00:00This is a story about big money and big sports.
00:03They've gone together for years,
00:05but recently there's been an explosion,
00:07whether it's pro teams selling for astronomical prices
00:10or college players receiving seven figures
00:13for their name, image, and likeness.
00:15Now, big money is reaching down into high school and beyond
00:19as parents invest in the dreams of their kids.
00:27The goal is to play Major League Baseball.
00:30Brayson Hoffman is like many young kids in America,
00:33chasing big dreams and facing long odds.
00:37It's weird because it's kind of starting to change.
00:38It used to be almost like a hobby.
00:40Now it's like a job almost.
00:42But it's like, if I could have any job in the world,
00:45that's what it would be.
00:46And for families like the Hoffmans,
00:48supporting that job requires a full-time commitment of their own.
00:52We literally drive three and a half hours for him
00:55to play with this organization because of their level of development
00:58and the coaches they have.
01:02Between club fees, private lessons, nutrition coaching, and equipment,
01:07the Hoffman family spends more than $16,000 a year
01:10on their son Brayson's baseball.
01:13We would just make it work.
01:14I mean, sometimes there was points where,
01:17when he was younger and first starting,
01:19before I got the job I have now,
01:20and we were traveling a little more than we traveled now,
01:23we didn't have cable because we put, you know,
01:25that $100 a month towards ball for him.
01:28The costs got so high,
01:30the family invested in this RV
01:32to travel to Brayson's summer tournaments
01:35to avoid spending on hotels.
01:38Last night, I was hungry.
01:40And the Hoffmans are not alone.
01:42Across America, parents are estimated to spend
01:44$40 billion a year on their children's sporting dreams,
01:48dwarfing the annual revenue of America's Big Four sports leagues.
01:53I have so many of my friends, Greg, today that say,
01:55Alex, if you were a kid today, if you were 10 years old,
01:59Alex Rodriguez would never make it to the big leagues.
02:01And I would say, why?
02:02Well, because you and your mother couldn't afford it.
02:04And the same parents are selling their cars.
02:09They're having a double mortgage in their homes
02:10to be traveling around this perfect game stuff
02:13and all this nonsense.
02:14You have to make sports more affordable.
02:17When I was a kid, I played used sports.
02:21I didn't start any form of travel sports
02:24until maybe eighth grade, and it was barely travel.
02:28It was travel around the county.
02:31And sport was accessible.
02:33It was affordable.
02:34That experience has been transformed
02:37over the past 20, 25 years.
02:40Tom Ferry is the founder and executive director
02:43of the Aspen Institute's Sports and Society Program.
02:46He has studied the growing industry for decades.
02:49The growth really started with the travel team industry.
02:52So in the 1970s and for most of the 1980s,
02:56youth sports were dominated by local,
02:58low-cost, in-town recreation leagues.
03:01And then hockey and then basketball and baseball and soccer
03:08and other sports really in the 1990s and the early aughts
03:12really discovered the idea of youth sports tourism,
03:16building these large, what we call megacilities
03:19in places like, you know, Central Florida
03:23or Indiana or Arizona with many fields or gyms
03:27where you could attract teams and host these large tournaments
03:31and make a lot of money from parents who are paying for fees
03:34or watching their kids play or local hotel rooms,
03:39which the tournament organizers get a cut of.
03:43So once the youth sport tourism thing was put in place,
03:48then we saw the explosive growth of the travel team industry
03:52and ultimately the pushing aside of these local, low-cost recreational leagues
03:58that once existed really up through eighth grade
04:02and now often disappear around third or fourth grade for most kids.
04:07Who's paying that money?
04:08I mean, if it's the parents, I mean, not all parents can afford that kind of expense.
04:13Right. So that's part of the challenge
04:15is once you introduce these travel teams at ever earlier ages,
04:19you structurally begin to push aside the kids from the lower-income home,
04:24sometimes a kid from the middle-income home
04:26whose family can't afford that,
04:28especially if they have two, three, four, five kids.
04:32You can't do this for every kid.
04:33And you also don't have the time for it.
04:36Yet for the most part, as costs rise,
04:39parents have continued to show a willingness to pay.
04:42And big business is taking notice.
04:45IMG Sports Academy was acquired for more than $1 billion in 2023.
04:51And other high-profile investors are looking to get a slice of the youth sports pie.
04:56It's a great environment for private equity to get into.
05:00You know, you look at this messy space,
05:03you begin to buy companies, you roll them up, you consolidate,
05:07you, you know, move to as best as possible,
05:09sort of a vertical integration.
05:11There are no rules around what private equity can or cannot do in this space,
05:17as there are at the professional level.
05:19It's a big, messy environment and an exciting environment for private equity.
05:24Not all of them are doing the same thing.
05:27Some of them are really super focused on the elite environment,
05:31wringing more and more money out of families
05:33under the idea that your kid might be elite.
05:36And the word might is doing the heavy lifting.
05:39A recent study found 11% of parents believed their child could go pro.
05:44But the actual chances are tiny.
05:47Out of 10,000 high school players,
05:50fewer than 16 will be drafted by a major league baseball team.
05:54And the odds are even longer for the NBA and NFL.
05:59But even if a young athlete may not make it to the big leagues,
06:02there are a growing number of avenues to see a return on investment.
06:06Name, image and likeness deals offer college athletes and those even younger
06:11the chance to make real money that goes far beyond the traditional athletic scholarship.
06:17That's part of what drives new businesses like Overtime, founded and led by Dan Porter.
06:23We kind of started when we realized that this whole generation,
06:27Gen Z, Gen Alpha now, just wasn't watching television.
06:31And they weren't watching live sports on television.
06:33But they were watching all their favorite YouTubers and now their favorite TikTokers.
06:37So in between that space of traditional sports media and digital,
06:41we created a new sports entity.
06:44And after five years of doing that and growing it really big,
06:47we thought, okay, now we're this really big sports media company for young people,
06:51but we don't actually own anything.
06:53And we saw a bunch of opportunities and we launched Overtime Elite,
06:57which is a basketball league, Overtime Select,
06:59which is a women's basketball league, and OT7, which is a football league.
07:02Head's up.
07:03Head's up.
07:03Head's up.
07:04Touchdown.
07:05So now we're, I guess, in business school,
07:08they would say vertically integrated in that we both own the IP and we also distribute.
07:12Made up of some of the best 16 to 20-year-olds in their sports,
07:17it's elite competition paired with a platform that lets athletes build their brand
07:21and their earning power along the way.
07:24How does the overtime path compare with what we think of as a traditional one?
07:28You go to high school and you go play college ball, maybe you end up in pros.
07:31How does it compare?
07:33How does it fit up?
07:33Yeah, I would say in general, you know, if you look at basketball or football,
07:40there's maybe 25 or 35 kind of schools or platforms like us that play a national program.
07:47I always say there's, I don't know, 32,000 high schools in America,
07:51and 31,950 of them will keep doing the same thing that they've always done.
07:57They'll play their local school, they'll do other stuff.
07:59But there are these national programs that play and that invest a lot of money
08:06and where all the best players gravitate.
08:09And so it is kind of a little bit of tiered system.
08:12For those people who say, oh, I remember when I was in high school, we just did,
08:16a lot of that still exists.
08:18It's just that both the demand from the audience as well as from the best possible players.
08:24Playing in high school, if you're really good in scoring 100 points
08:28on somebody who's going to be your local dentist or real estate agent isn't as desired as it once was.
08:35Do the parents pay you?
08:36Do you pay the parents?
08:37How does the money flow?
08:38The parents don't pay us.
08:40There are, of course, academies across the country where parents do pay.
08:44For us, we're a media product.
08:46So the economics go through sponsorship and media.
08:50And then NIL exists at the high school level as well as the college level.
08:54So there's always going to be a small number of players who get paid.
09:00As earning potential for athletes expands, so do the business opportunities around them,
09:05changing the economics of the system.
09:08Until five, six, seven years ago, all sports teams were owned by families mostly,
09:16or occasionally companies.
09:17There was no private equity in sports.
09:19There weren't a lot of investment opportunities.
09:21That's clearly changed.
09:22So what happens when that starts to get saturated at the pro level?
09:28It moves to the college level.
09:30And NIL and conference readjustment and television rights now see a lot of money pouring into the
09:36college level.
09:37Well, now that picture is overflowing and going to the high school level.
09:41Be it NIL, college scholarships, leagues like overtime, or playing for the Yankees,
09:48there are more pathways for kids to see a return on investment.
09:51But Tom Ferry says that just encourages parents to spend even more money.
09:56This whole industry is built on incentives.
10:02And those incentives have changed dramatically over the past 30 or so years.
10:07So in the early 1990s, there was about $250 million a year in athletic aid that was handed
10:15out by Division I and Division II universities in the NCAA.
10:19Today, that's north of $4 billion.
10:24So that's a lot of chum that has been thrown in the water of youth sports.
10:31And it's making the fish, the parents, a little bit crazy.
10:34They want some.
10:34They think this is an actual meal.
10:37What they don't realize is it's really still hard to get your kid a college scholarship.
10:42For families like the Hoffmans, they know it's a long and expensive road to see their son
10:49Brayson chase his dream.
10:51But it's one they're willing to take.
10:54Every single time Brayson, like, kind of reaches the next level, I have, like, a moment is what
11:01I usually call it.
11:02Like, I'll have a moment.
11:04I'll get emotional.
11:05Like, the first time, you know, he goes on to, like, he went on to a high school baseball
11:09field.
11:09I was like, wow.
11:10I was like, okay, we're making progress.
11:13We're moving.
11:14I don't doubt he will make it because he's focused and driven, and it's what he wants.
11:21And we'll see him there one day.
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