Last week it was announced that Kevin Durant and Rich Kleiman’s 35 Ventures purchased an expansion Major League Pickleball (MLP) team. LeBron James, Tom Brady, Drew Brees, Marc Lasry and Gary Vaynerchuk are among the league’s other high profile club owners.
A large—and growing—participation base makes the sport attractive to investors from a macro level. MLP founder Steve Kuhn is looking to have 40 million people playing the game by 2030. For perspective, tennis and golf each have roughly 20 million active players.
But MLP is just one of three professional Pickleball leagues. So, it’s logical to wonder why the high profile investors referenced have gravitated towards it over the Professional Pickleball Association and the Association of Pickleball Professionals.
Good Alpha Industries co-founder and Mad Drops co-owner Zubin Mehta explained that MLP’s diversified business model, which combines a top-down professional league approach with a bottom-up amateur-ratings software strategy, serves as a hedge on an otherwise risky challenger league investment. Dynamic Universal Pickleball Rating, or DUPR, is a SAAS platform that provides amateur player ratings. Those ratings enable players to participate in competitive tournaments or compete against equally skilled players who are only in it for fun.
“DUPR gives us a play into the grassroots growth of the game which complements our league strategy and can be a very large business on its own,” Mehta said.
JWS’ Take: Major League Pickleball initially sold eight clubs in 2021. Good Alpha and Brees were part of a second wave of investors that bought into the league in early 2022. “There was an extraordinary amount of interest in the four teams” preparing to start in 2023, Mehta said. “More interest than there were teams by an order of magnitude.” The four expansion clubs each sold for seven figures and included separate investment groups with James, Brady and now Durant.
Each of MLP’s 12 existing teams has ownership in the overarching entity. “All the team owners are aligned because we are all owners in the league as well,” Mehta said.
Good Alpha is a hybrid investor/operator with a focus on early-stage consumer products, consumer technology and consumer experience companies. MLP is its first foray into sports entertainment. A preexisting relationship with MLP founder Steve Kuhn (they are co-investors in a company called Richard’s Rainwater) opened the door to Pickleball franchise ownership.
The venture capital firm brought Drew Brees into the Mad Drops ownership syndicate. Mehta said it was a “truly authentic fit” with the former Super Bowl Champion quarterback playing the game a couple of times each week.
The broad investment thesis on Major League Pickleball is tied to the sport’s rapid ascent. “Pickleball is the fastest growing sport in the U.S,” Mehta said.
The presumption is “a growing participation base feeds the entire pickleball ecosystem,” said Anne Worcester (strategic advisor, MLP). “These players are future TV viewers, future social media followers, future ticket buyers and future consumers of sponsors’ goods including paddles, shoes and apparel.”
But it is MLP’s multi-pronged business model, co-ed Ryder Cup-style team format, and unique collective of influential owners that distinguishes it from the competition.
MLP operates a traditional league model “where ultimately as we drive awareness and interest in it, there are opportunities to monetize via sponsorship, media, TV rights, gambling, merchandise,” Mehta said.
Today, the bulk of league revenues come from sponsorship pacts. But Mehta believes some of the other revenue streams will eventually catch up—most notably, television rights. “If you look at some of the recently televised pickleball events, the numbers are growing,” he said.
While that may be true, there is not enough data to compare the sport’s performance relative to other upstart leagues. The only time one of the pro pickleball leagues aired on a measured network was Aug. 13, when a Saturday afternoon CBS PPA broadcast averaged 621,000 viewers. That was a considerably bigger draw than the week’s MLS match (All-Star Game on ESPN: 334,000), but paled in comparison to the combined deliveries for the English-language fans and the 1.2 million viewers who watched the MLS contest via Univision (total: 1.53M).
The measured pickleball audience also drew an older, less advertiser-friendly fan base. Just 22% of PPA viewers were in the 18-49 demo, whereas 55% of those who watched the English-language MLS ASG were members of the dollar demo.
That could change if MLP is able to deliver compelling content regularly. The league intends to build player profiles by telling human-interest stories, focusing on player personalities and highlighting their athletic exploits. “MLP players are world class athletes with incredible stories and personalities; that’s how you become a real star,” Mehta said. “Those marketable stars will be associated with teams.”
Team brands and fan bases will be built within their individual geographic locations. The hope is that local momentum funnels upward to the league level.
Perhaps more important, MLP controls DUPR, an “analytics company that has data on the growing grassroots market” of participants, Mehta said.
The Good Alpha exec believes both the league and the DUPR “can be very large businesses in their own right.” But investors are confident that the company’s ability to generate multiple revenue streams around amateur play, including tournament events and through a premium version of the app, can make the investment a winner independent of MLP.
DUPR launched within the last year. Mehta believes the platform is going to be a “big contributor” to the top and bottom line as more and more people pick up the game.
Official records show there are currently 5 million people playing Pickleball. Unofficially, “it’s probably closer to 10 or 11 million,” he said.
Pickleball has a chance to attract more participants than traditional country club sports because the barrier for entry is lower. “You can be eight, you can be 80,” Mehta said. “Anybody can play it, and it’s accessible. You don’t have to spend $2,000 on a set of golf clubs to be able to play.”
MLP has plans to add four more teams for ‘24. But 16 is where it intends to pause for the foreseeable future. Expansion fees are not part of the core business model.
The league does not want to add more teams until there are enough elite players to maintain the quality of play. As it stands, there are not enough dollars in the sport to fill out more rosters with full-time professionals. While MLP’s best players can earn in the mid-six figures annually between appearance fees, prize money and sponsorships, the number of individuals capable of fully dedicating their life to the sport remains small.
It seems likely there will be some sort of consolidation among the leagues as the sport matures, as there is not enough money to support three professional leagues long-term.
In the interim, Worcester said MLP is “totally open to working across leagues to maximize the pro pickleball calendar and player experience.” However, there needs to be alignment on two fundamental premises: player freedom, and player health and longevity.