OpEd from Quinten Griffiths, CEO of Sportball
“Private Equity” has become a polarizing term in youth sports. Over the past year or so,
we’ve attracted a lot of investment from this world, and a lot of parents and providers
are worried about what this means for the youth experience. So much so that the Let
Kids Play Act was introduced to restrict private equity firms from investing in youth
sports leagues, facilities, tournaments and technology platforms. The motivation behind
that concern is understandable. Families are feeling the pressure. Youth sports has
become more expensive, more complex and, in many places, harder to access.
As CEO of Sportball, I understand the concern and share parts of it.
I also think the current conversation is missing something important. Youth sports
should not be allergic to private equity. If we want to have a serious conversation about
the future of youth sports, we need to start with the fact that youth sports needs capital.
When something becomes more expensive, it’s usually a demand and supply issue.
Customers ask for more, and if suppliers can’t keep up – the price goes up, and
accessibility goes down. These suppliers need capital to grow. They just can’t rely on
the internal profit that they generate. They need capital injections to rise to meet the
demand.
As providers of youth sports programs, it’s up to us to provide sport experiences that put
kids first. We need the right culture, coaches, volunteers, programing and environment
for kids to learn at their best – but we also need the right capital.
Without capital, we can’t invest in the fields, rinks, gyms and coaches required to make
sports great. Without these investments, we risk leaving kids behind.
I’m here to say that the issue isn’t private equity vs. no private equity. The real issue is
good owners versus bad owners. Getting those two issues confused would limit capital
to the youth enrichment world and in turn, compound the accessibility problem.
Private equity firms function by gathering money from investors (Limited Partners, or
LPs). Small private equity firms gather $50M, and large ones can gather in the billions.
They get that money by making promises to their investors, such as a rate of return (like
20% – 30% a year) within a certain timeframe (like 5 – 10 years).
To generate those returns in this timeframe, private equity firms have to be aggressive
in how they operate a business.
Good private equity looks like investments in systems and people to grow a business
over the long term. Bad private equity looks like increasing prices without improving the
quality of the offering. Good private equity is a capital injection to boost hiring to meet
demand. Bad private equity is a roll up – combining several acquisitions into one large
business, because bigger businesses are worth more than smaller ones.
A lot of these practices should not be welcome in the youth sports industry, but cutting
all private equity risks throwing the baby out with the bath water.
We can’t respond by treating all private capital as predatory. Youth sports organizations
need money to grow and capital to invest in coaches, improve programming, build
better systems, support local operators, develop technology, expand into new
communities and make the day-to-day business sustainable. Passion matters, but
passion alone does not pay for insurance, staff, training, equipment, rent, software or
facilities.
If the goal is to help more kids get into and stay in sport, money is part of the equation.
The question is whether that money is being used to create value or extract it.
At Sportball, we look at capital through two lenses: time horizon and behavior. Sportball
is owned by Good Capital Partners, but our model is not built around a fixed exit clock.
My business partner and I own the majority of the company (we put up the money
personally), and we do not have a timeline forcing us to sell. For us, the private equity
model was a great way to get likeminded folks involved in a business that we care
deeply about.
That matters. When we bought Sportball, our first question was not, “How quickly can
we extract more from this business?” It was, “What does this business need to become
stronger over the long term?”
The answer was investment: in systems, technology, franchise development and the
brand. Those decisions were not made to create a quick bump in profit. They were
made to improve the experience for families, franchise partners, coaches, employees
and kids.
A short-term owner might look for ways to raise prices, change terms or take more from
customers for the same value. That is not our approach. If families pay more, they
should receive more. They should come back because the experience is better, not
because we found a more efficient way to charge them.
The same applies to franchise partners. A youth sports business is only as strong as the
people delivering the experience on the ground. If franchisees are not supported, if
coaches are not prepared, and if local operators cannot build sustainable businesses,
the kids ultimately feel it.
That is why I do not believe profit is the enemy of purpose. Without profit, leaders spend
all their time worrying about survival. How do we pay staff, support our families, keep
the lights on and make the model work?
With profit, a business has the stability to focus on doing good work. It can invest that
profit into better training, systems and experiences. It can serve its community more
consistently and make decisions from a place of strength rather than desperation.
Of course, profit cannot be the only goal. In youth sports, it should never be the first
goal.
My model has always been that a CEO is responsible to customers, franchisees,
employees and shareholders – in that order. If we take care of the first three, the
shareholders will be taken care of naturally. If we do not create more value for families,
franchise partners and employees, then we do not deserve to be more profitable.
That is the standard I believe youth sports should use when evaluating any owner,
whether that owner is private equity-backed, founder-led, nonprofit, public or anything
else.
Are they improving the experience for kids, expanding access, supporting coaches and
local operators, creating more value before asking families to pay more, thinking long
term and treating shareholders as the outcome of good work, not the only audience that
matters?
Those are the questions that matter.
The Let Kids Play Act is part of an important conversation, and I agree that youth sports
needs protection from predatory practices, but we should be careful not to confuse
responsible investment with exploitation. If policy limits bad actors, that is a good thing.
If it cuts off responsible capital that could help more kids participate, that is an
unintended consequence worth taking seriously.
Responsible capital can help youth sports grow and support better systems, stronger
franchisees, more sustainable businesses and better experiences for kids, but only if
owners are held to the right standard.
The question youth sports should be asking is not simply, “Is private equity involved?”
The better question is: “Are kids, families, coaches and communities better off because
this owner is here?”
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