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Hi, I'm Jim O'Shaughnessy and welcome to Infinite Loops.
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Sometimes we get caught up in what feel like infinite loops when trying to figure things out.
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Markets go up and down, research is presented and then refuted, and we find ourselves right back where we started.
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The goal of this podcast is to learn how we can reset our thinking on issues that hopefully leaves us with a better understanding as to why we think the way we think and how we might be able to change that to avoid going in infinite loops of thought.
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We hope to offer our listeners a fresh perspective on a variety of issues and look at them through a multifaceted lens — including history, philosophy, art, science, linguistics, and yes, also through quantitative analysis.
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And through these discussions help you not only become a better investor, but also become a more nuanced thinker.
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With each episode we hope to bring you along with us as we learn together.
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Thanks for joining us, now please enjoy this episode of Infinite Loops.
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Disclaimer: Jim O'Shaughnessy is chairman and Co-Chief Investment Officer of O'Shaughnessy Asset Management, where Jamie Catherwood is an associate.
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All opinions expressed by Jim, Jamie and podcast guests are solely their own opinions and do not reflect the opinions of O'Shaughnessy Asset Management.
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This podcast is for informational purposes only, and should not be relied upon as a basis for investment decisions.
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Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.
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Jim O'Shaughnessy: Well, hello everyone it's Jim O'Shaughnessy with my colleague, Jamie Catherwood, for another edition of Infinite Loops.
1:46
Today I am delighted to be joined by Massimo Marinelli, Aser Ventures Executive Board Member and Leeds United Board Member. Massimo, welcome!
2:02
Massimo Marinelli: Thank you.
2:03
Jim O'Shaughnessy: Jamie, since you are the axe here, I'm going to let you start.
2:06
Jamie Catherwood: Because we're a finance podcast, I think before we get into kind of the sports side of your career, it would be very interesting to hear about the kind of pre Aser Ventures portion of your career and your time in New York and then maybe from there, we can go into Leeds and everything. Massimo Marinelli: Yeah.
2:23
Look, I mean, they're very tied anyways because I now work for Aser, as you guys mentioned, which is an investment company in sports, but my background is very much one of financier, and that's still my responsibility really.
2:33
Here is around strategic investment opportunities and signing partnerships, making investments, and things like that, which is what ultimately Aser wants to do as well.
2:43
Massimo Marinelli: But in terms of myself, I started as an investment banker.
2:46
I was between London and New York 15, 16 years focused on media and entertainment.
2:46
Amongst media, we included sports given that at the end of the day the revenue lines of sports properties is very much tied to media revenues, entertainment, ticketing, and the likes.
3:00
And during my career, whether it was in New York or in London, I was doing deals for the likes of Comcast, ViaCom, Sky, but also Formula One, MotoGP.
3:11
And I also saw the previous business of the founder of Aser, Andrea Radrizzani who in his late 20s, 30s built a very successful sports like media agency, from zero to almost a billion of revenues.
3:24
IUBS, where I was I advised them on monetizing that investment and basically on the back of that monetization Aser Ventures was launched.
3:34
Jim O'Shaughnessy: So, I'm fascinated by the economics of sports.
3:38
Jamie and I were chatting before you joined us.
3:38
Many of our listeners are Americans, so they're going to probably be able to understand it from the point of view of the NFL and how they contrast.
3:48
And I know you just acquired an interest in the San Francisco 49ers, right?
3:54
Massimo Marinelli: No, it's the other way around.
3:54
The 49ers invested in Leeds United, so they- Jim O'Shaughnessy: Oh, wow. That's even cooler. Massimo Marinelli: Yeah.
4:00
It's [inaudible] Enterprises, an entity associated with the York family that controls the 49ers.
4:04
Jim O'Shaughnessy: I have a couple of questions.
4:06
The first is, again, for a novice, why a team in Yorkshire not London, I hear there might be an interesting story about that.
4:13
And then if you could maybe take us through how the investment risks differ between a Premier sports club in Europe versus the NFL, for example. Massimo Marinelli: Okay.
4:26
So I'm happy to answer that, taking a step back and say the way I think you can look at soccer or sports professional team investments.
4:30
I think you can either look at opportunities that have got a significant equity increase potential, which is what we saw in Leeds United.
4:41
It was a great franchise, had been in the second division for a long time, still a significant supporter base.
4:48
Once in the club we had opportunities through the bag up, the stadium and things like that, so you still have that opportunity to invest that one and potentially have an asset that was going to be worth multiple times that one in a short period of time, so that's a significant option equity value.
5:02
Massimo Marinelli: Or instead, you can look at opportunities that are a little bit more potentially yielding a stable return, so there are clubs that are managed more as a way to the kind of players, I mean to monetize that players and perhaps invest those proceeds into the sports and sort of business or other initiatives.
5:20
Could be Leeds United initially it was very much the former, as I was saying it was a club that was really a sleeping giant.
5:25
And it sounds like you had a little bit of the story of how you Andrea got involved with this club, but basically having been in football for a long time or done more as a kind of monetization looking at the broadcast right side of things, because we knew football very well and a lot of clubs, and a lot of mix.
5:45
And initially start looking at opportunities in Southern Europe whether Italy or Spain or France however, a chance encounter we can distinguish one of most about figures, I think in British football.
5:55
We mentioned Leeds United as a potential opportunity, funny enough, we happened to be owned by another Italian like us.
6:00
Massimo Marinelli: And that's history I guess.
6:02
We basically first acquired 50% and then 100% full control and that was in 2017 basically.
6:08
And in the back of it we started to execute that strategy already renovating the whole culture, hire new management both on the football side and on the sports side, on the business side, commercial side and also added an important planning act the 49ers in two transactions and basically managed to...
6:23
We can get up to the Premier League which is a top division in British football within three years and successfully close the first year in the primary last year.
6:36
But we're still into very much the beginning phase of that investment in a sense.
6:41
We obviously need to looking into the back of the club and the first couple of years also, very much years of consolidation, making sure that you can maintain that position in the Premier League.
6:51
That's going to be the focus for us certainly for the year is coming up and building on from there.
6:54
But I think very much so far we've been lucky enough, fortunate enough to be able to realize that upside potential, but we certainly need to continue to invest in it and continue to develop the franchise.
7:05
Jamie Catherwood: I think we- Jim O'Shaughnessy: And- Jamie Catherwood: Sorry.
7:07
It might be helpful for our American listeners who might not be familiar with the system of English football, where you have the Premier League, Championship, which is the second division and then to Fourth Division and the kind of monetary implications of going in and out of those leagues.
7:23
So from a financial standpoint, could you just kind of talk about how significant getting promoted back into the Premier League can be for a club's finances?
7:32
Massimo Marinelli: Yeah, absolutely Jamie.
7:32
I mean the key point ultimately is that there is more risk into investing in a European sports franchise, that there is in a professional sports team where there are a finite amount of clubs that you can buy.
7:44
Probably that's also true in European opportunities or world opportunities in terms of franchises with a lot of following, but on the other hand here there is a system of promotion, relegation where every year each team goes into a league and needs to perform to because they have the position in the league they're in.
7:59
If you are in the top of league, or if you are in the lower division like the Championship you just mentioned, trying obtain that promotion to the Premier League.
8:08
To give you an idea, the key difference obviously is about having the potential, if you are in the Championship, you got very limited revenues from media rights without being too specific.
8:17
Massimo Marinelli: But I think you're looking at that 10 times plus revenue upside from going from the low division to the top division between combination of fixed fees and the other fees that you can get by playing in the top division.
8:30
So obviously for us, having being promoted was a valid value, significant coupe.
8:34
And that's showing in other professional sports league in Europe where there is always that risk.
8:39
You always come in even if you are the top club every year, you start from zero points like everybody else, you need to make the points to preserve that position.
8:44
So currently there is more risk and it's down to the nature of how these sports organization were born, in the past they didn't even used to be a limited company or Inc they used to be association.
8:54
And so probably the professionalization was bought as happening in part, and that's why now you have limited company.
9:04
Also, club listed in stock exchanges like Man United or were interested in to them a couple.
9:09
Massimo Marinelli: But of course, you need to keep in mind that there is that sporting performance that could significantly impact your revenue opportunities.
9:16
Jim O'Shaughnessy: So it sounds to me like there's more of an arbitrage opportunity in European teams than say in the NFL, if you always start from zero, right?
9:25
That means that- Massimo Marinelli: That is true. Jim O'Shaughnessy: Yeah.
9:26
Massimo Marinelli: That's for sure, I mean, obviously the good news of being an NFL team owner is that you kind of know pretty much you got a very, very solid base of avenues year in year out and if you are the last one in the week, you obviously have the opportunity to pick out the best potential turn and that is coming out with a draft concept.
9:40
These things don't exist here, right?
9:40
You basically go in, perform it to make revenues, use those revenues to invest.
9:45
Obviously you can develop your own talent, which all good clubs do.
9:50
They have their own academy.
9:50
One of the things we did as owner for Leeds United was also to invest into the academy and very much bring the academy, I mean, it's a little bit specific, but our academy used to be top of the academy, which is now is what is called a category one academy meaning that we can compete with the top youth teams and continue to develop talent.
10:13
Massimo Marinelli: And of course, developing target is also a great way to realize asset value, new asset value potential.
10:19
And example for us is obviously Captain Philips, the national team member doing the last year.
10:24
He came through the whole academy system in Leeds United and now he is in a great year that after the first year of playing in the Premier League effectively played every minute that accounted for England during the European competition.
10:33
And we got obviously other examples in the past, but that's why investing into the academy is also very important for a professional sports owner.
10:43
Jim O'Shaughnessy: And again, it sounds to me like you also have a much bigger pool to choose from, right? Than say an NFL team. How do you go about it?
10:53
Is there a process that you use for scouting talent?
10:56
Massimo Marinelli: Well, I mean we have our scouts and so obviously there is a good scout component is led by director of football, Victor Orta of Leeds United.
11:00
He has esteem that basically is constantly looking up players whether it's in England or outside of England depending on his own age of course, if you look at very young teenagers, you're looking into the local area, but if you look at Premier League players, you have to look also outside of your current area.
11:20
And definitely from that perspective it's becoming a lot more interesting in terms of the use of analytics, AI, and new technologies to try and understand who could be the next Messi or Ronaldo.
11:30
Jim O'Shaughnessy: And an interesting question from me I guess, would also be you're drawing from very different European cultures.
11:38
Does that make it more difficult when you're working on sort of the cohesiveness of the team, or is that not an issue?
11:44
Massimo Marinelli: Okay, sir to be fair it's a good question.
11:48
I mean, it's probably more a sporting question than a business question.
11:52
I mean, I obviously don't get as involved with the composition of the team per se, but certainly what I would say is that it's very important to have a manager that builds that cohesive culture.
12:02
And I think in Marcelo Bielsa in Leeds United is exactly who we had.
12:07
And I want somebody to basically took a team that was already in existence, added a few players over the years and effectively built a very, very successful squad.
12:12
And there are many, many examples of these I think we are one of them.
12:17
Effectively when Marcelo took team the squad was much in fact was actually very similar to the one that he got to third in his first year, but arrived 13 in the league that we use here.
12:27
And in the second year, and then Marcelo won the championship as first by 10 points or so.
12:33
Massimo Marinelli: So obviously it was a very successful building of a team.
12:36
There are many examples, I mean, I can mentioned even the national team examples, very recent of Italy, obviously I'd be biased because I'm Italian, but Mancini, he took a team that did not qualify for the World Cub and effectively in three years won the European Championship, right?
12:51
So I think you can definitely see that building that cohesion in the team is going to be very, very important.
12:59
And that's where as a professional sports owner, you need to be able to address and understand who can be the guy in charge of it.
13:05
Sometimes it's obviously something that you have in-house, or sometimes you need to hire the right people, so that's definitely something you have to keep in mind.
13:14
I mean, in our case we definitely look at increasing those capabilities with the addition of new members of the management team like I've already added Victor or Marcelo and the likes.
13:23
Jamie Catherwood: So how has it been managing from a business and financial perspective?
13:27
So you get promoted obviously first time in 16 years, my dad called me crying from the car after he finished watching the game and it finally happened.
13:32
But then you come in during the season where there are for most of the season, no fans allowed in the stadium, so no match day revenue, how just difficult was that to manage?
13:43
And how did you guys kind of handle the COVID crisis from a financial perspective?
13:50
And you must be very excited about this season with full capacity coming back again. Massimo Marinelli: Yeah.
13:57
Finger's crossed obviously it was that's what we say now, who knows what will be in a month time, so we shall see.
14:01
But indeed we obviously had to go through that particularly when COVID started we were basically lucky enough to have a supporting team that helped us address the cashflow concern in the short term which was definitely a good way for us.
14:19
We basically managed to agree with the teams to delay some of their salaries, which is obviously the biggest component of costs for a professional sports team.
14:24
And as we went up of course, we look at a significantly higher revenue base as I was mentioning before, but we had to be indeed as you say, very, very careful and to be fair the first year for us was not a year of reaping lots of cashflow out of the club.
14:42
Massimo Marinelli: In fact, we had invested in everything we got and more to make sure that we had a competitive squad and that the team was well looked after, continue upgrade the facilities and do everything right.
14:50
We also have to have great facilities for the stadium because obviously we had a higher requirements for production that is required as a Premier League club rather than the championship clubs.
15:01
So there was a lot of investments we haD to make.
15:05
And therefore I would say the good news of professional sports, but that is true or Formula One or any leagues is that you got very high visibility at the beginning of every year, because typically you have a long term contract, whether it is media rights or commercial avenues.
15:21
And even ticketing obviously was missing during COVID, but you got certain visibility in terms of what sort of revenues you might get.
15:26
Massimo Marinelli: So you need to manage that because there is the cost structure, which is also relatively fixed.
15:28
So you just need to really set that at the beginning.
15:33
It requires a lot of work during the, let's say in between seasons particular as you start thinking, which is also different from professional sports team here.
15:42
We have the transfer window where you can buy and sell players, something that doesn't happen in professional sports in US, where you just exchange players or the draft system.
15:51
And obviously you need to put that into the equation of how you're going to buy the next midfieldER or the next keeper or whatever it is that you're looking to invest in within the team.
16:00
So it is a similar to a traditional business, but on the other hand, different even though you're very dependent on what are the sporting requirements and what is coming to the team is strong or needs more support.
16:11
Jim O'Shaughnessy: I'm interested in the fixed versus variable costs because that sounds a lot different than we're facing here in the US for example, with the NFL.
16:21
I mean, are you zero-based budgeting?
16:21
How are you dealing with that successfully? Massimo Marinelli: Yeah.
16:28
In a sense you could agree it's zero-based budgeting.
16:28
Obviously we know every year what is the pool of salaries that we paid, and obviously that's at least fixed cost base, but typically there are performance bonuses depending on how the team is performing and what a player plays, scores or whatever.
16:44
So that's very high fixed cost, but with some variable on top.
16:44
We also obviously have a very strong visibility in terms of the organization, what is required, host the team for home games or arrange for to pay in other cities, whenever that is.
16:55
And we definitely have then the part that's perhaps a little bit more vulnerable which is down to how many e-commerce or merchandise we might sell, how much hospitality and how much revenues we might make in the stadium, which obviously was not much last year for obvious reasons.
17:13
And that's where things are going to be more vulnerability perhaps.
17:18
Jim O'Shaughnessy: So the merchandising and I'm fascinated by that, because it seems to be the way things are moving and not only sports and things like music, et cetera.
17:28
The ability to get media rights, merchandising rights, can you keep that going even it sounds like you did through COVID, which is a pretty amazing?
17:40
Massimo Marinelli: Yeah, we did.
17:42
I mean, obviously kudos to our commercial teams there, but I guess, helped perhaps by having been back in Premier League but we did very well in merchandising particularly in e-commerce.
17:52
For a lot of time we also shops closed.
17:52
So we do have shops, in Leeds we call [inaudible] shops where supporters is can go in the stadium, in the city center at the airport.
18:01
But of course we have to keep them closed during COVID for a long period of time, but still performing on the pitch is a way to continue to maintain that appetite from supporters to be involved.
18:13
Jim O'Shaughnessy: And how much of a symbiotic relationship is there between, let's say you get a superstar and he's got his own endorsements and everything else.
18:23
How much does that help you on your merchandising side?
18:27
Massimo Marinelli: I think you're coming to there are basically examples there that says that it does, and it does successfully I mean, I think not necessarily tied to merchandise, but when Juventus bought Ronaldo, I think you saw a migration of fans on social media platform from Real Madrid to Juventus.
18:43
So I think it's one thing you have to consider these days particularly social media, having access to that talent is very important.
18:51
Jamie Catherwood: Juventus and kind of endorsements, I guess, but also image rights.
18:53
I'm a Tottenham fan much to Tom, your colleague figure in as an Arsenal supporter.
18:58
But I know that I was very excited I guess, two transfer windows ago when it seems like everything was done on a deal for Paulo Dybala and then the whole deal collapseD because of the image rights, because some third party owned his rights [crosstalk] like 20 million buyout or something crazy.
19:16
Is that common in continental Europe, that kind of image rights and those issues from a kind of management perspective or?
19:21
Massimo Marinelli: I think for the superstar, it's definitely a consideration.
19:24
There are companies that you guys would have seen particularly in the US and it's starting to expand also in Europe that I work into potentially invest into the revenue potential of sports fan and effectively guarantee an upfront ticket in exchange for a percentage of their earnings.
19:41
There are some regulatory things, regulatory constraints you need to keep in mind because there is no third party ownership of players allowed in European football at least.
19:50
And so you always need to understand what is possible and what is not.
19:55
Image rights was a way that I think in the past people have done some of these investments, but I would say that is very relevant for the big, big superstars and there are not many, many of them for which they're particularly relevant.
20:08
Massimo Marinelli: So as a football continues to grow as the importance of social media, I think would allow people to better realize and have engagement with sports team and players that would be a more important piece of the pie.
20:24
But I think it's an opportunity for everybody.
20:24
I think that's why we like sports in general.
20:24
We think as a sector with a secular growth prospects, with other opportunities that are still under utilized and we're frankly, though there has been some professionalization, there is still a lot more to do and I think the coming into sports of institutional investors is definitely what comes from that perspective.
20:42
Jamie Catherwood: Could you talk a bit about Aser's kind of relationship with the 49ers enterprises and the deal that was the 37% stake?
20:48
I hope that's the right figure.
20:48
And that deal from a few months ago in the spring, but just kind of what Astor's relationship is and what the kind of synergies you guys hope to bring about from that new acquisition or deal are. Massimo Marinelli: Yeah.
21:03
Well, first of all, I would say where it's going to be pleased and proud to have the 49ers enterprises.
21:05
So the entity associated with the York family as a show with United of course, they are one of if not the top professional sports team in the world, right?
21:17
In the NFL, we did too, the investors looked into separate transactions.
21:22
So they do have a 37% stake, and that came through two separate transactions.
21:27
The partnership is regular and constant dialogue with them in terms of how to improve and grow the opportunities for the club.
21:34
We obviously have a very strong presence in Europe.
21:34
We also have presence through Asia in our other assets in US and in Asia and the rest of the world.
21:43
Massimo Marinelli: But of course, they have such a strong track record.
21:45
They built the new stadium recently, they obviously know very well how to sweat merchandise and retail and ticketing.
21:49
And so we work constantly how to take those learnings and implement them in Europe adjusting them for the local actual needs.
21:56
And so I'd say it's a constant dialogue, daily basis we speak.
22:02
We look at what is required, what can they do utilize their analytical input into the club and build on that.
22:08
Particular, I would stay at the moment on the commercial side, but eventually and perhaps also see what can be done in terms of sporting, not necessarily obviously, of course, we play two different sports, but how you can maintain that sort of performance aspects of it.
22:24
Jamie Catherwood: I was going to ask is because like with Spurs, when we built our new stadium, there's two pitches, one for obviously Tottenham matches football pitch, well soccer pitch, I'll defer in this case, but then that pitch retracts and then an American football field slides out in its place.
22:45
And the idea is that Tottenham has announced like a partnership with the NFL and now the NFL matches in London that used to be played at Wembley will be played at and have been played at Tottenham stadium and there's that kind of relationship.
22:55
Is that something that the 49ers and Leads might pursue now, as well something where like 49ers games in London will be played at Elland Road and that is kind of another way to get some overlap and interests? Massimo Marinelli: Yeah.
23:12
I mean, I don't think that the Elland Road stadium will be...
23:16
I don't know to be fair what the Elland Road would be a good stadium for NFL game, but you're right.
23:21
That's been happening in between European football teams.
23:21
I think it's more about learning how to control the performance of the teams whether it's injuries, who is going through more fatigue or to maintain the sort of winning and performance culture rather than necessarily having teams play on each other's pitch.
23:40
But that could definitely happen in due course and I think we will see more of that.
23:45
I think it's very interesting obviously to see the NFL teams coming over, the NBA teams coming over, perhaps even more sports and for us vice versa to build perhaps more of a presence of Leeds United in the US and other markets.
24:02
Massimo Marinelli: We got strong recognition in certain markets, particularly in the Nordics and in Australia, perhaps too I will mention, but it is always more to do.
24:11
And even if you move beyond football, that's definitely for example, the way that Formula One has been building out.
24:15
I think I was speaking to somebody last week, they were telling us how the Netflix and the Formula One and kind of create almost a new generation of fans for Formula One in the US.
24:17
And I think not many people are followers of Formula One in the US maybe more focused on Indy Cars and the likes.
24:17
So basically there are examples that showed that creating the sort of a content interest, it's key to preserve the importance of the sports franchises.
24:20
At the end of the day, we are an entertainment business.
24:26
We need to continue to entertain, create interests, engage fans and have fans that continue to return, want to be involved with us, want to come to the stadium, want to wear the right t-shirt and so on and so forth.
24:43
Jim O'Shaughnessy: So one of the things that I'm interested in knowing your background in emerging markets and how well you did there.
24:45
Did you borrow your learnings there for application here?
24:50
And if you could talk a little bit about your investment horizon for this particular investment, is there an exit strategy or no?
24:56
I'm very interested to see how that symbiotically might go together.
25:03
Massimo Marinelli: So we definitely trying to apply any learnings in everything we do.
25:06
We are not a financial investor per se, rather we see ourself as a management team spearheaded by Andrea and other members of the management team be there.
25:17
Marc Watson that used to run BT Sports.
25:17
Graham [inaudible] that used to be at Man City and other clubs and media companies, and basically use that expertise to then better sweat the investments we make.
25:29
For that same reasons, we know we don't necessarily have an exit horizon at all, we rather.
25:34
We also don't have a stage that we invest in without anything from seed to launching our own businesses, to invest in a business like Leeds United that is 100 years grass over obviously.
25:45
Massimo Marinelli: And so we either see what are the opportunities out there where we can add value with the capabilities that we got wherever we got them, be that Asia or US and continue to be able to create asset value.
25:58
That's really the goal of Aser from, that's still for Leeds is to fully have in sports, which is our other I would say flagship property that we launched five, six years ago, very focused on monetization of our sports rights and entertainment rights more broadly.
26:09
But also we like now, which is the business we launched last year, which is more of a pay-per-view platform, focus on entertainment and lifestyle.
26:19
Jim O'Shaughnessy: Interesting.
26:22
And one of the areas where I see a lot of crossover between my interests in yours is in sports analytics.
26:27
We're quants, so can you talk a little bit about how helpful that has been to your process?
26:35
Massimo Marinelli: It's definitely an area where we spent more and more time and the scouting team we're talking about before have access to all the right tools and more.
26:41
Some tools I probably don't even know that they use, but sometimes I find out I'm looking at these companies or we partnered with Leeds United.
26:52
So it's definitely a key component of how scouts look at performance these days and select players.
26:57
So by any means the war from that perspective has changes, it's not any more this or that guy presenting this or that player, but it's very much us selecting the type of players that we want for, the type of football you want to play and the needs that you have.
27:07
But more broadly, if I go back into more the business side as Aser, we look at sports analytics and more broadly data as a key component of the things that we do.
27:18
Massimo Marinelli: We invested as a seed investment that we made in a company called Sports Data Labs, which is very much playing in that space.
27:27
In that case they created some very original and exotic IP in collecting human data from athletes.
27:34
But obviously it could be also from any sort of human and how you can then make sure that you get that real data, use that data in the best possible way be that to preserve injuries or so is obviously let's say health application, but also performance application.
27:54
And perhaps even tomorrow creating more data for betting purposes or things like that.
28:00
So data is definitely at the core of what we do and we will continue to invest in it.
28:05
Jim O'Shaughnessy: Would you think that...
28:05
Is there in the US of course, the very famous story was Moneyball and there was a huge reticence on the part of the old school scouts to even look at it much less really put it into use?
28:11
And obviously that created an asymmetric opportunity for him and we all know what he went on to do.
28:18
Are the younger generation of scouts just very comfortable with the data?
28:23
Or are you finding that you need to cajole them a little bit?
28:29
Massimo Marinelli: Well, Look I mean, my sense is definitely they are.
28:31
There's obviously now, access to tools that do not exist 10, 15, 20 years ago.
28:34
And now you want to know of a player, you don't need to watch the Euros, right?
28:40
You can go on certain platforms, look up the player and see every time is hitting with the right foot, every time is hitting with the left foot, header or whatever.
28:49
So definitely there has been a change from that perspective and I think that's a key component of how professional sports team and their sport individual these days.
29:00
On the other hand we're a human being, we're a human organization and the culture is very important in sports.
29:05
And at the end of the day we were talking about the importance of the teams, how teams need to be cohesive, and you cannot just go culture individual on their own.
29:11
Massimo Marinelli: You also need to think how those individuals are going to performance.
29:13
It's also school when we look at football clubs opportunities, it's not as simple as looking at the P&L and cashflow statement.
29:17
Is also important to understand what is the opportunity around the city? What the fans think?
29:23
Are you can engage with them?
29:29
What are the local dynamics are?
29:29
What is the position of the stadium?
29:29
Where up to the cities or you can improve those opportunities?
29:35
So it's obviously an area that you need to continue to analyze and though you cannot necessarily analyze always with data, but assess very, very carefully.
29:48
Jim O'Shaughnessy: And it seems to me also that in listening to you that there is an opportunity, which is still very much present in terms of the arbitrage opportunities between say operating in the United States, operating in central Europe.
29:58
Does that go to the rest of the world as well, or is your company looking for opportunities where you might even be able to have a bigger impact given being?
30:08
Massimo Marinelli: At Aser, we definitely have presence around the world.
30:10
We look at opportunities in any continent regularly.
30:15
Although we obviously more present in Europe or US and Asia.
30:15
We probably should differentiate also between where I get some media entertainment opportunity versus sports opportunities is down to size and comfort.
30:26
But I think as we look forward and look at the sector, there will be a lot more opportunities in any continent, be it Africa or also Australia, Oceania.
30:39
I mean, there has been definitely a lot of good examples there.
30:39
There have been investments coming from top investors in the broader economy.
30:45
And so they will cause you to more, I mean, if we go back to football, there is obviously the example of a City Cup that has made investments in football clubs, be that in India or US or Europe.
30:58
Probably that's not for us just yet, but never say never as an investor as you always need to keep your eyes open for what is the next trend.
31:10
Massimo Marinelli: But as a group Aser we definitely do not tie our eyes onto Europe at all.
31:11
And in fact we recently we made a relatively big acquisition for us buy Eleven Sports in US which we bought a company called Team Whistle.
31:22
Jim O'Shaughnessy: Interesting.
31:24
So I'm also interested in sort of the crossover learnings, because I think often you can learn even more if you're looking at different ways of investing and this certainly seems very intriguing to me.
31:36
So what have you learned from your experience here that you apply elsewhere in your investments?
31:43
Massimo Marinelli: So I think one of the area that has been very, very important for us as an investor has been always to make sure that we look at how we can be able to be more innovative in the commercial revenue piece.
31:58
I think one area that we would typically find is that's...
31:58
I'm not going to say about Leeds United or you haven't, but in general, when I look at opportunities.
32:04
It's very easy to get comfort with what you already know and how what's, let's say they go hanging fruits around you and instead we very much should go look at what else can you build that maybe does not reap benefits today, but definitely the franchise asset value tomorrow.
32:19
And so I think it's very important to keep those eyes for opportunities that are not necessarily short-term in nature and how you can realize revenues.
32:30
Massimo Marinelli: Obviously there is also a budget constraint at times.
32:32
It's very nice to build a new CRM system, but you might not be able to get any benefits out of the new CRM system within the next two years.
32:38
On the other hand, if you don't build a new CRM system, you may not be able to understand where your fan base is developing and where you're losing funds and how you can continue to build that fan base.
32:46
So from my perspective one area that we saw is continue to invest into the long-term future of these opportunities.
32:52
I think that's true from the previous asset that Andrea used to run that was a sports rights agency, very much looking at building out outside of the mainstream sports into new sports.
33:02
You could argue the same is true for e-sports for example, an area that obviously has been going by very, very fast.
33:07
And I think we continue to be an important component of the entertainment landscape.
33:11
Does that answer your question? Jim O'Shaughnessy: Yeah. No, it does. Thank you. Jamie.
33:15
Jamie Catherwood: So what do you think the kind of emerging opportunities for investment in both sports and media are today?
33:17
If you're thinking more about that kind of longterm future prospects, where are the emerging opportunities for those today?
33:27
Massimo Marinelli: On our side, we actually have a lot of focus on to what is services, agencies for the right sort of space and what of rights order.
33:31
So we made a recent investment in a company called CleanMedia, which is a digital media agencies focused on developing influencer presence on music space in particular or brand partnership for the sponsors and the likes.
33:51
Within that space, we acquire more and more attention for rights order to maintain that engagement with a broader fund base.
33:56
So actually, although it might be seen a little bit as old school sector, the agency piece, but actually within there is a lot to be don.
34:07
Similar in terms of content creation.
34:07
Massimo Marinelli: We did a documentary for Leeds United a couple of years ago that was very successful.
34:11
We're doing a couple more now with top properties that we are developing as we speak.
34:16
There are other examples in the world of football, whether it is the All or Nothing I think is called franchise that Amazon developed, the professional sports team even in Europe or the former one or the Michael Jordan one that may be familiar to the US audience that were I believe on Netflix or ESPN+, I think might create one, Michael Jordan one was Netflix outside of the US but ESPN and [crosstalk].
34:38
Jamie Catherwood: You guys were like the first [inaudible] and Amazon weren't you?
34:39
You were like the first [crosstalk]. Massimo Marinelli: Yeah.
34:41
We were definitely one of the first and I think that creates that sort of a bigger deal to offer new services, I mean, other services that rights orders are not very exploiting that however can be very, very useful to create new revenues and to increase engagement, which is what you need.
34:52
But more broadly I think data analytics already discussed.
34:58
Esports is another area create new IP in the space.
34:58
There have been some successful launch of new franchises if you think that is impartial some of them have gone super big like UFC or One [Chaptership Performgai].
35:09
So how can you create this sort of next area of interest for people?
35:16
And now you can monetize those and obviously OTT is an interesting space from that perspective, because it allows you to have access to one more content that you could have done through traditional technology in the past.
35:28
Massimo Marinelli: We only had a certain finite amount of broadcast channels, but you can broadcast by OTT any game you want.
35:34
And that's for example, what we do with Eleven Sports when we acquired what is now elevensports.
35:40
com, because with my Cujo we focus very much on second tier football weeks and make sure that people cannot approach them, kind of access them from around the world or similarly you can think of how you can create content that is available.
35:50
Whether is OTT for additional distribution that is a very engaging for young audiences.
35:58
So utilizing social media platforms and the likes or indeed offer the opportunity to access content on a more of a pay as you go basis within that's another unexplored area of a content.
36:15
Massimo Marinelli: Because a lot of people are happy to pay subscription and true fans wants to watch every game or some other people might just want to watch the odd game or the other event and how you make sure that those guys are as well served as the guys that are 100% fans that want to watch every single game.
36:28
That's for example, another of the trends that was behind the launch of GuideNow for instance because ultimately we think there is an unexploited area for the more occasional fun in sports or for the events that before were not accessible unless you were there in particular.
36:40
We call it, it became very clear that you can create a great event like we did for the studio 54, do I leave the concert and stream it worldwide in a short period of time. Jamie Catherwood: Wow.
36:52
Jim O'Shaughnessy: And what kind of contrast are you seeing between what I would call a super fan, somebody who wants to see every game, et cetera and the occasional fan that you've just been talking about?
37:02
Massimo Marinelli: Look, we love them both, and they're both super, super important, but it's just a matter of time obviously some people prefer some other things, right?
37:08
So we need to continue to build out the fan base and make sure that the super fans is what carry forward everything he wants and a constant content, constant access to behind the scenes, new games, new gamification opportunities, or just opportunity to interact with his fans.
37:23
And also make sure that the more casual fans feels like he's not left over, because ultimately not people also swap, right?
37:30
Swaps also, depending on what stage of your [inaudible] in, whether or not you can go to the stadium.
37:35
For me, I have two young kids is a bit more difficult than it was when I was a 20 something year old guy.
37:40
So there are obviously things that is also a cycle of life that might mean that you have to prioritize different things as a bit of time.
37:53
So we also need to recognize that and make sure that we preserve the engagement throughout the life cycle of fans.
37:59
Jim O'Shaughnessy: Precise.
38:01
Jamie Catherwood: I'm curious- Jim O'Shaughnessy: Jamie, you're- Jamie Catherwood: ... sorry.
38:01
Jim O'Shaughnessy: No, go ahead, please.
38:01
Jamie Catherwood: I'm curious what you thought of the acquisition from Ryan Reynolds and the other actor whose name I'm forgetting of, I think it was Wrexham Football Club, which is tier two or tier three tiny team.
38:13
And they basically acquired it with the intention of doing content and putting out a series similar to the one you did for Amazon, but the All or Nothing as well.
38:24
And I'm curious if you think that, that's going to become a more kind of dominant trend where people with huge followings like Ryan Reynolds get involved in sports and then use their own brands and influence to kind of produce content that people will want to watch.
38:40
Massimo Marinelli: I think the ability to have a good story telling around a club is going to be key for the success of a sports franchise.
38:43
And that is perhaps a very extreme example given they're not necessarily going to be attracting people with quality, at least at the beginning of the gates.
38:55
Although having said that, I never saw them play.
38:59
So by any means I don't want to make statements that I'm not really qualified.
39:03
Jamie Catherwood: In a lot of recondense I listen to this [crosstalk].
39:04
Massimo Marinelli: Oh, yeah.
39:07
I mean, that should be [inaudible] but in general, I would say of course, you watch Premier League or you watch championship because you're going to see a good game.
39:09
That's why people have to watch the top sporting competition.
39:13
On the other end there is an awful lot that goes on behind the scene and they're creating a nice storytelling behind, it's going to be key to preserve that interest and I think that's what we did with Take Us Home.
39:22
That's definitely what Club De Cuervo, I think was an example.
39:26
I'm not I'm not necessarily as familiar with that one, but I certainly heard this football team in Mexico that effectively build a Netflix show around how to create a football team.
39:36
And I think for a professional sports franchise is going to be very important to have that constant content access, be data during busy season, during the season, after the season, just maintaining the dialogue.
39:48
Social media platforms can be very useful for that, but it's not as easy to understand what's going on.
39:54
Massimo Marinelli: And so we are also experimenting, one of the other businesses we invested in is a company called Epicor that is exactly looking at creating more social media type content for professional sports team.
40:08
So probably are keen to what the example you just mentioned for Ryan Reynolds.
40:08
I think we all watch it with interest and I think it'd be an interesting learning curve, but there are a lot of a personalities let me say that continue to look at sports as an investment opportunity and a lot of successful sports entrepreneurs that have launched their studio properties like Lebron James, I think is obviously a clear example.
40:31
So from that perspective, it's going to be super interesting to see that or develop and at the end of the day, it confirms what I was saying before.
40:43
Massimo Marinelli: I mean, this is a sector with sacred growth prospects where I think it's going to be important for more than institutional investors to get comfortable with it and understand what are the upsides? What are the downsides? What are the dynamics?
40:55
Because ultimately that would be beneficial to the sports industry.
41:00
One area that of, course we continue to push is to make sure that the sports industry is sustainable.
41:05
We don't want to have gaps that go bust as it happens that are certainly for new investors, because they run out of money.
41:12
That's not in the interest of anybody's or interest of the owners or the interest of the supporters more importantly, it's not the interest of the players.
41:20
So creating an ecosystem that is a sustainable is in the interest of the overall sports ecosystem.
41:26
And I think having new investors or more investors with the institutional mindset coming in, it's all going to be positive for the sports industry.
41:32
Jim O'Shaughnessy: Fascinating, fascinating, fascinating.
41:35
Well, it looks like Jamie, we are coming up on your time limit.
41:42
So Massimo, thank you so much for joining us.
41:42
We always have a final question that we ask all of our guests and I'm going to be very interested to hear your response to this.
41:53
So we are going to wave a wand and we are going to make you the emperor of the world for one day, you can't kill anyone and you can't put anyone in a camp, but you can incept ideas in people.
42:02
And so during your one day of incepting the worldwide population, everyone's going to wake up thinking, "Oh, I just had this great idea." What do you got for me?
42:15
Massimo Marinelli: Well, I mean, that's quite a good question I think, a little coming out.
42:16
I think I like to actually follow up on what I was just saying.
42:17
My good idea would be to make sure that everybody recognizes sustainability of sports industries.
42:20
Sports sector is going to be key and therefore find a way to make sure that there is not too much leakage into that sports sector.
42:25
At the moment, I think there is a lot of people talk about increasing revenues in sports.
42:33
They were recently talk about clubs wanting to find ways to generate more revenues, but the question is not just about generating more revenues, we do want to generate more revenues.
42:40
Everybody wants to but make sure that those revenues are properly spent for the goal of the sports, the franchise, the youth system generating a new generation of players or supporters and a little how often would have been because again, that's the goal of sports.
42:53
Massimo Marinelli: We can be professional investors or business investor, but at the end of the day, we should not lose sight of what is sports is about.
42:59
Jim O'Shaughnessy: So I'm translating that as we would incept in everyone the understanding of how character building and great sports can be for children coming up and we want to make sure that, that's sustainable.
43:13
Is that a good translation? Massimo Marinelli: Yeah. Jim O'Shaughnessy: Okay.
43:14
Well, this has been great.
43:14
And you know what Jamie?
43:14
Since you can't answer this, I'm going to give a second one to Massimo and I'm going to tell Jamie's father that you came up with this and that is, you're going to incept everyone in the world to wake up thinking, "You know what?
43:31
I think putting Jonathan Catherwood on the board of Leeds United would be a good idea."
43:39
Jamie Catherwood: That was not.
43:39
My dad submitted a question is when did he get his [inaudible].
43:42
Jim O'Shaughnessy: Well, let's- Massimo Marinelli: I could've said when is Leeds United going to win the Champions League, but- Jim O'Shaughnessy: I know yo got. Massimo Marinelli: ...
43:48
I think I think that would have been too easy. Jim O'Shaughnessy: Yeah. Thank you so much.
43:50
This is really fascinating.
43:50
I just love the way these things are developing.
43:55
And so you taught me a lot. I really appreciate it.
43:58
Massimo Marinelli: Thank you. [crosstalk].
43:59
Jamie Catherwood: Thank you so much Massimo.
43:59
Best of luck, except against Tottenham this season.
44:01
Jim O'Shaughnessy: That's a very gentlemanly thing to do. All right.
44:04
Thank you very much and cheers everyone.