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Guarding the Gate

February 24, 2012

More slowly than I would like, because it’s not a field in which I’ve had formal training or extensive practical experience, I’ve been learning about the world of startup companies and venture capitalists that discovered the sports world in the 1990s and have proliferated during the past decade.

Usually with their founder making the contact, many of these young companies have reached out to the MHSAA, hoping we will embrace and endorse or utilize their new product or service. Almost all owe their existence to the World Wide Web and to the passion of their founder, either for sports or for a concept they think solves some need of athletes, coaches or fans . . . or advertisers and sponsors.

And almost every one of these startups is looking for an exit; looking for a bigger fish to swallow them whole. And paying them handsomely for consuming the young guppy. A lucky few make what the industry calls the “Big Exit,” like a major network buying the startup for many millions of dollars.

We hear from many of these startups that the advertisers are clamoring for this or that they are promoting, but we usually see one of two things happen. Either the advertisers show so little interest that the startup fails, or what support the advertisers do provide goes to the venture capitalists and not to those providing the content.

As we screen the plethora of proposals to capitalize on high school sporting events in Michigan, we look for two kinds of assurances. First, that the suitor doesn’t have an exit strategy; and second, that the initiative will have direct benefit in terms of both money and message to those providing the content:  i.e., schools.

Most of the initiatives we screen will assist schools with neither money nor message, and some of them would actually provide a message that is contrary to the mission of educational athletics.

So we’re guarding the gate, in both directions – controlling the entrance to the high school sports market in Michigan, as well as the escape of those who are in our market for a fast buck and quick exit, big or small.

Cover Story Stats

September 12, 2017

Eight excerpts from the cover story of TIME Magazine, Aug. 24, 2017, “How Kids’ Sports Became a $15 Billion Industry” ...

  • The United States Specialty Sports Association, or USSSA, is a nonprofit with 501(c)(4) status, a designation for organizations that promote social welfare. According to its most recent available IRS filings, it generated $13.7 million in revenue in 2015, and the CEO received $831,200 in compensation. The group holds tournaments across the nation, and it ranks youth teams in basketball, baseball and softball. The softball rankings begin with teams age 6 and under. Baseball starts at age 4.

  • With the cost of higher education skyrocketing – and athletic department budgets swelling – NCAA schools now hand out $3 billion in scholarships a year. “That’s a lot of chum to throw into youth sports,” says Tom Farrey, executive director of the Aspen Institute’s Sports & Society program. “It makes the fish a little bit crazy.”

  • The odds are not in anyone’s favor. Only 2% of high school athletes go on to play at the top level of college sports, the NCAA’s Division I. For most, a savings account makes more sense than private coaching. “I’ve seen parents spend a couple of hundred thousand dollars pursuing a college scholarship,” says Travis Dorsch, founding director of the Families in Sport Lab at Utah State University. “They could have set it aside for the damn college.”

  • The Internet has emerged as a key middleman, equal parts sorting mechanism and hype machine. For virtually every sport, there is a site offering scouting reports and rankings. Want to know the top 15-and-under girls volleyball teams? PrepVolleyball.com has you covered (for a subscription starting at $37.95 per year). The basketball site middleschoolelite.com evaluates kids as young as 7 with no regard for hyperbole: a second-grader from Georgia is “a man among boys with his mind-set and skill set”; a third-grader from Ohio is “pro-bound.”

  • Children sense that the stakes are rising. In a 2016 study published in the journal Family Relations, Dorsch and his colleagues found that the more money families pour into youth sports, the more pressure their kids feel – and the less they enjoy and feel committed to their sport.

  • There are few better places to take the measure of the youth sports industrial complex than the Star, the gleaming, 91-acre, $1.5 billion new headquarters and practice facility of the Dallas Cowboys. Turn left upon entering the building and you’ll find the offices of Blue Star Sports, a firm that has raised more than $200 million since April 2016 to acquire 18 companies that do things like process payments for club teams, offer performance analytics for seventh-grade hoops games and provide digital social platforms for young athletes.
    Blue Star’s investors include Bain Capital; 32 Equity, the investment arm of the NFL; and Cowboys owner Jerry Jones, who leases Blue Star space in his headquarters. The company’s goal is to dominate all aspects of the youth sports market, and it uses an affiliation with the pros to help.

  • Across the US, the rise in travel teams has led to the kind of facilities arms race once reserved for big colleges and the pros. Cities and towns are using tax money to build or incentivize play-and-stay mega-complexes, betting that the influx of visitors will lift the local economy.

  • There are mounting concerns, however, over the consequences of such intensity, particularly at young ages. The average number of sports played by children ages 6 to 17 has dipped for three straight years, according to the Sports &Fitness Industry Association. In a study published in the May issue of American Journal of Sports Medicine, University of Wisconsin researchers found that young athletes who participated in their primary sport for more than eight months in a year were more likely to report overuse injuries. 

  • Intense specialization can also tax minds. According to the American Academy of Pediatrics, “burnout, anxiety, depression and attrition are increased in early specializers.” The group says delaying specialization in most cases until late adolescence increases the likelihood of athletic success.
    Devotion to a single sport may also be counterproductive to reaching that Holy Grail: the college scholarship. In a survey of 296 NCAA Division I male and female athletes, UCLA researchers discovered that 88% played an average of two to three sports as children.
    Other consequences are more immediate. As expensive travel teams replace community leagues, more kids are getting shut out of organized sports. Some 41% of children from households earning $100,000 or more have participated in team sports, according to the Sports & Fitness Industry Association. In households with income of $25,000 or less, participation is 19%.