0:05

Welcome to the Fear and Greed Business Interview. I'm

0:07

Sean Aylmer. Regular listeners to the show

0:09

would know we love talking about unusual

0:12

and alternative investments. Stefan

0:14

Von Imhof, the co- founder of alternative

0:16

investing community fund Alts. co, A-

0:19

L- T- S. co, has

0:21

talked us through investing in art, vinyl

0:23

records, tequila, domain names, watches,

0:26

even water, I think. Today,

0:28

we're talking about investing in sporting

0:30

teams. Obviously, this is general information

0:32

only and you should always seek professional advice before making

0:35

investment decisions. Stefan, welcome back to

0:37

Fear and Greed.

0:38

Great to be here. Thank you for having me.

0:40

Now, one that we're going to start

0:42

with, I know is one that you

0:44

guys are interested in. You've

0:47

been in New Zealand recently. There's

0:49

talks about a new NRL

0:52

team, National Rugby League team there.

0:54

Take me through the thinking

0:57

behind that and investing in a sport

0:59

like that.

1:01

So, if there's one thing we've learned in

1:03

our time studying alternative markets

1:06

for the past four years now, it's

1:08

that there's one alternative investment

1:10

that kind of stands above the rest. It's the one

1:12

that everyone tries to get into, and it's really, really

1:14

difficult. And it's pro sports

1:17

teams. Pro sports teams

1:19

are, I cannot stress this enough, some

1:21

of the world's most unfairly

1:23

lucrative alternative investments, but

1:25

they're also some of the toughest

1:27

ones to get into. You typically

1:31

need tens of millions of dollars to even

1:33

get a seat at the table. You need connections

1:35

galore. So, it's unlikely

1:37

that most people are going to have the opportunity to

1:39

invest in, let's say, a gridiron

1:41

NFL team or a baseball team or something

1:44

like that. But as

1:46

far as sports investing goes, rugby

1:48

is one that we find especially

1:51

compelling. It's hugely

1:54

popular here in Australia, UK,

1:56

and especially in New Zealand. But

1:58

here's the thing, despite all of the love

2:00

for the sport, there's 17 NRL

2:02

teams, National Rugby League teams today,

2:05

and only one of them is actually in New Zealand, and

2:07

it's on the North Island. So,

2:09

there's a special group that's bidding to create

2:12

the NRL's 18th team, and

2:15

it's going to be on the South Island. The first

2:17

NRL team on the South Island. So, we have

2:19

decided to put our money where our mouth is and invest

2:21

with that group.

2:23

So, what is it about sporting

2:25

teams, be it the one that you are talking

2:27

about, or, I mean,

2:29

the world over, football, as in soccer,

2:31

is hugely popular and very difficult

2:34

to get into. Obviously, the American sporting teams are the

2:36

same. What is it that

2:38

is such an investment opportunity? Because in some

2:40

ways it's a bit irrational, sport, I

2:43

think.

2:45

It is a little irrational. Look, not all sports

2:47

are created equal. Some are much

2:49

more unfairly lucrative than others.

2:52

I mean, NFL, for example,

2:54

is just basically taking over the world.

2:56

As an NFL fan, I'm totally okay with this,

2:58

but that's very different than

3:01

maybe something like a pickleball team, which you could

3:03

probably invest in with like $ 30,

3:05

except it's not going to go anywhere. Other

3:08

teams, other sports leagues rather,

3:10

are actually protected by law. So, like in America,

3:13

Major League Baseball, you're

3:15

legally not allowed to create another league, a

3:17

baseball league in America. It's in the law.

3:19

Right? So, there's some special protections,

3:22

but what we like about rugby is-

3:24

Stefan, I'm going to jump in there. So, it's Rugby League

3:26

we're talking about here as opposed to Rugby Union?

3:29

That's correct, yeah.

3:30

Yep. Yep. Yep. Sorry.

3:31

Yeah, absolutely. And by the way, I've learned the difference,

3:34

myself, only in the past year, but

3:37

I think what's interesting is that the difference between

3:39

rugby's popularity and the actual

3:41

revenue. Rugby has a

3:44

ton of viewers, but

3:46

it has a disproportionately low amount

3:48

of sponsorship revenue today. And

3:50

that arbitrage, we believe, opportunity

3:53

exists for the time

3:55

being. It will close at some point.

3:58

And so, that's why we like

4:00

it. We feel that rugby is basically

4:02

undervalued compared

4:04

to how popular it actually is.

4:06

Okay. Who buys

4:09

these sorts of teams? I know that in

4:12

the case of EPL, for

4:14

example, in England, and certainly in

4:16

US sports, often it's an owner,

4:18

it's an extremely rich person who owns

4:21

the team. Is that normally

4:23

the way people invest or is it more of a

4:25

private equity investment? How do they

4:27

run? Who are the investors?

4:29

It's funny, it's changing right before our

4:31

eyes. I mean, sports teams

4:33

used to get passed down from family to family

4:36

and ultra, ultra, ultra- high net worth investors

4:39

to each other, basically. That has definitely

4:41

started to change. PE has been a huge part

4:43

of that. PE has made a lot

4:45

of moves. You may have heard in cricket,

4:47

actually, especially over in India

4:49

with the IPL. The big win

4:52

that PE had was they bought the

4:54

team from Rajasthan, I forget the name of the

4:56

team, but they bought the team from Rajasthan

4:58

and they won in their first year. They

5:01

won the whole thing.

5:02

Oh, wow.

5:02

So, their investment went up like 26X

5:05

overnight. So, PE is starting

5:07

to find its way into sports teams

5:09

over in Europe with football. Actually, the

5:12

NFL has loosened the rules around PE

5:14

now as well. With this particular

5:16

bid, it's pretty groundswell.

5:18

There's a mix of different investors. There's some Hollywood

5:21

folks, we can't name who just yet,

5:23

that are getting in, but there's

5:25

a lot of folks from our community. There's a lot of just

5:27

rugby fans who are well off, who want to bring

5:30

a team to life on the South Island, and we

5:33

think they've got a pretty good shot.

5:36

To be clear, there's two other places that are

5:38

bidding to be the 18th team as well. One

5:41

is out in Perth, and the other is

5:43

up in Papua New Guinea. So,

5:45

it's basically between Perth, Papua New Guinea

5:47

and Christchurch, South Island New Zealand. One

5:50

of those three teams will be the 18th

5:52

NRL team.

5:54

Stay with me, Stefan. We'll be back in a minute. I

6:03

am speaking to Stefan von Imhof, co-

6:05

founder of alternative investing community

6:07

fund Alts. co. Okay.

6:11

So, where do you get your money back

6:13

from, Stefan? So, I get what you're doing,

6:17

how do you get your money back?

6:19

So, really, it's through

6:21

sponsorship revenue. Right? And so,

6:24

this is again, where we feel that there's a

6:26

disconnect between the number

6:28

of eyeballs that rugby has and the

6:30

revenue per eyeball that it has compared

6:32

to other sports. So, that's

6:34

why we think this could be a really good opportunity. But

6:37

yeah, it's basically all about the sponsorship revenue

6:39

and the sponsorship rights. It gets into a very confusing

6:42

world ... The world of media rights and sponsorship

6:44

rights gets pretty intense, outside the

6:46

scope, I think, of this call. But that

6:48

is primarily where you make your money.

6:50

There's also merchandising, there's

6:52

ticket sales, there's licensing. You've

6:55

seen what's happened with the big sports,

6:57

the Major League Baseball sports here in Australia. Every

6:59

time I walk by a cap store, a hat

7:01

store, it's all like New York Yankees, Boston

7:04

Red Sox. They're getting cut of every sale, right?

7:06

So, merchandising can be a huge part of this

7:08

as well. But yeah, primarily

7:10

it's through media rights, sponsorship rights.

7:13

So, the Rajasthan team, I think they're the Rajasthan

7:15

Royals, I think, from memory, the

7:17

fact that PE got into that and they

7:20

bought it, success matters

7:22

then, I presume?

7:24

Yeah. I mean, brand

7:26

matters, but brand is based on success, ultimately.

7:29

I mean, brand can only take you so far. I

7:31

think that some brands have routinely gotten

7:33

lucky with having a great brand without having

7:35

a ton of success. Others have been riding

7:37

their success for a long time, and the brand has held

7:39

the value. But generally speaking,

7:42

yeah, you do want

7:44

and need to do well, as

7:46

you'd imagine.

7:47

Yes.

7:47

Although, I don't think people expect it on day one,

7:49

or season one, or year one. But

7:52

the team behind the South Island bid

7:54

is putting a lot of emphasis on

7:56

the ground- up, so that the training

7:59

programs and the social programs, that's

8:01

a big part of this. I mean, finding supply,

8:03

finding rugby players isn't something

8:05

that just happens on its own. That's something you have to build

8:07

as well. So, part of the funds go to programs like

8:10

that, to really build for the long

8:12

term, and that's another thing I like about this opportunity.

8:15

Okay. So, what are the big risks here?

8:17

One being that they

8:19

give the team to Papua New Guinea or Perth. Obviously,

8:21

that's a big risk, but what else are you talking

8:23

about when you're looking at the downside?

8:25

I mean, yeah, the biggest risk is that this

8:28

doesn't work and the bid goes to one of the other two

8:30

teams, which is absolutely a fundamental

8:33

risk. I do personally believe that South

8:35

Island has the best chance, and

8:37

one of the reasons for that is there's a gorgeous

8:40

new stadium that's being built in

8:42

Christchurch. It's actually under construction now, and

8:44

it's going to be done in 2026.

8:47

It's called Te Kaha Stadium, and it's going to

8:49

house 30, 000 rugby fans.

8:51

And actually, the New Zealand government

8:53

basically footed the bill for this. So, the infrastructure

8:55

is already in place, or it's going to

8:57

be in place in 2026. So, that's one

9:00

less risk you actually have to worry about with this bit,

9:02

which is fantastic. But in terms of

9:04

other risks, I mean, yeah, look, sports

9:07

teams that have started from scratch are

9:09

very different than buying again, the

9:12

New York Yankees or the Boston Red Sox, with a long

9:14

history of extremely high revenue.

9:17

It'll take time for

9:19

things to get going, and

9:21

that is not something that we should ignore. But

9:23

what I like about sports investing the most is not only

9:25

can you get a return, but you get so many

9:27

externalities and extra benefits from really

9:30

investing in something that you can not

9:32

only believe in and get

9:34

a return from, but actually watch on TV,

9:36

go to the stadium live and know that you were a part

9:38

of it all, which is tremendously powerful.

9:41

If you could invest in any

9:43

teams in the world, what would you invest

9:46

in? And unlimited money here, Stefan.

9:48

I mean, personally, I'd certainly go Yankees, Knicks,

9:50

any New York team, probably the Jets, you might

9:52

not be a Jets fan, but I'd go

9:54

that way. What would you invest in, if you could, as

9:57

an investor, not with your heart, with your mind?

10:01

Taking the heart out of it, huh? Well, I'll tell you, look,

10:03

the Yankees, I think are basically

10:06

the strong ... I mean, having lived in Australia now for

10:08

five years and just seeing how much Yankees gear there

10:10

is here, people that may not even follow baseball

10:12

that closely, that are just wearing the gear.

10:14

It just makes you realize how powerful, globally,

10:17

the Yankees brand is. However, I was

10:19

born in Boston and I grew up in Boston,

10:21

so I could never in a million

10:24

years invest in anything New York related.

10:25

No, you couldn't.

10:25

No. Especially the Yankees. So, I would

10:28

go with the Red Sox.

10:28

Righto. Stefan,

10:31

I had enjoyed having you on the show until

10:33

that very moment. I lived in New York for

10:35

a while, you see, and became a great Yankees fan, and my neighbor

10:38

was a season pass holder, and there were so many

10:40

games. There were like 70 home games a

10:42

season. He was always looking for someone to go with

10:44

him, and I was working from home, so I

10:46

became a Yankees fan. Well, the thing

10:48

I learned more than anything is that you've got to hate the Red Sox.

10:51

You have to. Look, I won't hold it against you. We can still

10:53

be friends.

10:54

Good. Stefan, thanks for talking to Fear and Greed.

10:56

Thank you.

10:57

That was Stefan Von Imhof, co- founder of

10:59

alternative investing community fund Alts.co. That's

11:02

A- L- T- S. co, C- O.

11:05

This is the Fear and Greed Business Interview. Remember, this

11:07

is general information only and you should seek

11:09

professional advice before making investment decisions.

11:11

Join us every morning for the full episode of Fear and

11:13

Greed, the daily business news for people who make their

11:15

own decisions. I'm Sean Aylmer. Enjoy

11:18

your day.