November 4, 2022

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Happy Friday!

This is the Pro Monthly Update. We’re bringing the top 10 deals from October, key earnings releases, and One Big Thing about the arrival of the FIFA World Cup in Qatar.

If you have questions, comments, or suggestions, contact me on Twitter @Ronenain.

Pro October 2022 Update

Credit: FIFA

Reports This Month

  • How Apple Uses Sports to Pull You Into Their Subscriptions Ecosystem
  • Inside the Growing Alliance Between American Private Equity and European Sports
  • How VR-Enabled Fitness Goes Mainstream
  • How the U.S. Got A New Pro Cricket League

One Big Thing

Soccer is the most popular sport in the world, and the FIFA World Cup — considered by many the pinnacle of global tournaments — captures the attention of most soccer fans once every four years. 

It has the highest awareness of any sporting event, and over 5 billion people from more than 180 nations are expected to tune in from Nov. 20 through Dec. 18.

Ticket sales have already reached over 2.9 million, and around 1.7 million people are expected to attend throughout — and the country will have around 500,000 visitors during some of the busiest days.

It’s going to be expensive, too: According to fintech research firm Conotoxia, the cheapest, most basic 10-day trip for the group stage for two American citizens would cost $6,500 — making it the most expensive World Cup yet.

But Qatar’s preparations for the World Cup have been dogged by controversy, from the original bidding process to several alarming recent developments, all of which have contributed to a decidedly negative public reception thus far.

  • FIFA was accused of bribery upon winning the hosting rights for 2022. 
  • Since winning the bid, Qatar has racked up multiple public concerns over tracking apps, lack of infrastructure, suboptimal security standards, insufficient accommodation, and disregard for the human rights of LGBT people, migrant workers, and others.
  • Early trial runs at stadiums have generated complaints about regulations and limitations surrounding alcohol consumption, celebrations, and other fan behavior.

The timing for all this turbulence is less than ideal, as current geopolitical and macroeconomic environments have created worldwide financial instability and political uncertainty. The consequences and third-order effects might culminate in a different live experience than previous editions.

Qatar 2022 will be one of the most dramatic World Cups in history — no matter what happens on the pitch.

An Unfamiliar Experience

Even though the World Cup’s popularity and relative scarcity make it a highly appealing product and an enticing status symbol, many fans may feel discouraged from going to Qatar — resulting in a much lower draw than the 3.03 million who attended the 2018 FIFA World Cup in another controversial nation, Russia.

From the perspective of traditional, Western, more liberal sports fans, the abovementioned obstacles could be problematic, and some may even have political or personal reasons to boycott the tournament.

That atmosphere raises the entry barrier, limiting the types of fans that will be able to attend. 

“Some reports estimate that 3,000 British people will attend Qatar, but there were 15,000 in Russia in 2018 — that has a profound effect on the crowd, as it will probably look and feel different,” explained Simon Chadwick, Professor of Sport and Geopolitical Economy at SKEMA Business School.

And compared to previous tournaments, where people hung out in fan zones and at local parties, Qatar’s off-field experience may be less enjoyable:

  • Changes in the mobility of the crowds generated by high accommodation prices in Qatar will have attendees spending more time commuting and less on the premises.
  • Drinking and partying restrictions diminish the nightlife appeal, pushing consumers to be less active during their visit or far less interested in attending.

Nevertheless, Doha’s stadiums and hotels are still expected to be filled.

The World Cup Consumer

There are some insights we can use to construct a proxy of your average World Cup attendee.

  • According to Nielsen, 63% of all soccer fans worldwide are males, and 37% are females.
  • According to Global Fan Insights from The Football Collective, 66% of millennial soccer fans are interested in attending Qatar — the most of any generation. 
  • According to FIFA, international fans from Saudi Arabia, the U.S., Mexico, the UAE, France, England, Argentina, Germany, and Brazil are leading ticket buyers.

“The demo attending Qatar is also likely to be associated with a corporate entity invested in the spectacle or the outcomes of the matches,” said Elias Blahacek: Marketing and Investor Relations Manager at Playmaker Capital.

Due to the diverse challenges for its live consumption, we can expect diminished international demand from a market-share perspective. This World Cup mostly accommodates diehard soccer fans with higher purchase power who live close to the Middle East. 

“High-net-worth individuals from developed economies will probably also contribute heavily to attendance. Coming out of the pandemic, people want to experience live sports, particularly the more glamorous events,” explained David Woodley, President of Playmaker.

The Bright Side

There’s no doubt that Qatar has benefited from sportswashing and has been highly criticized for it — but despite all the controversy surrounding the 2022 World Cup, 73% of internet users plan to follow the tournament, according to data from GWI. 

But once the whistle blows on the first match, people’s attention and the public narrative will likely shift to the competition itself, and fans will be able to enjoy the games.

“The true acid test will happen once the tournament finishes. Will there still be a focus on those concerns, or will we all forget about them? Usually, the critiques dissipate or even disappear when the circus leaves town,” said Chadwick.

Ultimately, this World Cup is an opportunity for Qatar to establish a compelling image of its culture and the value it can bring to the world. The question is whether the country’s restrictive policies and the tournament’s high-profile mishaps will overshadow it all. 

Deal Tracker

Deal Tracker

Here are 10 of the most notable deals from October:

  • Fitness equipment startup Katalyst, which is developing an electro-muscle stimulation suit, raised $26 million in funding led by Stripe,  Incisive Ventures, and Unlock Venture Partners.
  • Horizon Blockchain Games raised $40 million in Series A funding co-led by Brevan Howard Digital and Morgan Creek Digital.
  • Sports tech startup Golf+ raised $6 million from several athlete investors, including Rory McIlroy and Tom Brady.
  • Qatar Sports Investments has agreed to pay an estimated $88 million for a nearly 22% share in the Portuguese soccer team SC Braga.
  • BlackRock and Promethean Investments invested $150 million in Puttshack, a tech-focused mini-golf establishment.
  • Homa, a firm that develops data-driven mobile gaming solutions, raised $100 million in Series B funding from Quadrille Capital and Headline.
  • Digital biomarker startup Spren raised an $11.3 million seed round with contributions from Eli Manning and Drive by DraftKings.
  • Gaming solutions company GXC created Round Ventures, a $40 million VC fund, to invest in early-stage video-game startups.
  • CoachMePlus, the digital fitness platform that helps coaches work with athletes to achieve their fitness and wellness goals, raised a $1 million round from the Rochester Angel Network and the Buffalo Angels.
  • Odyssey Interactive, an independent game development studio, raised a $19 million Series A round led by Makers Fund.

View the full Deal Tracker.

Earnings Summary

Earnings Summary

Selected earnings calls and results from the past month:

AAPL: Apple reported record fourth-quarter revenue of $90.1 billion — an 8% increase year-over-year — for the period ending Sept. 24.

AMZN: Amazon saw its total sales climb to $127.1 billion in the third quarter, a 14.7% increase 

year-over-year. Net income dropped 9% to $2.87 billion.

CMCSA: Comcast reported a 1.5% year-over-year decline in third-quarter revenue to $29.8 billion and a net loss of $4.6 billion, compared to $4 billion in net income the year prior.

COLM: Columbia Sportswear reported record third-quarter revenue behind double-digit growth in profits, posting $955 million in net sales in Q3 2022, a 19% increase year-over-year.

MSGS: Madison Square Garden Sports Corp. saw its revenue rise 28% year-over-year to $24.1 million in its fiscal first quarter ending Sept. 30. 

NKE: Nike reported a 4% increase in first-quarter revenue to $12.69 billion, beating analysts’ estimates of $12.27 billion.

PTON: Peloton, the connected fitness giant, generated $616.5 million in revenue in fiscal Q1 2023, down from $805 million for the same period the year prior. 

UA: Under Armour generated $1.57 billion in revenue in fiscal Q2 2023, a 2% increase year-over-year, surpassing Wall Street estimates of $1.55 billion. 

WWE: World Wrestling Entertainment, Inc. posted $304.6 million in revenue in Q3, a 19% increase year-over-year.

Closing

Closing

Besides being the first time it will happen in the Middle East, the FIFA World Cup in Qatar is unique in so many ways:

  • It’s the last time the tournament will feature 32 teams, as the next edition has been expanded to a 48-team competition for the 2026 edition in the U.S., Canada, and Mexico.
  • Due to extreme weather temperatures throughout the year in Qatar, this will be the first time the event will happen during the winter, overlapping part of the holiday season.
  • It’s also the first time in history that female referees will officiate matches during the tournament.

Additionally, given that sports betting legislation was in its beginning stages for the 2018 World Cup in Russia, this will be the first time in history that soccer fans can bet legally in 32 states in the U.S. 

Due to the size and popularity of the tournament, the World Cup could become a massive catalyst to push the gambling industry into mainstream adoption and attract the casual sports bettor — and it seems like it couldn’t come at a better time.

DraftKings’ stock plunged Friday over 25% after revealing a significant growth slowdown in active users during the last quarter — so the World Cup might be able to help turn things around in a turbulent time for these companies.

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Written by Ronen Ainbinder
Edited by Brian Krikorian

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