The American Cornhole League (ACL) closed on its first outside investment round last week. John Thompson III (VP for player development and engagement, Monumental Basketball) and real estate investor James Simmons III (who is also the founding partner of Asland Ventures) bought into the organization responsible for the standardization (think: rules and equipment) and professionalization of the bean bag toss game. The terms of their investment were not disclosed.
One can understand why outsiders might question investing in a perceived tailgate game. Thompson was initially cautious, too. But “as the group educated ourselves on the sport, the industry [tied to it] and the potential for growth from both a participation and business perspective, we became more and more comfortable with our inclusion,” he said.
Simmons said the pair can envision “cornhole becoming a national sport and enterprise from a television perspective, as well as an in-person experience.” And if that occurs, the upside for the first outside money into the ACL could be tremendous.
Our Take: Thompson acknowledged that the ACL does not fit the “traditional investment strategy” (i.e. it is not wildly profitable). But Simmons explained that he and the former Georgetown basketball coach are not “necessarily IRR driven,” either. The duo is best described as a pair of long-term growth investors who look for opportunities to invest in companies they believe “can grow at a better-than-average rate of return,” he said. For the record, the ACL would not disclose current revenues.
Like “most [who invest or are invested] in sports enterprises and teams,” Simmons says he expects the value of cornhole and ACL overall to appreciate over time. He’s confident that will be the case because of the strong foundation ACL commissioner and founder Stacey Moore has constructed and the multiple profit centers the organization has developed.
Just a couple of years ago, sponsorships made up roughly 80% of company revenues. Today that figure is down to around 50%. Between merchandising and licensing, “a strong network of sponsors; the local, regional and national [tournaments]; as well as the actual [pro] events, there are multiple profit centers,” Thompson said, making for an organization that is no longer “dependent on one thing.” Johnsonville Foods and DraftKings are among the ACL’s sponsors.
The ACL’s unique merchandising and licensing program now makes up roughly 30% of company revenues. While it has a traditional licensing business that enables partner brands to slap league marks on products, the ACL also has a burgeoning “second level of licensing, based on equipment standardization and [authentication],” Moore said. “Companies license the ACL professional, ACL competitive and ACL recreation marks to let people know the level of equipment they are offering in the cornhole space,” he explained. To put the opportunity in perspective, there are now more than 60 manufacturers selling ACL pro or ACL competitive bags.
The balance of ACL revenues currently originate from their live event business. The organization collects membership and software fees from the many competitions held across the country, Moore explained. The ACL currently has around 125,000 members. “Our next stop is 1 million competitive players,” he said.
While the pro circuit is not a major revenue driver for the ACL today, Thompson said the importance of the “broadcasting deals in place with ESPN, CBS, CBS Sports and NBC Sports” should not be overlooked. Those relationships are instrumental in driving popularity and exposure for the sport.
The sport’s most recent CBS broadcast drew a .4 rating and more than 600,000 total viewers, and ESPN has aired (and re-aired) nine events from last season more than 150 times across their collective of cable channels. It’s fair to presume “they would not be showing [the sport] that much if they weren’t finding value in it,” Moore said.
But ultimately, Simmons and Thompson don’t view their investment in the ACL as a media rights play. Their investment thesis is rooted in the premise that “the deeper the penetration a sport has [among] casual or active players, the broader the business opportunity is,” Simmons said. And the investors remain bullish that participation will continue to grow. For one, the sport maintains “a broad appeal across many demographics, including age,” Simmons said. “It is relatively inexpensive to get involved, and if you dedicate yourself to practicing, you can compete at the highest level.”
Though the game largely remains a North American phenomenon, Simmons believes the social element of the sport is a “transferable dynamic that would do well in almost any country once introduced.” So, the plan is to use some of the investment capital (the remainder will go toward marketing and content development) to “replicate the [member/director] model in other countries,” Simmons said. “Once that occurs, there will be an uptick [in participation] and opportunities for growth in individual regions across the world.”
Then, he believes, cornhole could go global. He can imagine holding events that pit teams from different countries against one another, “or a U.S. versus international [team] event, similar to what you have in golf with the Ryder Cup,” he said. The concept of holding majors, like in tennis or in golf, makes sense to him, too. “In the future, you can envision [a points championship] similar to the FedEx Cup,” he said.
