Robert Kraft's Next Investment In Professional Sports

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Friends,

When Robert Kraft paid $172 million to acquire the New England Patriots in 1994 — the highest price ever paid for an NFL team at the time — he was laughed at. But almost 30 years later, the Patriots are worth nearly $5 billion, and no one is laughing now.

Even more interesting: Given the impressive valuation growth of all NFL assets in general and the New England Patriots specifically, Robert Kraft and his family have continued to expand their investment portfolio in professional sports.

The Kraft Group’s Sports & Entertainment Investments

• New England Patriots (NFL)

• Gillette Stadium (Venue)

• New England Revolution (MLS)

• Boston Uprising (esports)

• Kraft Analytics Group (Data)

• Patriot Place (Stadium Retail)

Now, Robert Kraft has made his next big bet in professional sports — announcing an investment in the Premier Lacrosse League yesterday.

The total investment, nor the valuation, is known, but Kraft co-led the funding round with Arctos Sports Partners and Brooklyn Nets owner Joe Tsai — an existing investor in the league.

Despite lacrosse being North America’s oldest team sport — played by Native Americans throughout the 1400s — the United States never properly developed a legitimate professional league.

That changed in 1999 when Jake Steinfeld, Dave Morrow, and Tim Robertson founded Major League Lacrosse, the first outdoor professional lacrosse league. Overall attendance grew for a decade straight, occasionally drawing more than 10,000 fans per game, but the business model appeared to be broken.

Players weren’t making any money. The average salary of an MLL player was around $10,000. The league didn’t provide health insurance, and coaches, trainers, and players all held other jobs.

Here’s a wild stat: Despite being the 1st overall pick in the 2008 MLL draft, Paul Rabil’s rookie salary was only $6,000.

These are the challenges Rabil faced when transiting from college to a professional career (source):

If lacrosse was the fastest growing sport in the United States, and attendance increased every year, why weren’t player wages rising also? This is where Paul Rabil and his brother Mike Rabil stepped in.

After offering their opinion and assistance to only be turned away by Major League Lacrosse, the Rabil brothers decided to start their own league in 2018 — a direct competitor called the Premier League Lacrosse (PLL).

Sure, they still played outdoor lacrosse, but everything else was different. The PLL was backed by serious investors, including billionaire Brooklyn Nets owner Joe Tsai, The Raine Group, and Creative Artists Agency (CAA).

That enabled the PLL to recruit players away from the MLL with a few key advantages.

• Average salaries of $35,000, compared to the MLL average of ~$10,000.

• The PLL offered its players equity ownership in the league.

• All PLL players were given health care coverage.

Unlike other major professional sports leagues, the PLL decided to operate a single-entity operation. That gives them the ability to control all eight teams, their players, and business operations.

To increase viewership, the PLL relied on social distribution and changed the way lacrosse was traditionally broadcasted. For example, they removed wide-angled cameras, shortened the field of play, reduced the shot clock, used yellow balls instead of white, and even added intra-game interviews with players after goals.

That enabled them to sign sponsorship deals with companies like Gatorade, Adidas, Champion, and Ticketmaster. They also added a sports betting partnership with DraftKings and recently signed an exclusive partnership with NBC’s Peacock, putting their content in ~100M+ homes.

Even more impressive: While seemingly every other professional sports league in the world lost billions of dollars collectively last year due to COVID-19, the PLL pivoted from their traditional tour-based schedule to a 16-day tournament in late July.

The results were fantastic. Ratings were up 27% year-over-year, sponsorship revenue was up 59% during the same time period, and overall league revenue actually increased despite no in-person attendance.

In simple terms, the PLL’s business model is working.

Less than two years after their official launch, the Premier Lacrosse League (PLL) and Major League Lacrosse (MLL) announced an agreement to merge last December.

It expanded the league from seven to eight teams, but more importantly, it creates one unified outdoor professional lacrosse league. From a talent perspective, that’s extremely important.

The PLL plans to double its revenue this year, with hopes to reach profitability by 2024, but in the end, I’m excited to see how they are able to leverage additional capital to continue building the sports league of the future.

Have a great day, and I’ll talk to everyone tomorrow.

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