The Los Angeles Dodgers are fielding some new prospects — in Silicon Beach.
The baseball team has launched a business incubator program to cultivate a new generation of technology stars.
Well-heeled companies often participate in incubator programs to provide seed money, office space and mentoring advice about the ins and outs of business. But the team and its partner in the venture, digital marketing firm R/GA, have taken the concept a step further by investing in early-stage sports technology firms.
“This is the first program of its kind in sports,” Dodgers Chief Financial Officer Tucker Kain said in an interview. “We are trying to pioneer a new avenue for innovation in our industry and add as much value as we can.”
Dodgers owner Guggenheim Baseball Management and Major League Baseball have been working on several fronts to bring America’s pastime into the digital age. Among the Dodgers Accelerator participants are a team that wants to speed up ordering hot dogs and beer at concession stands, and another that has built a social network to connect athletes and coaches.
The team announced last spring that it was looking for start-ups at the “intersection of sports, technology, entertainment and media.” More than 570 eager firms applied. R/GA executives and the Dodger front office culled the list and picked 10 firms that they believed offered the best commercial prospects.
In August, the Dodgers Accelerator opened in R/GA’s office space in Playa Vista, the booming corridor known as Silicon Beach. The initiative was crafted as a three-month training camp for companies that made the cut, and R/GA’s loft-like industrial space now buzzes with hipsters in baseball caps, geeks with laptops and even a handful of young men sporting neon pink T-shirts.
The various ventures share the space, and their goals and milestones are handwritten on sticky notes mounted on a community bulletin board.
“Our experience has been nothing but positive,” said Cavan Canavan, chief executive and co-founder of Focus Motion, a Santa Monica firm that uses data from a sensor embedded in wearable devices to track and analyze human movements. “This is a more focused accelerator than most, and it has a broader breadth of companies. Some of the companies here have already had success, and we can learn from them.”
A New York firm called ProDay is working on a mobile app to let fans “work out” with favorite pro athletes, and Canadian firm Kinduct is developing fitness software. DoorStat, a Chicago company, is working on technology that uses sensors to help stadium owners analyze demographic information about people who come through their doors.
In addition to nurturing young entrepreneurs, the project doubles as something of a venture capital fund to advance the team’s strategy to leverage the Dodger brand name. The team owners started developing the program about a year ago after being deluged with requests from fledgling companies who want to be associated with the Dodgers.
“It became pretty clear to us that a brand like the Dodgers — and a platform like the Dodgers — could be incredibly strategic and opportunistic around some of these early-stage businesses,” Dodgers CFO Kain said.
The Dodgers and R/GA take ownership stakes in the firms, which can be as much as 6%, in exchange for a $20,000 contribution. In some cases, the Dodgers and R/GA accepted a smaller percentage if the start-up already has taken a product to market or secured other financing.
And if any of the nascent companies beat the long odds and achieve success, the team also will benefit.
“They could help solve some specific problems that we have operationally, or add to the fan experience,” Kain said. And the Dodgers get in on the ground floor. “It makes all the sense in the world for our ownership group.”
The Dodgers are owned by six investors: controlling shareholder Mark Walter, the CEO of the private equity giant Guggenheim Partners; Todd Boehly, another top Guggenheim executive; veteran entertainment executive Peter Guber; Dodgers President Stan Kasten; Texas oil investor Bobby Patton; and former L.A. Lakers great Magic Johnson.
The group acquired the team from Frank McCourt in 2012 for $2.1 billion. That was nearly six times more than McCourt paid in 2004, when he bought the Dodgers for about $370 million from Rupert Murdoch’s Fox conglomerate.
The explosion of sports team valuations in the last few years has largely been fueled by the big-money contracts paid by TV companies desperate for marquee franchises.
Guggenheim Baseball Management negotiated what is believed to one of the most lucrative contracts in all of sports with its 25-year TV rights contract with Time Warner Cable, estimated to be worth $8.35 billion. The team owns the cable TV channel that carries Dodgers regular-season games, SportsNet LA. Time Warner Cable guarantees the fees that it pays Guggenheim, which top $200 million a year.
Guggenheim and other sports team owners have looked for other ways to increase the value of their franchises.
They’ve upgraded stadiums and added wider food selections to create a premium fan experience, enticing casual fans to fork over big bucks for stadium tickets. They’ve also boosted the amount of advertising in the ballpark and tapped social media platforms to engage smartphone-connected fans.
“We need to be where our fans are,” Kain said. “This [accelerator program] helps position us to see where the trends are ahead of time — and take advantage of them.”
One of Major Legue Baseball’s pressing concerns is making sure that sport appeals to younger, technology-savvy fans.
For good reason: TV viewers for baseball are among the oldest for all of professional sports. The median age of TV viewer during the early games of the playoffs last week was 53.4, according to research by Horizon Media.
But this year’s postseason contests, which include the Dodgers’ slugfest against the New York Mets, have made strides over last year, according to MLB. TV viewership during the playoffs is up 18%.
More people also have been watching on computers and mobile devices. The league said Monday that there were 3.4 million unique daily mobile views, with the strongest digital markets in New York and Los Angeles.
The inaugural class of the Dodgers Accelerator will graduate next month during an event at Dodger Stadium. The 10 companies will each take turns making a five-minute pitch to a group of investors.
For some of the ventures, the accelerator provided a path to make connections with, not only the Dodgers and financiers but also R/GA. The firm works on marketing campaigns for such companies as Nike, Microsoft, Samsung and Beats Electronics, which was bought by Apple Inc.
One of the participating companies is FieldLevel, which has spent seven years building an enormous private social network to connect athletes with coaches. The platform, which is akin to a LinkedIn for sports, was designed to help steer athletes to colleges where they will be able to play — not sit on the bench.
FieldLevel’s founders were both college athletes who are trying to turn their personal frustrations into improvements to the system.
“Recruiting is the lifeblood of sports. If you don’t have the right players on your college team, or even on the Dodgers, you are going to lose,” said Kai Sato, one of the founders. “If you can get the right kids or right athletes on the right teams, then you are very valuable to the sports ecosystem.”
Sato and his business partner, Brenton Sullivan, both 31, now have offices in L.A. and San Diego. More than 15,000 athletes have been placed through the service.
For R/GA, the concepts being developed provide an interesting peek at the future.
“We are not an investment fund — we are not doing this for financial reasons,” said Stephen Plumlee, the firm’s global chief operating officer. “What we are interested in understanding where tech is. We are a global digital agency, and it is important for us to stay at forefront of innovation for ourselves and our clients. We want to stay ahead of the curve.”