This is Buying Sandlot — the only newsletter that focuses solely on the business of youth sports.
I’m aware that only a small percentage of our 6,480 subscribers will watch or listen to my interview with PlayOn Sports CEO David Rudolph in full.
But given that he sits atop one of the biggest companies in high school sports, I felt this week would be a good time to kick off our “5 Things I Learned…” series.
What and Who
What: PlayOn Sports is the company behind leading brands in high school sports, such as:
NFHS Network— streams more than 650k high school games every year
GoFan— will process 80M high school ticket sales this year, more than Major League Baseball will sell this season
MaxPreps— the leading high school sports news and information site that PlayOn acquired in April which reaches more than 100M visitors per year
Who: David Rudolph developed streaming offerings for college sports inside of Turner in the mid-2000s. When it became clear that they were on the leading edge of a new paradigm (sports streaming), he spun the business out of Turner and shifted the focus toward high school sports. He’s been running the company ever since.
Here’s what I learned from him. His quotes are in blue.
1) The Audience For HS and Youth Sports Has a Direct Relationship
PlayOn’s core audience for streaming, ticketing, and MaxPreps is:
Direct relationship to player: family members, parents, grandparents, other relatives
Friends of the player
Others (very small portion of the audience)
Alumni or school supporters
College fans looking at incoming recruits
Coaches and players for scouting and on-demand viewing
“The core audience… it's someone who has a direct relationship with someone who's on the field. And I think that applies not only in high school, but I think that's probably even more pervasive as you start thinking about the broader youth sports space once you get into club and things like that.”
Nothing Earth-shattering here.
But.
Many operators across the youth sports landscape are looking to advertising and sponsorship as significant potential revenue streams.
We’ve covered this concept here, here, and here. And what I’ve noticed is that some are viewing the youth sports audience in the same way they view pro and college sports audiences.
Right now, the youth and high school audience is pretty much just parents and friends. Substantial opportunity, yes. But we should keep in mind the differences in consumption, and how to best market to this group.
Out are beer brands and gambling ads. In are products and services that speak to parents. The Toyota ads work for all.
What could change this? Again, I’d point toward the Pottstown Scout example— creator-led teams that develop a fandom outside of grandmom sitting on her porch. But these often require a lengthy post-production process to turn out tightly-edited pieces with compelling narratives, with sponsors aimed at the players themselves.
Either way, you need scale to attract larger advertisers:
“We will be looking at brands that are more national in nature, regional, multi-state— more than we are local. I do think there is a great local advertising and sponsorship around high school. [But] the execution of that is extremely hard.
And one of the biggest challenges is - you're in the space, you know - the costs to sell and to fulfill a $100k deal is not that different as a $1k deal. And so just as a percentage of sales on the local side, when you're selling a bunch of $1k-$10k deals, it just eats up your margin like crazy.”
2) AI Is Necessary to Achieve Scale in Youth Sports
“Everything in youth sports, including high school, is in that long tail. [AI] is not even critical, it's mandatory.
You cannot scale a business just using manual approaches with a human. The unit economics don't work.
I'd say we've been employing a version of AI, probably before it was even called that, for a long time with the Pixellot solution that we use to capture games and track games. I'll never forget the first time Pixellot pitched me that product was 10 years ago. I was blown away. I was like, how in the world does something like this work?
But that's been on the capture side. I'd say now how we're starting to use it more and what the new generative AI platforms have unlocked, is how we can take that content and data and use to create new pieces of stuff?
So how do you take a two hour long game and cut it into clips?
Back to who's our core audience, the parents. It's nice for you to send me a summary of the game. I appreciate it. That's great. You want me to pay more? Send me highlights of my kid. That's a killer product. Send me the stats of my kid. Send me all that timestamped together. Package it all up. Make it easy for me to store it and save it. Make it where I don't have to worry about pulling out my phone and trying to film stuff at the game. Make it easy for me to share through social media. That's what I want. That's where AI is super valuable.”
AI is not critical, it’s mandatory.
Love that line.
In other areas, including in sports, AI is helpful and efficient, and will increasingly become critical.
But it’s not mandatory to use AI, for example, to log and edit professional game footage. Humans can do that. It’s human scale.
Youth sports don’t happen at human scale. Somewhere around D2 college sports, the long-tail of events outpaces the number of available humans and capital to complete certain tasks.
Everything he just described could be accomplished by humans in pro and D1 college sports. But it simply can’t be done in youth sports without AI.
Part of the reason youth sports is exploding is because AI unlocks products and services that were previously impossible.
But…
3) Execution Is Most Important in a Fragmented Market
“The execution around the fragmented market is hard. And so this is not invest a dollar and turn around five years from now and get 10 back. This is invest a dollar and work really hard, and it should have grown to more than a dollar. But it's not going to be a 10x in a short time horizon like some of the other tech investments are.”
In other words: AI unlocks new products and services, and thus, scale. But none of it works without a strong ground game. None of it works without local partnerships, regional knowledge, and innate understanding of the differences between sports and levels of competition.
There are many people in this space who do nothing but talk about capital deployment that miss this point.
To wit…
4) Consolidation, But Only to a Point
“And I'd say back to that question about investors— there's a whole consolidation theory percolating that you're just going to see this map of companies, that you're going to see them all consolidated down into a couple of players.
I actually don't think that's going to happen. I do think you'll see consolidation. That happens in every industry.
But it's such a fragmented market, and it's fragmented by sport. So what's successful in soccer is not the same thing that's successful in baseball or lacrosse or hockey. There's very different providers in each of those.
Could you see some consolidation by vertical? So could you see some consolidation inside of soccer or inside of hockey? That's fun. So again, I think you'll see it, but I don't think you're going to see just some company emerge that's just this amalgamation of 30 or 40 of the existing products that are out there.
I think back to the ground game, I think to do this right, to provide a great experience for the fans, for the coaches, for the athletes, you've got to keep this local.
You can't just consolidate it, cut a bunch of costs, find efficiencies, and keep those folks happy.”
I’d argue that the other cross-section is by segment. You will see consolidation among streaming providers, among ticket sellers, among event hosts, and among tech companies for sure— regardless of sport.
But that doesn’t mean only one or two companies - like Unrivaled or Dick’s - will own youth sports the way Fanatics owns sports apparel.
5) Game Recognize Game
I asked what other companies he admires in the space:
“I think the product that GameChanger has for baseball and softball is incredible. You know, just the live scoring kind of mindset of the baseball fan and parents and coaches, and then kind of combining that with video and how it tees up all these individual player moments and what they've been able to use that data and video to create. I think it's very impressive.”
“Again, my kids are soccer players. So I've used pretty much every soccer application and app that's out there. PlayMetric seems to have emerged over the last couple of years. I think they were recently acquired. But what they're doing in the registration and fan communication, I think, a little bit of recency bias here, because I probably use that app 20 times a day, I think it's pretty cool.”
“I'd say that the company that has just really blown me away with their tech in the last, don't even know if it's been 12 months, it's actually probably since the fall, so six to nine months, has been Veo. Again, super soccer bias here. I'm a soccer guy, my daughters are both soccer players, that's both on the club and the high school side, that's the sport I spend the most time around. But Veo's tech is incredible.”
Aw, friends.
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Good game.