It is Major League Baseball’s own “Shark Tank.”
The Dodgers are using their vast financial resources in a largely unprecedented manner, announcing last week they’ll invest up to $1.2 million in some 10 startups over the next six months, seeking profit and, perhaps, some on-field benefits.
The Dodgers Accelerator program, in conjunction with the advertising agency R/GA, is the first of its kind. With mentorship available from Dodgers ownership and dozens of others, selected startups will work for three months at the agency’s office in Playa Vista, after which they’ll demonstrate their wares for interested businesses. Of course, the Dodgers’ owners are almost all investors by trade.
The venture’s goals are multifold: The team will get a 6 percent baseline stake in each startup in exchange for a guaranteed $20,000, and the Dodgers will offer a $100,000 convertible note to each for additional stock in the company. If one of the 10 startups becomes worth even a few million, the Dodgers will turn a profit. And, arguably more important, the Dodgers might eventually be provided with a competitive advantage of some sort – although those in charge are remaining vague about that part of it.
“We’re in this to find products and companies and technologies that solve our problems but are ultimately scalable,” said Tucker Kain, the Dodgers’ chief financial officer. “We’re not really going to cross over into the proprietary, competitive-advantage area. But, hey, listen, if somebody comes to us with something that is incredibly proprietary – and I don’t know how much I’d say this publicly – we might pull it out of the program.”
Experts familiar with startup accelerators paint a slightly different picture.
“Why does anybody start an accelerator?” asks Steve Mednick, who once ran a venture-capital firm and now teaches at USC’s Marshall School of Business. “Why did we do it? We did it to get access to technology early. You can get access in advance, and you would then use it for your benefit.”
The Dodgers say they are primarily interested in ideas involving sports training and analytics, consumer relationship management, fan engagement and in-stadium technologies. That’s according to the site where applications can be submitted. The press release included more categories, such as sponsor integration and e-sports, but it seems the focus is on either things that can help the organization make more money or make the on-field product better.
“It’s brilliant, in many ways,” said Cheri Bradish, a professor at Toronto’s Ryerson University, who is spearheading a similar program in partnership with Rogers Communications. “In a real simple term, it’s like the ‘Shark Tank’ we’re all familiar with.”
Rogers owns the Toronto Blue Jays, making that program similar to the Dodgers’. But Ryerson’s is a competition.
Ten selected startups, with applications closing May 1, get a four-month residency in Ryerson’s sports-focused startup incubation program. Office space and mentorship are provided, and, at the end of the four months, sports professionals will vote on the best pitches. The top three companies will split $100,000.
Bradish pointed to Nike’s partnership with popular accelerator TechStars as the advent of sporting companies’ forays into entrepreneurship.
In 2013, 10 selected startups participated in a three-month program near Nike headquarters in Oregon. The terms were the same as the basic terms for the Dodgers’ effort – $20,000 in funding in exchange for 6 percent equity.
“Our starting point for this wasn’t primarily revenue,” Stefan Olander, Nike’s VP for its Digital Sport group, told FastCompany at the time. “For us, it’s just a good test to see what will come out when you leverage social and gamification tools to inspire employees.”
Similarly, Kain said the Dodgers’ goal is “not purely financial.”
“We’d obviously love to create credible businesses that create jobs and economic development and have real financial upside, but we think there’s a real benefit to our organization continuing to grow and moving the industry forward,” he said.
The industry, as used there, is one of the broadest terms possible. Dozens of industries could be encompassed in what the Dodgers are seeking. Perhaps the most interesting is sports training, which has long been considered ripe for technological advancement.
An innovation there could have sizable value as a competitive advantage.
“There’s a lot of uncharted territory as it relates to wearable technologies, diagnostic technologies and things that we’d be incented to focus on with the wealth of players we have here,” Kain said.
That could then get tricky. Because if the Dodgers come across something that could help them and the 29 other major league teams, they could have to decide between selling it leaguewide and making money or keeping it in-house for a competitive advantage. And because of baseball’s collective bargaining agreement, teams can’t force players to try wearable technology.
Dodgers pitcher Brandon Beachy, who is recovering from his second Tommy John elbow surgery, understands that teams will always want to know everything they can about a player, including medical data that could aid decisions about who to sign and who not to.
It’s up to the players, he said, to determine if they’ll cooperate with advancing technologies.
“I imagine a guy going into his free-agent year isn’t going to want to give up any more information than he has to,” Beachy said. “But if you’re a guy who’s under team control for a quite a while, why would you not want to know everything you possibly could that could help you?”
Kain said Andrew Friedman and the Dodgers’ baseball operations staff has been “wide open” to the project, although it had been in development before Friedman’s arrival in November.
“They think it’s a great opportunity for us to continue to build our information set, our knowledge base, and try to use this type of program to enhance everybody’s business,” Kain said.
Mednick interprets the Dodgers’ move as the ownership realizing a need to act more like businesses in other industries: “What are they doing in others that we can take advantage of?”
Sports franchises have traditionally operated in a separate sphere of business. The Dodgers and their unusual, unceasing approach to trying to win may help change that.
“What is the profile of a typical owner of a team?” Mednick asked. “Typically, they’re billionaires that are well-steeped in their industries. This may be the sign of new ownerships that will come into play in the future.”
Contact the writer: pmoura@ocregister.com
