions or other add-ons, CASV brings in $15 million a year, says the Bloomberg report.
In 2021, David Blitzer and Josh Harris — pro investors with pro sports ties — spent $116 million for an 80% share of CASV. According to Boudway, that launched the duo onto a buying spree of more than a dozen companies with ties to baseball, softball, flag football and basketball. They recently formed Unrivaled Sports LLC to manage the companies, which operate across 30 states.
And there are dozens of “Unrivaled” clones being formed. Those clones are buying companies that help with youth sports in all sorts of ways — from equipment to payment processing to equipment. And they’re even buying coaching camps and clinics – the higher-volume, more programmed versions of our revered Coach Raffy in baseball, softball, football, hockey and more.
In the vernacular of combat, it’s a “target-rich environment.” American parents spend $30 billion a year on their kids’ sports activities, the nonprofit Aspen Institute said in 2022. That could actually be low: U.S. youth sports outlays could be running at a $50 billion rate now, Aspen says.
By owning hefty slices of that, these private equity folks are buying “call options” on America’s sporting future.
We’re talking about Marketing Strategy 101 here: Get your hooks into customers when they are kids – either directly or through their parents – and you’ve got yourself a customer for life.
During my career as a reporter, I’ve seen this over and over. Detroit carmakers like Ford started doing this decades ago by licensing their “badges” to companies like Hot Wheels maker Mattel or model-car-maker Revell. Heck, when I was a business reporter covering Eastman Kodak Co. KODK 0.00%↑ and Xerox Corp. XRX 0.00%↑ for Gannett, the company cut a deal with (if I remember right) Fisher Price to market a toy office copier.
And now the private-equity folks like Harris are following exactly this strategy — with sports.
Just these two guys own, or have stakes in, the NBA Philadelphia 76ers, the NHL New Jersey Blue Devils, the MLB Cleveland Guardians and the NFL Washington Commanders — and other pro teams or pro leagues.
“Now they’re bringing their big-league expertise and very deep pockets to an industry that’s traditionally been left to mom-and-pop operators,” says Bloomberg’s Boudway.
Those heavy-hitting PE investors will end up owning sports in America — or at least a hefty slice of it — from bottom to top, from youth to adult, from rec to pro … not to mention the fans of it all.
In doing so, they’ll alter one key element of investing — the supply/demand equation that you folks have repeatedly seen us refer to as the “Econ 101” of investing.
And by altering that Econ 101 equation, they’ll also create one heck of a profit window for Wealth Builders like you and me.
Most investors aren’t “connecting the dots.” Not yet. Not like we are.
And in Part II of this report, I’ll show you why this will happen. And I’ll show you how you can cash in.
See you then;
