Value proposition
(DEMAND)
(SUPPLY)
(CONNECTING DEMAND AND SUPPLY)
The service
"Sports Stocks" will provide potential investors with:
Sports Stock's source of revenue
Sports stock will get its primary revenue by:
Information on the site
Sports fans loves statistics and information. They consume information.
Sports Stocks's site will connect fans up with:
information on sports including:
Investment information including
Purchasing and selling stock on the site
Customers will be able to purchase stock through a page on the
site. This will be security coded and executed with a credit card.
The model will be similar to the off-shore gambling firms such
as IGC already use this
facility and on their web page they go out of their way to assure
investors of the security of their system.
Demand will come from existing sports gamblers and investors who
become interested in investing in sports clubs
Gambling
The revenue of the legal total US gaming market (source: Industry Surveys 1994) was:
1992 $10.4b
1993 $12.6b
1994 $15.6b
Betting on team sports is not legally permitted in any state other
than Nevada. Most betting on team sports is done illegally with
local bookies. The likely value of the US gaming market is likely
to be at nearer $30b when the black market is taken into account.
Of this share, most gambling is made in casinos, team sports gambling
may make-up $10b.
Much of this betting is sport specific - i.e. people betting on
a sport they follow and is usually not transferred into other
sports. It is not unlikely that there is a revenue potential
of around $500m for betting on soccer. Of this maybe only 20%
of this is transferable from betting on actual games to investing
in teams. Of this target market, there will be a growing share
of people who are linked up on the net.
Existing stock investors
Sophisticated sports betting (such as spread betting ) is already
popular with professionals in the City in London and on Wall Street.
In addition, there are many sports fans who are willing to invest
in their own team. For example, there are well over 50,000 holders
in the Boston Celtics stock
The problem in growing the service is a shortage of sports stocks
publicly listed. The value of sports franchises continue to appreciate
but there are as yet few stocks on the market.
European soccer
At present, there are eleven UK soccer teams listed on London's
secondary stock market (Alternative Investment Market) including
Tottenham, Manchester United, Sunderland, Millwall and Sheffield
United. This number has been growing rapidly and is set to continue
to grow.
The Italian soccer clubs Lazio, Fiorentina and AC Milan are all
looking to be floated on the AIM market soon. In Italy, it is
only possible to list after three consecutive years profits. The
trend in Europe, is for soccer clubs to float.
In general, these stocks have been doing exceptionally well. Manchester
United's being the most exceptional of all. Manchester United's
success on the stock market was the catalyst many other UK soccer
clubs followed.
US Sports
At present, only the Boston Celtics basketball
team is listed in the US.
The Florida Panthers Hockey team is looking to list. At present,
many of the leagues have restrictions on floating and at best
discourage it, primarily because a poor stock market performance
of a club can undermine fans faith in the sports. Battles which
undermine the ideals of a sport (e.g. players v's owners in baseball
can undermine fans enthusiasm and spending on a sport).
A major reason for the lack of floatations has been that the Boston
Celtics stock has not performed well ever since it was listed
in 1996.
Creating Supply
An addition of the service would be to create a stock market game
for a specific league where no clubs are listed such as Major
League baseball. Variables could be built in to create a stock
price - the most obvious of all would be the teams results, but
other factors could be targeted players fees. The game would be
a development and variation of the Fantasy
sports games. The difference would be that performance would not
be evaluated by points but converted into stock price movement
.
EXAMPLES OF STOCK PRICE MOVEMENTS OF SPORTS
TEAMS
There is no direct firm that offers a similar service. Sports
Stocks will be positioned between internet bookies and internet
stock brokers
Internet gambling firms
There are a huge array of sports gambling sites on the internet.
These include firms IG Index
and IGC. Many US internet
gambling services are set-up oversees to avoid directly breaking
the law. Sports Stocks should avoid this US regulatory problems
because it is not a sports betting firm.
Stock Market games firms
There are a number of companies who run stock market games, such
as the Fantasy Stock Market Game.
Firms in this area could become direct competitors if the service
took-off and other firms tried to edge into this niche.
Stock market etrade firms
This is likely to be a major source of competition. Firms such
as E Trade already allow
for stocks to be bought and sold on the web.
RISKS
The principles risks are