Underweight: Democratizing Sports Ownership

Key Stats:

Summary

The Fan Owned Club team has been selected as an “Underweighted Deal” by KingsCrowd. If you have questions regarding our deal diligence and selection methodology, please reach out to hello@kingscrowd.com. 

Problem

At the highest levels of sports, teams generate tremendous revenue and achieve impressive valuations. The most valuable sports team in the world is the Dallas Cowboys, worth $5 billion with an operating income of $365 million. While Americans think of the Cowboys, the New York Yankees, and the Los Angeles Lakers as valuable powerhouses, they often forget that global soccer generates billions in revenue each year. In fact, two European football clubs, Real Madrid and Barcelona, are the third- and fourth-most valuable sports teams in the world. 

Sports team owners are typically wealthy, prominent celebrities and personalities like Jerry Jones of the Cowboys, the Steinbrenner family of the Yankees. These individuals and families profit from the popularity of the team they own, and average sports fans don’t receive a share of the pie. While the Green Bay Packers offer a notable exception (fans can occasionally purchase shares of the publicly-owned non-profit), most Americans can’t invest in sports teams, though democratized sports team ownership is more common in Europe. 

Passionate fans would love an opportunity to get closer to their favorite sports, teams, and players, but they don’t have many options. Are fan-owned-clubs the way of the future?

Solution

Fan Owned Club is a business entity that owns a large stake of FC Pinzgau, an Austrian soccer team, and effectively operates the club. Fan Owned Club invites fans to invest in FC Pinzgau and achieve their dreams of sports team ownership, bringing them closer than ever before to the real decision-making behind sports management. 

Like typical wealthy sports team owners, Fan Owned Club investors will have access to exclusive club content, including live-streamed games, interaction with the manager (coach) and players, and the opportunity to attend annual club meetings in the club’s picturesque hometown in the Austrian Alps. 

Investors will become part owners of FC Pinzgau, one of 62 teams competing in Austria’s third division of soccer (learn more about the European divisional system here). The club is led by manager (coach) Christian Ziege, who formerly played for the dominant German national soccer team as well as leading European clubs Bayern Munich, AC Milan, Liverpool, and Tottenham. Ziege joined the club on a multi-year contract after trialing as an interim coach in spring 2019 and will be a key player in the club’s quest for promotion into a higher Austrian division. 

Prior to the end of the spring 2020 season due to COVID-19, FC Pinzgau was favored to achieve promotion to the Austrian second division (the equivalent of winning a championship in American sports terms). This promotion would further the club’s quest to play beyond Austria in the cross-European competition circuit, which promises better sponsorships, media partnerships, ticket sales, and even prize money.

The Team

Fan Owned Club has three co-founders that lead a large team of contributors and advisors. Mark Ciociola is Fan Owned Club’s co-founder and CEO, an entrepreneur who previously owned and operated multiple franchises of Discovery Map International, a tourism-focused marketing company. Ciociola is joined by co-founder and COO Steve Paris, a corporate executive and former Senior Vice President for Aimia, a global loyalty solutions company. Trey Fitz-Gerald is Fan Owned Club’s third co-founder and the company’s CMO. He is a sports marketing executive who oversaw the launch of America’s Real Salt Lake, a Major League Soccer team. 

The Fan Owned Club team also includes the current President of Discovery Map International, a soccer advertising expert, Major League Soccer front-office expert, and digital development and production designer.

Growth Plan

Fan Owned Club’s revenue grows in correlation with the sporting success of FC Pinzgau. The company does not offer specific plans for bolstering the club’s chances of success, beyond the obvious: Pinzgau’s prominent manager will attempt to acquire skilled players and build a cohesive team to win matches and achieve promotion to the Austrian second division, and subsequently the Austrian first division. It is safe to assume that the club’s ultimate goal is to enter the European Champions League and earn recognition as one of the most prominent and successful clubs in the world. 

Rating

After careful consideration of the company’s areas of opportunity and seeming weaknesses, Fan Owned Club has been ranked as an Underweight deal. Investors should consider two critical uncertainties when evaluating this deal: 

• Uncontrollable and unpredictable nature of sports performance: In most businesses, a strong founding team, provable business plan, and long-term dedication to growth can generate at least moderate returns on invested capital. Succeeding in these businesses comes down to good process, and typically good process yields great results. In sports, however, good process does not always yield good results. There are a number of uncontrollable factors that influence how well a sports team performs in a given match or given season. The only way that investors will receive a sizable financial return from Fan Owned Club is if the team performs well, ascending through divisions of Austrian soccer and ultimately achieving notable status in the ranks of Europe’s best soccer teams. That future is inherently uncertain, even with the best team leadership and players. Therefore, an investment in Fan Owned Club is similar to a simple sports bet: uncertain and risky.

• Long-term impact of COVID-19: Sports around the world screeched to a halt due to the global coronavirus pandemic, and it is uncertain how and whether teams will be able to recover from the continuing hiatus. While a soccer club of this size is likely not generating the bulk of its revenue from ticket sales, Fan Owned Club will still take some degree of income hit from the lack of games played (note that it may be a very long time before fans return to sports stadiums in full force). It may be more difficult to acquire international players in the wake of COVID-19, which is likely key to the club’s long-term ascension in the European ranks. Merchandise sales and other sources of revenue may slow significantly due to a global recession. There are numerous COVID-related uncertainties facing Fan Owned Club, and now may not be the best time to invest in an industry hard-hit by the pandemic. 

Fan Owned Club promises a unique opportunity for soccer fans looking to experience the next level of fandom as a partial owner of a club. However, the definitive benefits of an investment are just that: experiential. This investment bears greater financial uncertainty and risk than typical business investments due to the inherent volatility of sports performance. That uncertainty is only further compounded by the coronavirus pandemic’s impact on global sports. Therefore, Fan Owned Club is an Underweight deal.