Mets Sale May Shed Light On Team Valuations In Covid-19 Era, But Esports Should Tempt Investors, Too – Forbes

On Monday, final bids for the New York Mets are due. A bidding war reportedly broke out when Jennifer Lopez, Alex Rodriguez and a few tycoons indicated interest.

What we’ve learned about these transactions over the years is that you should believe almost nothing you hear or read in the news. The best owners and bankers usually know how to keep a deal quiet. On the other hand, of course, we are taking about the Mets.

Given the unprecedented circumstances, the entire sports world will be tuned in to see what effect game cancellations and an absence of live fans have had on a major sports franchise’s value. In the winter, it was reported that the Mets were about to ink a deal at a valuation of $2.6 billion, so we’ll see. The bigger question with the Mets might be whether the New York Post will report about the deal in the sports section or on Page Six.

So how are sports valuations and transactions coping during the time of Covid-19? Bobby Sharma, who has almost 20 years of sports, media and entertainment experience, spoke with Professor Tiryakian and offered some insights and the perfect analogy. Sharma is special adviser to the sports industry team at Foley & Lardner LLP; founding partner of Electronic Sports Group, an esports advisory firm; partner at GACP Sports, a PE firm; and vice chairman and interim CEO of Soccerex, and he was formerly SVP/global head of basketball at IMG and VP/general counsel of the NBA Development League. He works with teams, leagues and stakeholders across a variety of professional sports.

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Sharma, discussing franchise transactions in this era with no fans in the stands but plenty of fans watching, believes that NBA, NFL, NHL and MLB franchises are best compared to real estate holdings at a time like this: The best properties at the best addresses are going to hold their values. If you live on the Upper West Side near Central Park, there is probably no need to worry. However, if you bought in Queens or Brooklyn during the appreciation growth period, you’re probably in a different situation. 

The conversation then shifted to the esports industry, which has not faced the headwinds of traditional sports. In fact, Covid-19 has likely been a big boost to this burgeoning category of sports and entertainment. As an esports insider and partner at ESG, Sharma has his pulse on the phenomenon that is esports and its ecosystem. Sharma told us: “Stay-at-home orders have proven to be a bonanza for the industry. From Riot Games’ League of Legends to Activision ATVI ’s Overwatch League and newly formed Call of Duty League to Epic Games’ Fortnite, viewership and franchise values in the esports industry have seen dramatic increases.”

According to Sharma, Twitch—the live-streaming service operated by Twitch Interactive, a subsidiary of Amazon AMZN , primarily focused on video game live streaming, including esports competitions—saw a 56% rise in viewership in this year’s second quarter, amassing more than 5 billion hours watched. In June alone, viewers watched around 1.5 billion hours on Twitch, representing a 60% jump in year-over-year viewership for the month.

Fortnite saw a 100 million year-over-year jump in registered players—from 250 million to 350 million—as Covid-19 kept people indoors and game consoles close by. Franchise values for Riot’s League of Legends properties have seen a 300% increase in just three years, with values approaching $30 million from the initial $10 million price. 

“Seismically, esports organizations are drowning in funds as the likes of Michael Jordan and other wealthy and influential investors are throwing money at entities like Cloud9 and Team Liquid, who have become the de facto aggregators in the esports industry, similar to Fenway Sports Group, MSG or Anschutz Entertainment Group in the traditional sports world,” Sharma said.

While we don’t know if the Mets will be able to get Steve Cohen, Josh Harris or A-Rod to pay more than $2.4 billion for a franchise sustaining steep losses, we do know that the loser of the auction could definitely put some of those considerable funds to work in the esports industry without the worry of when fans will be allowed to get back to the park.

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