How Investor Todd Boehly Is Capitalizing On Name, Image And Likeness

Key Concepts:

• Secondary position investment
• Fee-related earnings
• General partner balance sheets
• Long-dated call options (carry)
• Limited partner hurdle
• Structuring capabilities
• Risk mitigation (avoiding loss)
• Sports facilities and academies
• Name, Image, and Likeness (NIL)
• Time optimization for athletes

I. Investment Opportunities: Secondary Position in Dial Fund Three

• Transaction Details: The firm acquired a 10% stake in Dial Fund Three in partnership with Blue Owl through a secondary position purchase.
• Return Elements: The investment offers multiple streams of return:
  • Share of fee-related earnings of the general partners.
  • Share of the general partners' balance sheets (dividends and distributions).
  • Long-dated portfolio of carry (potential profit from fund investments).
• Carry as Call Option: Carry is likened to a long-dated call option with no maturity date but an increasing call price based on the limited partner hurdle.
• Win-Win Scenario: The transaction is described as mutually beneficial for the firm, Blue Owl, and Dial Fund Three.
• Cash Flow Performance: Cash flows from the investment are meeting or exceeding expectations.

II. Structuring Capabilities and Risk Mitigation

• Strategic Goal: The firm aims to use structuring capabilities to eliminate the possibility of a negative return on investments.
• Prioritization: The investment philosophy prioritizes avoiding losses before focusing on generating profits.
• Odds and Structure: Investing is viewed as a game of odds, and structuring is used to improve those odds.
• Quote: "Our whole goal in the end is really to use structure to take the potential below zero return outcome off the table."
• Quote: "If we're always thinking about how do we not lose money, and then we think about how to make money, right? There's never really a problem in finance or business or investing. You know, if you don't lose money, right."

III. The Saint James: Athletic Facilities and Academies

• Facility Description: The Saint James is a 550,000 sq ft athletic facility, described as potentially the best in the world.
• Market Trend: The rise of Name, Image, and Likeness (NIL) deals is professionalizing college sports, and high school sports are evolving to resemble college sports.
• Demand: There is insatiable demand for sports and sports-related activities globally.
• School Launch: The Saint James has launched a school to cover all day parts (morning, evening, summer, and school hours).
• Ecosystem: The facility attracts top coaches due to its high-quality real estate, which in turn attracts top athletes.
• Clientele: Examples of users include the Washington Spirit (women's soccer team), Kevin Durant's high school basketball team, and the Little Caps (hockey team).

IV. Reimagining Education for Athletes

• Critique of Traditional Schooling: The traditional eight-hour school day is criticized as being more of a "babysitting exercise" than effective education.
• Time Optimization: The Saint James school has reduced the schooling element to a couple of hours per day, allowing athletes more time for practice and recovery.
• Consolidation Benefits: Consolidating school and training saves athletes time and reduces stress.
• Goal: The aim is to create the best school and the best facilities for athletes.
• Quote: "The idea that you need to be in school for eight hours a day is absurd, right? It's really like a babysitting exercise, more than a schooling exercise in a lot of ways."

V. Synthesis/Conclusion

The speaker highlights two distinct yet interconnected investment opportunities. The first involves strategic investments in secondary positions, leveraging structuring capabilities to mitigate risk and generate diverse income streams. The second focuses on capitalizing on the growing demand for elite athletic training and education by creating a comprehensive ecosystem centered around state-of-the-art facilities and a reimagined approach to schooling that prioritizes athlete development and time optimization. Both opportunities reflect a focus on identifying market trends, applying innovative structuring, and maximizing value creation.