Bob Barnett is a former banker and investor, and now a lot more bullish on the esports industry than he used to be. This wasn’t always the case, and prior to 2017, Barnett couldn’t tell you much about esports or even gaming. The company which he is a managing partner of, Phoenix Sports Partners, is a Chicago-based investment and operating company that was started as a vehicle to put investments into promising sports technology. He is also the founding partner of Wexford Capital Partners, an independent sponsor private equity firm also headquartered in Chicago.
“Guys come up with a new product idea and they pitch it at the major league level and the collegiate level, and they have some success and then they try to scale it, drive it down into the youth and amateur markets where there’s a tremendous market opportunity,” Bob Barnett told The Esports Observer, in explaining what Phoenix Sports Partners does for its portfolio companies. “And they just run into a wall where it’s just really hard to conduct 20,000 pitches to high school athletic directors. So we came up with this Phoenix Sports Partners concept that picked a number of companies, we looked at a hundred deals, and then from there we picked five that were really good.”
That portfolio of companies includes TrinityVR, a virtual reality-based baseball training suite that provides performance analysis, feedback, and custom coaching to players of all levels; Atavus, a data-driven training platform for football coaches; and a visual performance assessment and training program for collegiate and Olympic-level athletes called Vizual Edge. Other companies include fusesport, a platform that helps sports organizations grow their communities by managing events and data; and FanFood, a mobile ordering and express pick-up app that fans can use while at sporting events.
The odd man out in the Phoenix Sports Partners portfolio is LeagueSpot, an esports tournament platform designed and developed by Bob’s sons Andrew and Brandon. In March, their company signed an enterprise-level deal with the YMCA, and last year began working with New York’s state colleges and universities, or SUNY, to facilitate state-wide collegiate tournaments. At the beginning in 2017, Bob admits that he really had no clue about esports; the technology and the sector it aimed to serve were alien to him until he went to a sports technology trade event in Michigan and heard people and companies buzzing about it.
“So, I went to the Michigan Sports Business Conference in the fall of 2017 and I literally came in and it seemed like half of the agenda was about esports. I never knew what it was. We were really over there in our capacity as Phoenix Sports guys. We were getting started with this big sports platform, which just turned out to be super successful. And we’d gotten t a lot of traction under our belt. And I came back from that conference and I just happened to ask my son, Andrew, who was a software developer who was working for his brother, Brandon. And I just said, ‘Have you ever heard of this esports thing?’ And he just looked at me, rolled his eyes, and said, ‘Dad, are you kidding me? This is what I do.’”
Andrew said that best way he could describe his reaction to his father’s question about esports would be if he asked him in return, ‘Have you heard about the Beatles?’”
Bob started doing a lot of research on the sector at that point. He found himself attending another event, put on by New York-based law firm Herrick that was fully focused on esports – a panel discussion including the Overwatch League franchise slots being auctioned off. Bob recalled panelists saying “there were like 12 franchise slots available, and I think they had 120 bidders. Around 108 of them went home without an esports franchise at the auction, and a lot of them were just people who just came in with money because they just had to have some kind of an investment in a connection with esports.”
This and other research led Bob, his partners, investors in Phoenix Sports Partners, and his son Andrew to have serious discussions about how to build a product that would be viable in the space. Andrew was brought on with a mandate to create what is now LeagueSpot.
Phoenix Sports Partners CEO Brian Kopp remembers the early discussions with Bob about esports. At first, he wasn’t sure that having an investment in the sector was all that viable. What ultimately convinced him was his children.
“We were both fairly new and learning about esports and a little bit skeptical about its longevity,” Kopp said. “When we first started hearing about it, it felt a little bit like a hot fad that may go away. But, honestly, what turned me was I have kids that play and watch video games and when I observed how much they got into it and how it really was a new way of them engaging and looking for things that really aren’t too different from traditional sports. And I remember having those conversations with my kids where they would say, it’s not too different than me watching a football or basketball game. They’re watching a competition, as well. It’s just esports.“
Once Kopp and Bob were convinced that Phoenix Sports Partners wanted to get into the space, they started looking around for existing viable candidates to invest in. What they found was that many of the companies they looked at had high valuations. They decided it might be better to build something from that ground up, with Andrew’s help.
“I think we started looking around at what our options were and we realized pretty quickly that most companies weren’t very far along and yet they already had fairly inflated valuations,” Kopp said. “So we came to the conclusion that maybe we should start one on our own. And that was Bob’s conversation with Andrew and thinking that we could build our own platform, invest in it as we go, and have a very significant stake in the company rather than investing more money and having a small stake in a company that already existed.“
One of the advantages of having LeagueSpot in its portfolio alongside sports tech offerings is that they complement each other, and some of the products and services can be offered to customers they are already working with.
“LeagueSpot fits in nicely with our platform because each of our companies has synergies with each other; if we have a relationship with a collegiate conference, we can do other things with them; we can operate their esports leagues, we can pitch Vizual Edge to their hockey and baseball program throughout the whole conference, etc. So we’ve created these sales channels where we can come in through the top of governing bodies, like we did with the YMCAs, make an arrangement, cut a deal at the enterprise level, and then that governing body becomes our client and they make it available to all of their participants.”
Of course, there would be no LeagueSpot without Andrew and Brandon Barnett’s commitment to the company, their expertise in technology, and their love for competitive gaming.
Andrew’s background was in computer science and enterprise software before focusing all of his energy on LeagueSpot, and while his expertise is in very technical things, his heart has always been in competitive gaming.
“I’ve had gaming affect me positively in a lot of ways, and it’s definitely given me my broadest and best group of personal friends. As I watched the industry materialize beyond professional play, I knew there was an opportunity to go and help kids get the organized gaming experience I had growing up through organizations they’re already a part of – schools, YMCAs, park districts, etc., LeagueSpot was born from that premise.”
Over the last 12 years, Brandon Barnett has been in technology, software development, and product consulting, and like his brother, grew up playing traditional sports and playing video games competitively.
“I grew up playing traditional sports and video games in equal measure, and found that gaming with new friends I made online helped grow my social skills and community at a time when I was having trouble making friends at school.”
This love of video games and the view that they could change lives, coupled with what he has learned through his work has given him the skills needed to “help create an environment that gives back to the community and helps kids experience the sportsmanship and character-building moments playing the games that they’re passionate about and may have not had the opportunity to experience without esports.”
Bob says that LeagueSpot and other companies under the Phoenix Sports Partners umbrella are not just receiving investment from the group. He says that the company provides an infrastructure for all of its family of companies so that they can focus on the technology and not worry about things like sales, hiring executives, HR, payroll, signing partnerships, etc. All of these companies heavily participate in whatever Phoenix Sports Partners is doing to move their property forward, but the focus is on letting these people work on their products and services.
In talking with Bob over several calls, one of the things I found interesting about him is that he understood that, to speak to investors who may not understand a space like sports technology or esports, it always helps to have someone in the room that can speak their language, from a generational perspective. As he points out, a majority of these up-and-coming esports companies are helmed by 20-somethings who may not know how to connect with the 70- or 80-year-old investor, and may not be savvy enough to explain their work in a way that resonates with them. At the end of the day, it’s about securing investors that believe in what you are doing and who will take the journey with you for several years as you try to find success.
“There’s always someone generationally more aligned with someone like me or Brian [Kopp, CEO of Phoenix Sports Partners]. And I think it’s kind of nice that we feel like we’re symmetrically organized where someone like me at the Phoenix Sports level can engage with someone I know or with whom I share our common experiences with because of age, or the experiences we’ve had, where we can build trust in our way. Then someone like Andrew or others on his staff that can do the same thing down at the operational level with an endemic game or sports person.
Finally, Bob says that his investors deserve credit for really trying to learn and understand what they are investing in, trying to educate themselves about esports.
“We have dozens of investors and half on average call into our monthly calls. Several of our investors are in their eighties and, quite a few are in their sixties and seventies. And when we’re presenting content, especially around esports, they’re dug in the most intently of anybody because they’re trying to learn about it and they really have taken an interest. I give them a lot of credit. Just like with me at the beginning, you don’t catch it all on the first go. You have to hear the same story over, and over, and over again. After a while, the pieces start falling together.”
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