🥎 Combatting Youth Sports' Embezzlement Problem

This is Buying Sandlot — the only newsletter that focuses solely on the business of youth sports.

We’ll be at LeagueApps’ NextUp event in NY next week. If you’re planning on attending and would like to meet up with me (Kyle), James, or Paul (partnerships and sponsorships), reply to this email and we’ll find some time to connect.

Let’s get to it.

There is a new report about a youth sports official embezzling money or committing financial wrongdoing seemingly everywhere you turn. It is so prevalent that Little League International has a checklist for addressing and recovering from embezzlement on its website.

Close to $200K in Pennsylvania and just under $100K in Florida. Another $300K in Texas and $175K in California. Over $40K in Louisiana and $50K more in Oregon. Don’t forget the $600K in Colorado or the $2.4M (yes) in Canada. And that is just a fraction of what pops up with a simple Google search.

The ill-gotten funds go toward Amazon purchases, gambling addictions, hair extensions, even other youth sports expenses. And the malfeasance can go undetected for years, often only being discovered when an organization is blindsided with embarrassment and potential financial and reputational ruin.

“Most of these clubs were started because you have people who were passionate about the game and about the kids,” Club Capital VP of Youth Sports Lisa Wolf told Buying Sandlot.

“They are not business people, generally speaking. And then you now have somebody who is in charge of a business who is really a coach. … The time and ability to really weigh the importance of reviewing the financials just falls to the wayside.”

Some of the factors to consider:

“Organizations have experts when it comes to the game and the technical side of it,” Wolf said. “You should have experts on the business and admin side as well.”

Club Capital says it provides accounting, budgeting, compliance and tax services not only for youth sports organizations to prevent theft, but also to catalyze continued growth — the consequences of poor financial controls are not always criminal.

“We are doing financial statements every single month,” Wolf said. “We are reviewing variances on a timely basis so anything that starts to bubble up, we are quickly on top of it. We are building a budget for you, comparing it to actuals, looking at general controls, tightening up those gaps. And then the fun part starts and we get to go more strategic with you. … There is a cost, but it is a cost that helps protect your organization.”

Club Capital works with clubs that generate $300K a year and clubs that make over $10M, Wolf said.

“We are there to walk with them,” Wolf said. “We are not there to shame them for whatever they’ve done. We’re partners. Let’s start where we are today, walk down the path together and make it better.”

We have all been there. You urgently need customer support and you end up spending hours on the phone, only to be routed to an overseas call center. Or even worse — the only contact method is an email account that will not receive a response for a day, if at all.

That is not the case with Zorts. The cutting-edge youth sports management and safety platform also offers best-in-class customer service.

Zorts reps are U.S.-based and available 18 hours a day, 7 days a week. Including holidays. And shifts are strategically scheduled on a week-by-week basis to ensure someone is there to answer the phone when you need them.

Reps will be able to assist operators utilizing Zorts ID with Flash Biometrics with any issues or questions, ensuring the platform is positioned to safeguard events with its background checks and age-verification software.

Top customers will have their own rep and there is no call too small.

Find out how your platform can offer this class-leading feature to your customers right here.

*Sponsor

RCX Sports and the National Police Athletic League announced a strategic partnership expanding NFL Flag to “hundreds” of communities nationwide.

RCX handles the NFL’s flag operations for ages 5-17. National PAL will get access to NFL Flag resources and RCX will support local operations for all PAL chapters.

PAL has over 300 chapters in almost all states and serves about 2M kids annually; the announcement did not say how many existing PAL flag football opportunities were in place prior to the partnership.

Kyle likes to say we are the Bloomberg of youth sports.

And now actual Bloomberg is talking youth sports with a breezy essay from reporter/youth sports parent Ira Boudway that examines the industry through the lens of its booming mother church, Dick’s Sporting Goods.

The behemoth “has become the Levi Strauss of the youth sports gold rush,” he explains about a third of the way through “Inside the Empire That Sports Parents Built.”

Quick Take: Boudway’s essay checks all the boxes — GameChanger and Unrivaled Sports also get shout-outs — and does a far better job of capturing the state of play than The New York Times and other brand name outlets have. It also does not hit with a, um, preconceived worldview baked in.

Here are 5 BIG IDEAS from my podcast with Brent Wall, co-founder and CEO of Student Athlete Score, an NIL platform.

1) The opportunity for the 95%ers

The top athletes get access to bespoke deals given their heightened standing in the community or even nationally. But what about everyone else? That’s where data and AI come in. Platforms, like Student Athlete Score, can identify the long-tail of athletes and where they sit on the interest graph. Brands can work with them at scale through a series of micro deals. This is similar to how online ad networks, like Google Ads, work with small websites.

2) AI Agents to handle payments

If a larger brand buys into one of these campaigns to work with the long-tail of athletes, AI agents can easily identify the reach and engagement of each athlete and distribute payments accordingly.

3) Arbitrage opportunity for brands

If a brand wants to target a given geographic market, typically the best way to do that - outside of Facebook - is through costly radio, print and TV ads. But working with 100 local athletes who have built-in social media followings (ie micro influencers) can get the same reach for a fraction of the cost.

4) ROI will be non-negotiable

Digital advertising has directly-measurable results baked in. But so far there’s been little data to support NIL deals. Are they too big? Too small? Very quickly, the ability to prove ROI - which I’d define as both Return On Investment and Reach On Investment - will become table stakes.

5) The brand-ification of youth sports teams

As readers of Buying Sandlot know, I love me some Pottstown Scout, the influencer-led travel baseball team that sells every square-inch of athlete surface area with sponsor-laden swag bags.

What’s to stop brands from stealing this model and forming their own travel clubs with the best and most influential athletes in a 60-90 minute radius? Team Dunkin Donuts™ in Mass, as an example. I think the next step here is a white label club operator that works on behalf of brands, or a reverse-licensing company that facilitates these relationships with existing clubs. Like RCX does with NFL Flag for league operators. Only in this case, club operators are provided branded jerseys and other branded equipment.

You can listen and subscribe to the Buying Sandlot podcast with the following links:

“2 outs, play’s at first!” - every youth baseball coach ever with 2 outs

Last night, Orion Kerkering painfully (over)threw to home in this situation, proving that even Major Leaguers are capable of this moment-of-panic. Phillies manager Rob Thomson, JT Realmuto and other players all immediately rushed to console Kerkering as the Dodgers celebrated their NLDS win around him.

Something for dads and coaches to remember the next time this happens to an 8-year-old… probably tonight, tomorrow, or the next day.

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Good game.