Treating Players as Partners not Products
How Overtime is revolutionizing sports with a focus on personalities, professional progression and partnership
Today’s Innovation Armory is on Overtime, the leading Gen Z and young millennial sports media brand that recently launched its own basketball league, Overtime Elite. Overtime has raised $140M+ from the likes of Jeff Bezos, Drake, Kevin Durant, a16z, Spark Capital, Banana Capital and more. Thank you to Farzeen Ghorashy, Chief Strategy Officer and Chief Financial Officer of Overtime, for sharing his perspective for this piece! Also, thanks to Turner Novak, Founder of Banana Capital, for sharing more on his thesis for investing in Overtime. Read on for more about:
The synergies between combining a media brand with a sports league
Building audience engagement and athletic attraction moats in sports
How Overtime Elite could overtake the NCAA as the preferred scouting league for the NBA
Positioning Overtime’s new College Athlete Creator Studio in the context of the NCAA’s lifting of its NIL restrictions
The opportunity in tokenizing player, team and league equity for fans
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For Much of Its History, the NCAA Has Been a Broken Institution
Up until 2021 (and still in many ways), NCAA college athletes, particularly in basketball, have been treated like products in a broken system:
Up until June 2021, NCAA athletes had been banned from making any money off of their personal brands (NIL - name, image and likeness) in order to remain eligible for NCAA competition. Even if an athlete made $1 through a sponsorship deal, they’d lose eligibility whereas universities pocketed billions of dollars in sponsorship revenues.
At university, education is heavily de-emphasized relative to athletics and there have been numerous documented cases of academic fraud where athletes are encouraged to take “phantom / no show classes” where they receive grades for classes they don’t actually attend. The end result is that players who go pro lack important life skills they could have otherwise gained through robust education and those who don’t make the cut have restricted career options and a limited safety net to fall back on which introduces financial and personal obstacles for athletes and for their families. Some student athletes even cite cultural issues where there is a pressure from team members, coaches, etc. to care less about academics than sports in order to fit in.
Universities are focused on making money off of athletes during their time in school programs and therefore take a more short-term oriented view towards competition over injury prevention and broader health concerns. Nearly 30% of college athlete injuries each year are caused by overuse. What’s even more insane is that universities are not required to provide / cover healthcare when athletes get injured and can even condition scholarships and admission to programs based on continued good health. In injury prone sports, from an athlete’s perspective it makes sense to get compensated as early as possible to de-risk the chance of serious injury (and the associated impact on future earnings potential) and to take a more long-term view on your health. Neither of these factors have historically been prioritized in the university sports system
The end result of these factors is a historical institution that treats players as products over people and partners. The system is changing though starting with the Supreme Court’s unanimous decision that the NCAA’s NIL restrictions on athletes violated antitrust law:
The Independent Evolution of Media Coverage and Sports Leagues
Why don’t traditional cable media companies own sports leagues? At face value, it would make a lot of sense for TV shows / networks to want to save the league content rights fees they pay in order to televise sports content and instead vertically integrate and invest in their own league IP. They would also get to capture more of the value from league appreciation as viewership grows (value they have historically helped create through quality coverage that both enables and incentivizes more fans to tune in) as opposed to renting league rights. I believe a fundamental issue with a media conglomerate like Comcast buying a sports league is that when you assess the linear TV media value chain, it would be too anti-competitive to own sports leagues when you assess value capture across the whole vertical value chain. This could be different under a digital-first model where social media accounts and sports leagues are paired together but where the distribution platform is independent. Take Comcast for example: It already has Xfinity, NBC Universal and content networks / producers, which could make it seem highly anti-competitive to also acquire a league and expand its reach fully downstream:
In addition, historically, TV media conglomerates had a captive audience they could sell into because they controlled the means of distributing content. Sports leagues (And thereby also individual teams and their constituent players) had little choice but to build their own audiences from this captive TV audience if they wanted to extend reach beyond in-person attendance of games. Therefore, by controlling the means of distribution, TV conglomerates had more of the leverage and therefore had less of a business need / imperative to purchase a sports league to expand their business vs. continue to invest in producing new TV content. With the proliferation of distributed social media, this dynamic has shifted. Now individual teams and players can build their own brands through social media platforms like TikTok and Instagram and are theoretically able to disintermediate the controlled distribution of linear TV via the right social media and audience-building partners. This creates a unique opportunity for a media business that positions itself as a friend to players looking to build and monetize their own audiences to more actively operate sports leagues in a way that is also not anti-competitive because of its independence from the platforms on which the content is primarily distributed. Combining a sports league and digitally native media business would unlock a whole host of synergies including:
Unparalleled access to players to improve content on the media side
Built in audience engagement advantage by leveraging existing media channels yielding a lower fan acquisition cost
Greater ability to shape the media narrative around competition
Overtime’s digitally native audience-building media strategy is a powerful base from which to launch a high school basketball league. Its approach has attracted the attention of some of the world’s top investors across technology, media and sports.
I caught up with Turner Novak, Founder of Banana Capital, to learn more about his thesis for investing in Overtime:
"It's not everyday a company is positioned to create global sports leagues across multiple categories. By first using social to build distribution, Overtime is positioned to use a bottoms-up strategy to compete with incumbent sports organizations."
Enter Overtime, Threading the Needle Between Sports Media, Technology and Sports Leagues
Overtime is the leading sports media business for Gen Z and young millennials creating digitally native sports content of basketball, football, soccer, eSports and more. While the business initially started in the sports media space, they recently launched their own men’s basketball league (Overtime Elite) targeted at high school athletes aged 16-18 and are expanding into other sports and technology verticals including sports gambling. They are trailblazing the way for digital media organizations to develop, own and promote their own sports league and are benefiting from the synergies that come with this dual-pronged approach, which I will discuss later in this piece.
This is meteoric innovation of business models in sports and to my knowledge is the first instance of a leading media company leveraging their existing audience and social reach to launch a sports league competitor. Overtime dunked on the incumbent sports media brands with this powerhouse play:
To learn more about the origins of Overtime and its recent independent league launch, I caught up with their Chief Strategy & Financial Officer, Farzeen Ghorashy to learn more:
A Snapshot of My Conversation with Farzeen Ghorashy (CSO & CFO of Overtime)
SN: What initial insight led to the founding of Overtime?
FG: Overtime was started five years ago with the understanding that the audience was bottoming out in sports. There was all this disruption that happened in the scripted media space. If you ask the average teenager what channel their favorite scripted content is on, they probably would have no idea because of their focus on VOD and Youtube. When you look at the sports space, there has been minimal innovation over the last 30-40 years. If someone was in a coma in 1970 and they woke up in 2021 and tuned into a sports event, it would be a similar announcer, same view, maybe different players. We have understood for a while that young millennials and gen Z is consuming sports content in a really different way and that no one had really tried to build the ESPN custom-made for this generation of sports fans. What is common knowledge now around how sports is holding up the bundle for telecom companies and catering to the older fans, we’ve known that for a while. We set out to build a brand on top of platforms like TikTok, Youtube, etc. and meet the fans where the are.
SN: Could you provide some more context on your initial traction and how the team’s thesis is differentiated relative to other sports and media players?
FG: Fast forward 4 years, we have built effectively the largest sports media brand in the world for young millennials and gen z. We have over 50M followers and do over 1.5B+ views per month. We’re huge in basketball. We’re big in football as well and also have an eSports division. Primarily, we have always thought about our media business very differently and our ability to launch a sports league shows how different our thesis is. 3-4 years ago, we didn’t set out to build a sports league, we didn’t necessarily view sports betting as a big opportunity, but we have been at the forefront of capturing value at all of those moments of disruption in the space. You can use the analogy that if you are bullish on the intersection of sports, media and tech, would you buy an index fund to track against that? The answer for many people would be yes and investing in Overtime has been effectively that for our investors as we have been able to expand our core competencies into many additional verticals leveraging our strong media distribution.
SN: Could you provide some more context on the new league initiative for men’s high school basketball? What opportunity do you see in other sports outside of basketball?
FG: The prime target for the league is 16-18 year olds. We are mostly focused on juniors and seniors in high school. Currently, we are just focused on male basketball. We believe female basketball has a similar issue and could benefit from a comparable league structure. Issues around athlete disempowerment persist across all sports, but basketball is where we have built our brand today. A league for football, eSports, etc. would look different as we expand over the long-term. However, the commonality would be that we have millions of followers to distribute the content to on day 1, a strong brand and an ability to story tell like no one else in the space.
SN: How do you position your media ecosystem in a differentiated way to advertisers?
FG: If we have users in our ecosystem, they may want to interact with different parts of that ecosystem. If we are talking to Nike or to a luxury brand, there may be a demographic they are particularly interested in. We have lifestyle content too, for example, the biggest sneakers / kicks lifestyle account on TikTok. We also have the biggest football, women’s basketball, soccer accounts, etc. The audiences that follow those account are not necessarily interested in multiple different areas, but the idea is to bring as many people under the Overtime tent as possible. It’s not necessarily 1:1 where you have a vertical and need to specifically monetize that vertical and realize a certain amount of ROI. There is value in being able to push an advertiser through the various points of contact that fans in the ecosystem have vs. pushing them through only one channel.
Building a Dual Moat in Audience Engagement and Athlete Attraction
At the end of the day, sports leagues are in a sense market makers between fans / audience (demand) and sports talent (supply) engaging with one another through the acts of viewing and competing in sports events. To be successful in launching a new league, it is important to be able to create sustainable competitive advantage vs. an incumbent on both fronts. Otherwise, you run into a bit of a chicken and egg problem where it’s difficult to make both fans and athletes reliably make the jump. Overtime is well positioned on both the fan and athlete vectors to better engage both stakeholders vs. the NCAA:
Distribution Strategy - Overtime has a digitally native and multi-modal distribution strategy that is internet-first. Overtime has the top sports accounts on TikTok across multiple sporting events and there is only a compounding advantage to holding the leading attention spot in sports social media as they will be able to use existing accounts to cross-pollinate and promote new accounts over time. Gen Z and young millennials want to watch content on these social media platforms and so Overtime reduces friction in the sports watching experience by meeting younger generations where they want to be met. Overtime has the benefit of being able to tap directly into its own accounts for distribution to reach 50M+ fans instantaneously and to also be able to control its own league messaging through proprietary media source. The NCAA and traditional sports leagues are also encumbered by exclusivity restraints and restrictive provisions on how their content can be distributed given their legacy agreements with linear TV businesses.
Creator Focus - Overtime’s content strategy is heavily focused on telling player narratives in intimate ways that help breed a stronger connection between the athlete and their fanbase. The stories dive into their backgrounds, demonstrate their behind the scenes resilience / grit and showcase their personalities in ways that make these athletes much more relatable to the average fan. Here’s an example for Ashton Sylvan in boxing:
This sort of personalized, intimate coverage of players’ lives keeps fans engaged more, especially those that crave a feeling of connection with their athletes of choice.
Media Synergies - given Overtime also gets high social media engagement for content on their social channels across TikTok, IG, Youtube, etc., it can leverage data on user content interactions to inform aspects of the league to make it more entertaining and engaging to its audience base. Overtime can track what content gets the most engagement to improve league rules, halftime shows, interviews and more to make the end-to-end entertainment experience more engaging for the average fan in each livestream. The media distribution provides data synergies to optimize the league format further.
Fair Compensation & Benefits - Relative to the NCAA, athletes in Overtime Elite actually earn a salary for playing. The business is offering a minimum of $100,000 to all players with some contracts as high as $1.2 million for a season. Overtime is also guaranteeing benefits like healthcare coverage to all athletes. Overtime’s league starts before students are even eligible to play in college, so their choice is join the league and get paid a hefty sum + benefits or get paid nothing to play high school basketball. The answer to that question is like asking a fat kid if he wants to eat an ice cream sundae or raw broccoli?
Not quite actually because by accepting payment for their athletic performance, Overtime athletes are forfeiting the right to play in the NCAA so their choice really relates to weighing the opportunity cost of not playing in the NCAA. However, for many student athletes this is absolutely life-changing money and with uncertainty around future performance, injury status, etc. it is quite a compelling offer. Plus, if the regulation changes to let NBA teams recruit right out of high school this concern is irrelevant over time.
Training & Skill Development - Overtime Elite will be offering students customized training programs that teach important life skills to athletes around financial literacy, communications, health and wellness and community empowerment that will also be important in their roles as athletes. The curriculum is customized and tailored to the needs of individual athletes to improve learning outcomes and academic engagement vs. the bending of rules around education that happens under the table at some NCAA programs. This skill development provides meaningful incremental value to athletes. Relative to the NCAA, Overtime Elite athletes get compensated for play and also get free education, not just a University claiming that their subsidized education is enough compensation for their gameplay.
Earlier Brand Building - Overtime Elite gives athletes a national platform to build up their fan and follower bases from a much younger age than the NCAA. The fame, sponsorship deals and entertainment value that come with building up such an audience are valuable to players who get a head start on building a national / global sports career with a large following . A greater fanbase from an earlier age also makes these players more valuable NBA prospects eventually from an entertainment perspective. With the opportunity to earn income from your brand from a younger age, this opportunity can be even more lucrative for players, the earlier they start investing in building their audience
Scouting - Overtime’s downstream media coverage of up-and-coming high school players has given them superior connectivity in terms of scouting prospects for their new league. Overtime already earns sponsorship and advertising income from its high production quality press coverage and layering in scouting activities into these existing media activities should be relatively seamless. Moreover, besides scouting for their own league, the high profile high school level games gives younger athletes strong exposure to future NBA scouts they otherwise would not get in high school which could expedite a path into the NBA down the road for these players.
Retention Flywheel - Overtime Elite will work with its players to help them maximize their earnings and income off of their name, image and likeness leveraging sponsorships, merchandising opportunities, NFTs, advertisements, trading cards, licensing and more. As a high school student, it is difficult to navigate the landscape of these opportunities on your own, but Overtime will help athletes secure and evaluate the opportunities that are right for them and equip them with the financial literacy to be able to evaluate these sorts of opportunities on an ongoing basis. In my opinion, it is akin to the famous 1957 drawing of Disney’s flywheel strategy: Build a media company with creative IP at the center that monetizes through merchandising, comics, cruises, parks, music and TV in a reinforcing and synergistic circle. Overtime will attract and retain players by helping young athletes unlock their own “Disney-like flywheels” de-risking their careers, creating financial security and building their audiences from a much younger age than many thought ever possible by monetizing their personal athletic brand 360 degrees:
Creating Value for the NBA
In my mind, one of the driving questions about the relative success of Overtime Elite vs. the NCAA is: will the existence and popularity of Overtime Elite create additional value for the NBA over the long run? Fundamentally, if Overtime Elite positions itself as a preferred pool of scouting talent for the NBA vs. the NCAA then it will solidify advantages in audience attention and athlete attraction by becoming the leading pre-professional league. Who will Adam Silver fast track into NBA heaven over the long-term?
The value of a player to a given NBA team can be reduced down to two factors: Quality of Play and Marketability of Players, which account for both i) how much more competitive a player makes a given team and ii) how much more likely a player makes a fan tune into / show up to a game (e.g. entertainment value). These two factors are like the PB&J of scouting players:
There are two elements to quality of play that are closely related to the well known nature vs. nurture psychological framework: a) natural talent and b) play improvement. The ability of Overtime Elite to attract players that are naturally most talented relates to the factors already discussed in the section on fan / athlete competitive advantages. However, I think there is a reasonable case to make that players that join Overtime Elite will be able to improve their quality of play at a faster pace than those in the NCAA to gain a competitive advantage over time. We’ve all seen tapes of ridiculously talented high school players absolutely obliterating the other team, like this tape of Josh Selby perpetually dunking on less talented players:
If Overtime Elite players get an extra two years competing against some of the best talent globally in their cohort (vs. mediocre average talent in their hometown), they will be challenged from an earlier age and develop better quality of play. Josh Selby probably would have developed a lot more his senior year if he was challenged more instead of dunking on most players in his region all the time. Further, compensation from a younger age and tailored educational programs that also teach proper nutrition and rest management have the potential to alleviate mental and physical health strains on players and their families, unlocking conditions that could help bring about better play potential.
With regards to player marketability, Overtime Elite players will have larger pre-existing fanbases from a younger age due to an ability to start activating millions of digitally native fans in games through social media channels and a greater investment in collaboration with Overtime in developing their personal brands.
The NBA is watching as commissioner Adam Silver said he has “no opposition to paying young people” on a different path and “will be paying a lot of attention because those players are potentially the future of our league.”
Let the games begin.
Overtime Positioning With New NCAA NIL Regulations
In June 2021, the NCAA lifted the leagues archaic restrictions historically prohibiting student athletes from earning income off of their name, image and likeness. Call for celebration for all college athletes, am I right?
Interestingly, while this news seems at face value negative for Overtime’s positioning vs. the NCAA (namely the potential for more lucrative earnings from a younger age), I believe the nature of the regulations still favor Overtime Elite. Under the new regulations, while players can earn NIL income, Schools are not allowed to be involved in creating these NIL opportunities for their athletes. This is highly significant because it means that athletes who want help navigating the ecosystem of lucrative NIL opportunities will seek partners and that partner will not be affiliated with the NCAA. Given its large fan / audience base on the media side, Overtime is well positioned to be the partner of choice to help college players capitalize on their brands to ink sponsorship deals and other paid opportunities. In August 2021, Overtime announced a new College Athlete Creator Studio to help college athletes access lucrative sponsorship opportunities leveraging its social distribution accounts, high production quality content studios and its in-house creative talent. Previously, Overtime was not able to work with this pool of college talent because accepting sponsorship dollars would have eliminated their NCAA eligibility status. With these regulations, Overtime both defends its preferred status as the partner of choice at the high school level, while increasing its value to college athletes. This latter value to college players will have a large benefit to its content quality / selection and eventually further boost its audience on the media side. As its college media content and connectivity at the college level grows stronger, it will grow its audience larger and this larger audience distribution network will make its league more attractive to high school students deciding between Overtime Elite and the NCAA.
Tokenizing Player Equity
One of the monetization areas that Overtime will help its players explore is issuing NFTs to fans, which could likely take the form of scarce digital art, rare gaming collectibles, digital trading cards and more. I think there is an interesting opportunity to take this idea one step further and actually tokenize equity in players or in the league to increase fan engagement. One interesting business in the sports tokenization space called Chiliz (owner of Socios) is working with professional sports leagues (starting with European Club soccer) to offer fan tokens that offer fans numerous benefits including:
Ability to “Own a Share” of your team and speculate on its value in secondary markets
Opportunity to Vote on Team / Club Decisions
Player Meet & Greets
Access to an Exclusive Super Fan Community
Access to Exclusive Merchandise and Collectibles
I think there is a massive opportunity to further increase fan engagement for Overtime Elite vs. the NCAA by offering tokenized equity in both the league and in individual players. Tokenized equity could give fans the exciting opportunity to shape decisions in an emerging league in order to actively shape the league’s trajectory and share in the growth of the league over time. In addition to the levers Socios is using above for fan engagement, some other ideas for Overtime Elite include:
Gamification of Trades, Drafts and Wins - As players get traded and drafted eventually to the NBA, reward fans who have ownership in those specific players with cash dividends to incentivize more active fan engagement. You could even reward players that have ownership in a specific team that wins each game, creating a more long-term and sustainable type of sports bet through team equity speculation
Exclusive Social Media Appearances - Above a certain token threshold, a fan can choose a player to appear in a collaboration video to help up-and-coming Gen Z creators. Similar to what PearPop is doing but in the context of sports specifically
League Participation - express your opinion on new league rules / initiatives like new jersey designs or number of fouls before bonus / double bonus. They could also find a way to allow those with tokenized equity to participate in the game streams by letting fans vote to overturn an unpopular referee calling with supermajority veto power
NBA Draft Watch Parties - let fans with a certain number of tokens attend a draft watch party with their favorite players in the league
The opportunities with what could be done with this tokenized equity are endless. I believe the benefits to the league would be very meaningful and could help take even more share of fan attention from the NCAA:
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