All The Angles S1 E10: Focus on Padel's International Hype Cycle

Difficult to argue against the idea that internationally, padel is riding a wave of discovery, growth and enthusiasm. Some call that a hype cycle.

But what comes with that? What characterises a hype cycle? And what are the positives that come with that status or moment?

Equally, what are the dangers and downsides of a hype cycle? 

And cycles tend not to last forever. What happens on the other side of the wave? Can you see it coming and can you mitigate against its worst effects?

These are all critical questions for the sport of padel. It has to plan for the future, otherwise stakeholders, if not the whole sport, will learn some painful lessons.

This week's episode looks at esports and women's football to draw out parallels and lessons. We speak to Nico Maurer, Co-CEO and Founder of Team Vitality, one of the world's leading teams across gaming titles year after year; as well as Maggie Murphy, a player and more recently CEO of Lewes FC, the world's first equal pay football club and target for Mercury/13 investment. 

Two sports that have enjoyed the hypest of hype cycles. And have learnt from painful contractions when the momentum dies down. What can padel learn? A lot.

Transcript

Introduction

Alex 0:05

Ladies and gentlemen, damas y caballeros, thank you for joining us for another episode of All The Angles, the business of padel podcast worldwide, powered by the Hexagon Cup. This week our objective is to give you our audience a unique insight into how other sports that have gone through the hype cycle have dealt with the ups and the downs and the risks and the opportunities that come with that status, and we try to draw lessons for the padel industry as it is undoubtedly going through an international hype cycle at the moment. I'm joined on this episode by two individuals who will have a very acute understanding of hype cycles and the ups and downs that come with them. From Team Vitality, Co CEO and founder Nico Maurer understands how it looks from the esports point of view. Team Vitality being one of the biggest team organizations in esports competing winning in numerous esports titles. And he will be able to bring his experience from the eSports ups and downs of recent years. And then I also have Maggie Murphy. She has a history of being a champion of societal integrity, anti corruption, and she parlayed that into campaigning for women's equity in sport and a role as CEO of Lewes FC, which was the first gender equal football club. So thank you both for joining. before we get started, if you enjoy this episode or have benefited from previous ones, please like, share, subscribe. It helps spreading the word and getting the views. So without further ado, I guess my first question just to really set the scene is: what is a hype sport or what is a sport that goes through a hype cycle? How do we recognize a hype cycle? Nico, do you want to get started? ESports have been through a few of these. They obviously change. They also sometimes grow or decrease in size. But how would you characterize a hype cycle?

Nico Maurer 1:58

Yeah. So, thanks for that question. I think the difficult part is to understand if a sport, a new sport, a new practice is hype in the sense that it sparks a lot of sudden interest but then we can expect that this won't last for more than the short term, or is it a phenomenon that will last? That is seeing a drastic spike, but ultimately will remain. And obviously most of the time you can understand that after the fact, after certain number of years. But yeah, for your definition, I don't know which one you have exactly, but let's align on saying it's a spot that is suddenly seeing a new influx of maybe players and or viewers, and that caused a drastic shift in the ecosystem, which is obviously what we've been seeing in eSports. But inside that hype cycle, you have many sub cycles. And after a certain number of years, we can say, obviously preaching for my own industry, that eSports is here to stay. And that's much more than initial hype. Let's put it this way.

Alex 3:03

Maggie, what about your definition? How do you recognize a hype cycle?

Maggie Murphy 3:07

I don't think I'd ever really thought about women's football or women's sport being a hype sport or going through a hype cycle, but that's partly because we were so desperate for any hype. So if you think about where we are today, it's being built on the shoulders of giants, but giants that no one would know aobut, no one would know the names, they wouldn't know how hard people fought to develop leagues, to develop clubs, many of which have fallen by the wayside. So potentially we're going through the first hype cycle in England, on the back of the Lionesses win and a couple of years ago in the Euros, which really has generated that, that hype. But what will be interesting is to know Whether it's here to stay. Um, potentially the biggest comparator or, or maybe red flag or something to be aware of is in the U. S, since 2001, we're onto the third league. So, In essence, you did have a league that was set up and crashed. And a few years later, another one was set up and crashed. And so now they're onto the third. So perhaps that's more evident of hype cycle. Though I don't even think at that time it was particularly hyped. It was just investment coming in, to see whether it could be sustained. So I don't have a definition. I hope women's football is not on the crest of a hype cycle, but yeah, it, truth to be told, we'll see where it goes and which part of the cycle its on, curve.

The Opportunities of a Hype Cycle

Alex 4:31

I think I think the way I would characterize a hype is not necessarily that it is destined to fail or destined to disappear on the back end. It's more a case of understanding, as Nico said, this sudden surge of interest, investment, viewership, participation, which can either be harnessed very carefully and strategically, or it can be wasted. And cause problems. It might be three steps forward and two steps back. It might be three steps forward from four steps back. Really, it depends on how those within the ecosystem harness that buzz for want of a better phrase, which really dictates whether it's a hype with a disappearance, whether it's a hype that leads to sustained growth or whether it's a hype that kind of has a hiccup and then rallies. You know, I think the hype, I like to think of it not necessarily as a slur, like being a hype sport is not necessarily a slur, it's just a moment in time in that journey. And the point of recognizing a hype in my opinion, is to understand that there are fantastic opportunities, which we'll go on to in just a second. But also significant risks, which we'll go on a little bit further. Because I think both are really relevant to women's football and to esports, and I think are really relevant for padel as well. So jumping straight into that, the opportunities, the positive characteristics. So when a sport suddenly kind of burst into the consciousness on a much broader scale than it did, six months before one year before, What are the positive things that kind of come with that? What are the immediate things that flow from that are beneficial to that entertainment product or sport? Again maybe Nico, from your point of view, as eSports has blown up, what is it that you've been able to grab as a stakeholder in that space?

Nico Maurer 6:13

Before answering that, maybe a brief point on the previous conversation, which was, you say, Hey, people in this ecosystem, stakeholders can either make it a long term success, or if they make the wrong decision, uh, maybe make it only something that will last for the short term. I think it's not only tied to the way the stakeholders behave and decision they make, but also in the core offering. For example, for esports, a lot of people, and it's an understatement are playing games. So you could definitely think that still a strong fraction of those people will watch the games. And as long as the gaming continues to grow in terms of players, if we still have the same percentage of people watching, we're in for the long run. That's one aspect of it. The others could be are certain video games interesting. Exciting to watch? Is it designed to be a good viewer experience and so on and so forth. And I think for padel, obviously my view, it has certain core components that should make it last in the long run, no matter how the stakeholders behave, but still, it's an important and integral part of the long term success, the sport itself. Now, coming back to your question. On eSports, we've seen certainly a lot of appetite that sparked and started, not out of nowhere, but it was very big difference compared to the previous year. For example, we started Vitality in 2013, and from 2013 to 2016, No one was interested in investing in esports company. And suddenly everyone was interested. It started in North America, but then expanding into Europe. So as a stakeholder, I'm talking from having obviously a entrepreneurial mindset and having my own company in that world, what you can grab is be the one that's at the forefront of this new interest and be the one that grabbed the resources, the money, the ways to develop. We were at the time and still are extremely ambitious. So for us it was a no brainer to say this is our opportunity to go now, to go super hard, take alot of risk, so that when the dust settles, maybe we're one of the big players in an ecosystem that stabilized. So, there was certainly those kind of resources to grab. And we, we did grab those at the time. Then, which we will discuss afterwards, it comes with its downsides and problem that's come with it. But at least we had no doubt that we needed to go all in at this time.

Legitimacy & Credibility

Alex 8:28

And Maggie, from your side maybe we can look at the cycle, which, as you said related to the success of the lionesses. What do you feel comes in with that? What changes from the year before to the year after that is positive? Obviously we'll go into the downsides, but what is the opportunities that need to be grasped as quickly as possible?

Maggie Murphy 8:44

Yeah, I think for me, I don't know whether this will have as much resonance with padel. But for me, maybe with a slightly more gendered lens on it, the key thing is legitimacy. So almost overnight, it became legitimate for little girls to want to go and play football in the park. It became a legitimatesports for the dads or the moms to allow their girl to go and play, it became a legitimate playground activity for girls at school. So there's so many gatekeepers when it comes to women and girls in football. And I think the legitimacy allows you to knock some of those doors open and it suddenly becomes a valid space. You don't have to be embarrassed that your daughter plays football. For example. You don't have to hide it. You're not even needing to be proud. You just say that is what they do. Now, that legitimacy also shifts into her places as well. So suddenly it becomes a legitimate place for sponsors to put their money. It becomes a legitimate place for media entities to start opening their eyes to. It becomes just a legitimate space for investors to start turning their eyes. So you need the visibility. You need that, what we're calling here, I guess, the hype, in order to create a space around legitimacy. And from that, then the opportunities flow.

Doors & Conversations Open

Alex 9:58

I think I remember when I started working on the ESL Pro League, so this was 2020 and obviously, as Nico suggested, there'd already been a significant shift in growth preceding that. But one of the key words that I talked a lot about at the beginning of my role was similar to what you're talking about, maybe I was talking about credibility I was trying to underline that there had been this huge growth, which gave a certain level of interest and curiosity. And as you said, it opened doors. But my thesis at the time was that we need to really stabilize the industry with credibility to ensure that those investors that are curious Have a business case to get in. That those executives who want to work in this space understand that there's a real longevity to where they're leading their career. So it was really about even when you have that initial step of legitimacy, that legitimacy can morph and evolve, but you still need it in order to really continue to get the fruits of that growth. so, yeah, you get new people coming into the space in terms of executives, you obviously get more viewership, higher profile media coverage. As you mentioned, Maggie, the sponsors start looking at you very differently and seeing real credibility in aligning themselves with you and the values that your sport or your entertainment product brings. So I think it's easier to see the opportunities, right? I think Nico, it would be fair to say that any conversation you have just gets a lot easier, right? You can just get a lot more time. You get a lot more doors open. As Maggie said, in a whole broad range of aspects as you build this organization, as you build this sport.

Nico Maurer 11:35

Yeah. It's not only that this conversation become. It's easier, it's just that they start to exist. They didn't exist beforehand. And yes, you're not talking to the same people also. So when it comes to investors, we were actually stuck at the first step, which is one junior guy in the VC firm being, eh. This is the future guys, but not able to convince his senior partner. So ultimately it was just initial conversation, never going to the next step. For sponsor, you suddenly talksto,to brands that were never interested beforehand when you were sending decks and no one was ever answering. And suddenly it's a very different approach. So yes it helps. It makes your life much easier, but we need to differentiate the spark of interest and the percentage of those conversations that will come to fruition, especially on the sponsor side. Many, uh, what we call in esports non endemics and non gaming brands will get interested. But very few will ultimately sign and confirm a deal for a lot of reasons, but that comes down to people being conservative before moving into new industries. So very often you will have a lot of internal support. I don't know. I would take the example of banks. For years we were convinced that banks had an incredibly easy path towards esports because they want to cater to new audiences. They want to recruit new people, opening their first account. So from our perspective, it was always a bit of a no brainer to have a bank as a partner of team vitality. It took years. Because even when we had a lot of internal support, uh, ultimately the conversation ended up at either CMO or CEO level. And those people, especially when it comes to CMO, maybe you are not really sure about how to justify that investment and would ultimately turn into what they know, what's proven or what they think is proven. So traditional sports. So, thanks guys for the six months process, but ultimately we'll sponsor a football club. And that happened and happened and happened again and again. And it change sometime because we are able.to convince the right people. Because sometimes some people will take more risk and take some bets in those industries. And also because of the natural evolution of the people you talk to. Because when it's the first year or the second year of that new wave, okay, but then when the fifth, sixth, seventh years, okay, they say, Hey, no, it's something that's credible enough. Yes. It's been six years. I seen the buzz and the hype, but now, I understand it's here to stay and I will move. So you have a lot more conversation. They still take many more years to fully develop. I would say.

Maggie Murphy 13:59

I think what's interesting on that is that I identify with everything you've said. I think that what you're almost looking for is, yes, you have to prove that you're still going to be around in five, six, seven years. But every so often you find that sponsor or partner that sees this as a build and wants to be part of the journey. And that's what you're looking for when you're at that early stage. You're trying to find and convince that one partner, that one business that says. Hang on a sec, you know what? Let's go hand in hand. Let's build it together. We can bring something, they can bring something. And then when it starts to come into fruition, we already have this long lasting. relationship. I find it funny that every time I'm in a shop, I'm I'm I'm I'm

Nico Maurer 14:44

Okay.

Maggie Murphy 14:45

um, covered in I'm I'm in a shop. I think about them as being absolute heroes because when I was 10 or 11 years old, the first ever girls football tournament I was ever allowed to play in was the wagon wheels football tournament based in Woking. And I will always remember it In New Orleans In New

Nico Maurer 15:15

And I think it shows that taking some risk and being early adopter from a brand perspective also can pay off massively. But not every brand has that long term thinking. Not to blame them because those are not easy decisions. But I agree with you, when you find a brands that are here for the journey and say, Hey, I will be the one supporting and in five years I will be able to say I was part of this new industry. I think it has an incredible resonance towards our audiences. I agree.

The Dangers of a Hype Cycle

Investor Pile-ins

Alex 15:43

I think just to summarize this part of the episode. I think it's fair to say that padel is going through this kind of hockey stick growth, right? The participation numbers are incredible. The Qatari sports investment fund created Premier padel, acquired World padel Tour. So the professional scene has received a significant injection of attention from a, international heavyweight stakeholder. The endemic brands are obviously still there and putting in serious financing, but also the non endemic brands are now starting to take a look at it in a way that they didn't before. all the forecast, all the numbers, the car guys on every metric are all in the right direction. And you keep seeing all of these stories in the media about, what is padel? I mean, I've seen about 20, what is padel articles in the last three weeks, whether it's the BBC, whether it's the times, but these big publications are dipping their first toes in this space. explaining for people who clearly have no idea, which is part of the journey. And then you've got all the celebrity stories, and Cristiano Ronaldo is playing padel. You've got Jürgen Klopp's retiring to play padel, probably not to play padel, but he will be playing padel. You've got the formula one drivers. So the kind of the hype cycle, the kind of self fulfilling tornado of this feeds into that feeds into this feed into that, is in full effect. I don't like to be pessimist, but I do feel like it's really important for the majority of this episode to talk about the risks of the hype cycle and how, first of all, what they are, what are the risks and we will probably end the call with what can we do to recognize it, when do we recognize when things are starting to really shift? When the mood in the room has shifted? And what can we do to minimize the negative impact. So some of the things that I think happen with hypesports, and I'd love to get your perspective on this. I think one of the first things is The pile in of investors, right? Everyone wants to be the first, the more hype the sport is the shorter the due diligence process becomes, right? Because you, you can't afford to be spending a month reviewing documents when your rival is going to take a week reviewing your documents and get that asset or get that stakeholder before you can. So suddenly you have all of these investors who either aren't necessarily credible themselves, but just don't want to miss the opportunity? Or they don't do proper due diligence? And in my sense, it inflates personalities and businesses. It generates a focus on growth and domination over stability and profits, and it can sometimes build those bubbles, which can then obviously lead to painful contractions. So how does an industry or an individual business manage these expectations and act reasonably, when it needs to avoid being swept up in that reputational damage. Like Nico, from your point of view, you know that there is that sudden, everyone wants to jump on the boat, right? And how does thesports distinguish between the good actors, the bad actors, the long termists versus the short termists?

Nico Maurer 18:37

Not an easy answer, but let's say, What we've seen in eSports, I will differentiate, as I said, the subcycles and the big trends. The big trends in eSports are constant growth, linear growth in a way. More and more viewers, more and more people interested. So that's good. But, uh, it didn't happen this way from an investor perspective. It went from Zero to a bit of investment to a lot of investment, then boom. Uh, so what we call esports winter. So going back to that. In 2017, 2018, everyone wanted a piece, where teams, at least talking about what I know, where scarce, especially with the birth and the arrival of franchise league, similar to the NBA. There's only a certain number of teams in a given league. And either you're in, either you're out. Very binary system, very different from European spot. So from an investor perspective, they needed to get on board fast. Otherwise the doors would close for years. So they did. And every team have gotten at the time, so 2017, 2018, a lot of investment. And I'm talking about big number. For example, at Vitality, we were raising 2. 5 million. With VCs in 2017. And 20 million the next year. And obviously the business, had not done 10 X in terms of revenue in one year, far from it. So it was not correlated to the current level of growth of our business, but just the appetite of people wanting to get in at the right time. The issue is that when you have such big number invested, people want returns, and they want returns at a rate that might not be correlated to the growth of your industry. So eSports is keeping on growing as, as I said, in a linear fashion, strongly year after year, two digits growth per year, but investor expected a five, 10 X in a matter of a few years. And that left most of them extremely disappointed. And that's when the bubble burst in a way. From us, I think we've made, during those years, a lot of good, a lot of wrong decisions. Obviously that's the path of an entrepreneur. But I think at least the right one we've made is go with investor that, had, the long term perspective and not VCs. With VCs, they will require you by contract to exit and sell the company, after five to seven years. And we felt. at the time You that it might take longer for esports to fully establish itself. So easy to say in retrospect, and maybe we didn't have that level of clarity at the time. At least we had that feeling that maybe the short timeframe of a VC deal was not suited to our industry. So at least we avoided that specific mistake. Because when you have investor, VCs investing, wanting to do 10 X in five years. If you don't do that, they need to exit their position at a low price. And then everyone else is in the same situation, which makes the prices even lower and everyone is left in a terrible situation. So that's what happened in eSport with many teams not able to raise money to keep on fuel their operation, especially because everyone was in a super fast growth mode. Everyone wanting to be the best. And when you don't have the funding that comes with that strategy of growth at all costs, then it implodes. So that's what happened to a certain extent in eSports. But obviously some teams were very resilient, were more prepared for that, had more funding, had more Oversight, understanding that could happen. So people made mistake. A lot of teams died. A lot of investors lost money. And that's exactly what happened. to Now how do you avoid that is a different question. And it depends if you place yourself, sorry from an investor perspective. get From an investor perspective you have to make a choice. You just have to understand the level of risk. If you understand the level of risk: I get in early, I pay a lot, but maybe it won't grow as fast as I think, but I'm ready to lose if that's the case. That's fine. But many investors were simply betting on the fact that it would succeed quickly and not envisioning any other outcome. I think their risk assessment was wrong. If you have the right level of risk assessment, then it's fine to go in early, find the right stakeholders, invest a lot and hope you have the good intuition on the market. But, it comes down to me as risk assessment with the same from the other side when you pick your investor.

Alex 22:42

And Maggie, we're seeing a lot of investors whether it's Michelle Kang, whether it's Mercury 13, whether it's other entities who are looking at investing in women's sport and women's football. There is a world in which they are entering into this kind of hype cycle as well. Where you've got these investors: some of them are known, some of them are unknown. Some of them have a track record, some of them don't have a track record. And it's really easy to get seduced by The momentum I guess. Has that been the case in previous cycles for football? Is this brand new to football and how does women's football, try and stabilize this in a way that won't have a downside or minimizes the downside?

Discussing the Health of the Padel Pyramid Today

Maggie Murphy 23:21

I think one of the key things to start from is to know and be aware that There's an ecosystem. And everyone in the ecosystem needs to be kind of pulling towards the same goal. Apart from your players and your clubs, you have the league, you've got the media partners, you've got broadcast. But we've seen in the past, I mean, Fulham was the first professional women's team, in this country. Not many people know that. It was more than 20 years ago. They won everything three seasons in a row and then no one else joined in, so they just went bust. So you can't really play against yourselves. So you need other people. You need the whole ecosystem to grow. I think one of the big risks is also that As the hype starts to come or as it's bubbling or when you're trying to create hype, you might focus on the top and you might focus on the glossy. It's certainly the case that on our TV screens at the moment, there are a number of clubs that are likely to feature more than others. Because we feel like they're the ones that the broadcasters will like, they're the ones that the fans will like. And so things look really really glossy but you dont have scratch hard beyond the surface.. to find that there are some really basic challenges in challenges and lots of clubs around facilities around uh, playing conditions around level of coaching of whether the coaches are appropriate or or whether there is sponsorship coming in So I think you want everyone to be pulling in the same direction. You need lots of players that are all wanting to be part of this growth. And you have to make sure that you're really focused on growing the ecosystem rather than just the gloss or the ones at the top. Because otherwise you build something which will fail because the others haven't been able to keep up.

Nico Maurer 24:58

Just on that note, I think that's what, at least it looks like to me, that padel is succeeding in that sense. Because there is the top level of aspirational talent, a huge competition going year after year. So that's great. But also at the base level, at least in France, but I think I see that trends in many other countries, more and more people are playing. You have more and more courts. So it goes both ways and feed wells together. So I think from what I see at this padel seems to taking care of the shiny, and also on the daily basis of what makes thesports successful in the long run.

The Costs to Revenues Ratio During Hype

Alex 25:33

I think I have concerns about both aspects, Nico. I know you're a padel fan and a padel player, so you're speaking from some experiences. I think for me, there are two risks, which I think touch on what Maggie mentioned, which is one. There's a lot of courts being built. And there are a lot of people playing, but a lot of the investment is being driven by private clubs who are expensive. And so what you've got is a sport that is building a reputation of being expensive and elitist because there aren't community courts, there aren't public courts. It's really being driven by private investors who are finding the best locations with the best footfall and they're driven by margins. So they're putting high costs on memberships and rentals. And so you're creating a disconnect between the sports and what I would call like the real grassroots, like there is participation. No doubt participation is brewing, but it's a very top heavy piece of the participation group. I think that's a concern that I think padel needs to try and solve. And who that is, whether it's government, whether it's federations, whether it's the international federation, it's difficult to really know who to point the finger at. But it's a critical piece in order to stabilize the pyramid of this sport as it tries to grow, to Maggie's point, the whole ecosystem. The second issue I think touches upon the pro circuit, which is: I think the pro circuit is going tremendously well in certain ways. But, and I think this is one of the points I wanted to raise is, I think when you have a hypesports, what tends to happen in my experience is that the costs of competing at the top level go up really fast, but the revenues don't keep up, right? So you're effectively investing in what will be by driving up the cost base, which might be production or it might be player salaries But actually the revenues that are coming into that professional sector are not there To pay for that.And so that disconnect or that delta becomes bigger and bigger. And so I think in padel, in the last few years, the Delta that has occurred for players and their agents from where they were five years ago, 10 years ago to where they are now is just stratospheric. What these players are earning at the tournaments, what they're earning in appearance fees, what they're gaining from their sponsors is huge. But actually thesports doesn't quite have the health and fan base And sponsor base to really pour the money into the funnel to support that expenditure. And again, there have been some conversations, Nico, you'll be aware in eSports about how the salaries of players, for example, and the cost of productions of events are incredibly high and whether the industry is in a position to actually sustain those.

Nico Maurer 28:15

I mean, everything what you say about those costs going quicker than the revenues associated is exactly what we live in eSports. Because there was so much investment that everyone wanted its piece. Everyone was competing for everything. So including the talent, the player. So the revenues were disconnected from the reality of the business, and it can only last for a certain time. Because depending on the economics overall in the markets, uh, it can last longer. Obviously what we've seen when, let's say, interest rates were low, we've seen more and more people investing with no, let's say, short term plan to look at profitability. It was on all about growth. But at some point it stops and in the realm of esports it stop, it stopped drastically. So I think what you need to do, I think that could be an advice to other hypesports, if you call it this way. You need to think about that before it crashes, before you have to make a horrible decision. You're forced to do so, but if you can prepare beforehand, when everything looks healthy, you start to think about how you align the revenue and the reality of the business. If we had done that earlier in eSports, it would have helped tremendously to prepare for the difficult state of the economy that we've seen. Especially talking about salaries. If you look at the NBA, I think players overall roughly get 51, 52 percent of the overall revenue generated by the league. Which leaves the rest to the NBA and the teams. And that makes it overall for healthy business. Not for everyone, but more or less, I think it's a fair distribution of the value. In esports for a while, players were getting more than a hundred percent of the revenues generated by the industry simply because of the influx of new investor. So if you find a way collectively. sometimes to assess that, see the pain point and work on aligning ultimately the revenue and the salaries. Make sure the distribution is healthy and fair. The sooner you can do that, the better. But it's difficult to do in environments where everyone is competing and everyone needs to be first, which is the nature of sports. Everyone wants to be first. Everyone invests a lot, and you don't have the time or the mindset to sit together and build your industry for the 20 years to come. So it's an easy advice to give in retrospect, but more difficult to put in practice, actually.

Alex 30:36

Maggie, is this a trend that you're seeing now in women's football as well, where you've got the cost base is starting to swell at a rate that is much higher than the revenues?

Maggie Murphy 30:45

Yeah, yeah, yeah, yeah, yeah, yeah, yeah. Advise or, you know, this is something that they occupied all my time when I was at Lewes: like diversifying the revenue streams. This is like business 101, you know, diversify your revenue streams. And I think that in that quest to be number one, in that quest to be promoted, whether you might get a bigger chunk of the central revenue or the broadcast deal, a lot of people are just looking to their men's clubs or looking to an external investor to just pay for it. And I think the problem with that is that that doesn't really foster innovation. It doesn't foster thinking differently. It means that you spend more time pleading with your men's side to have access to a facility, than you do in paying for commercial managers, to come on board, start creating generative relationships with sponsors and partners. I do think that some clubs, if they were given an extra 50 K would put that into the player's salary over building out revenue- generating salaries on the business side of the club. And I think that ultimately there are lots of unintended consequences that I think a lot of people in women's football haven't thought about. So in that quest for success on the pitch, they are becoming more and more dependent on the men's side of the club, or more and more dependent on an investor who might walk away or the men's club might say one day: do you know what? You can't have access to that facility. And so for me, as quickly as you can find ways to, in a healthy way, generate revenue from your fans, not just by upping ticket prices and demanding that they pay more. But more how can I get them to want to spend their money here? It's not rocket science, but I think it's something that goes on a back burner when you're in that middle of the hype cycle. Because you don't want to lose your footing. You don't want to get relegated. Because if you get relegated, you don't know if you'll be able to get back in.

Alex 32:45

And another piece that comes to mind when I think about hype cycles is: there's a significant shift within the organizations themselves, right? They suddenly get new executives trying to take roles. They need to expand their team to certain degrees. So they bring in new people and you start to see this tension between the OGs who were there when no one cared. And who built it with sweat and tears when there was no rewards. There was no, bonuses They were the people who lived and breathed it, cut them and they bleed: padel, women's football, esports. And then you get these new people coming in, maybe from other industries, who are like: no, I've got a great idea. This is what we do in ice hockey, or this is what we do in basketball. And you're like, wait, we're not them. And we're different. And you start to see this tension. Within organisations, But also even within the fan base, frankly. Where it's: all these Johnny come lately fans who are enjoying their hospitality at the stadium, but they weren't here when there was only 300 of us sitting here in the rain. so you're seeing that with padel, padel has this interesting problem. I had a conversation last week with the first number one in the world, uh, Argentinian guy. And he said. And I didn't really know this because I didn't even look that back in the history. But he said every decade or so there is a new circuit, a new international circuit with a new sponsor, new organization. And they immediately forget everything that happened before. It doesn't exist. There's no person who won 30 tournaments. There was no guy who was number one for like, 78 weeks. We started from the day that we started and we're looking forward. And he said, the amount of history that is lost because the O. G. S. Are not recognized or not rolled into the new era. So Maggie, there must be a lot of people who have been toiling away at the women's football coal face. Who must look a little bit at what's happening now, going: this isn't us, we're being sidelined. That tension must exist? And how can you deal with it or minimize it, or even harness both sides? The new people and the legacy.

Maggie Murphy 34:40

this, this very much exists. And you're right. It's across the fan base. It's across people that have worked: now you have jobs in women's football, before it was all voluntary. So you've got people that did slog hard to build something that were never paid. And now you get people who can make a career out of it. And it's hard and it's something that few people talk about. One thing that I made a pledge to myself over was that when I would talk to my players, I would always want them to be demanding more. But I was so jealous of what they had. Cause I had nothing like that when, when I was playing. But I would never say that out loud cause I didn't want to be holding back their ambitions. That's, that's not what I was. I was wanting even more for them on the day to day basis. I think that it's a really hard one because this comes into the human psyche and feeling valued and how you process your identity and belonging and all those things. And so it's really difficult to get right and some people will need more recognition than others. I think that there is, um, certainly a, a way that, that you need to have that recognition for what went first. What's come before, tell the stories, make sure that people realize that this is growth and that there is a journey. And there are beautiful stories of people that were part of a club or women's football for a long time. And by able to harness some of those stories, it can have a real impact on today's players as well. And when I say players, I mean players, but also people that work there. Um, within the sport. So there is a point of recognition. I think that there is also a challenge of the line where you say, yes, that's what was done before, but now we have progressed and we're doing things slightly differently, or we want to do this or that. And it's not necessarily wrong just because it's not what you did or what you want to do. I think there are voices that are strong from certain quarters, there are fans that are very opinionated and that can be a challenge sometimes because they have a legitimacy for the fact that they've been around longer. So it's almost as though their opinions are facts, even if they Don't necessarily know the full story or they're implying or making assumptions over something. But I think all of this is like your traditional kind of stakeholder management, isn't it? It's making sure that there's transparency. At Lewes, we were always extremely transparent. We published our strategy for everyone to look at. There were no secrets. It was like, this is what we're trying to do. And then at the end of the year, we would publish our impact report, which said whether we'd failed or not. And we would hold up our hands and go, yeah, we tried to do that, but we just couldn't. And by doing that, I was trying to be really, really clear on what it was that we were trying to do. So if someone was calling us out, as happened in my early days: you know, you haven't done this, you haven't done that. I could quite clearly say, well, we're not trying to do that. Here's our strategy. This is what we're trying to do. Hold me accountable to this. And if we fail, I'll try to explain or try to figure out why we failed on it. So that level of transparency is unusual in football, but I think it served us at Lewes and I think it would serve. Well, personally, I think it would solve football generally. But women's football for sure. Just by being open and transparent about what you're trying to achieve, I think just allays some of the validity of comments that might come out.

Alex 37:46

And Nico, obviously most people think that eSports is not that old, but you do have OGs who have been there for 20 plus years. when tournaments were being held in hotel lobbies and we bring your own computers, and now we see, with Katowice and Cologne and, The majors: these huge stadium events, 20, 000 people sold out nights. How has esports in your experience, at least, how has esports solved the tension between the OGs and the people that need to come in and breathe in with new ideas, new ambitions, and new perspectives?

Nico Maurer 38:19

From a, let's say, fan perspective, I think it's naturally a topic in the sense that yes, you will always have a fraction of people that say, hey, it was better at the beginning. I was there, blah, blah, blah. But I would say overall, it's a very small portion. Most fans of esports that are here since, I don't know, more than a decade. They are just incredibly exciting about seeing their niche passion being now, maybe not mainstream, but extremely well recognized, going in huge arenas, being on the news and so on. So I think most people are really just overall, incredibly excited that their passion is recognized publicly, let's say to a much wider world. Uh, so for the fans, it's not really a topic I would say. Then I would say there's a topic when you have people, executive, joining the industry. I've seen most of them fail to adapt because I think our industry is not mature enough yet. I think in five, 10 years, it will be more standardized, the revenue stream, the way we all function. So you will have very competent managers joining the industry and being able to, Not be plug and play, but understand rapidly and do their stuff and bring their overall operational managerial expertise and just thrive. But what happened those last years was really not the case. And most people fail to adapt. But at the same time, you also add on the first wave of funders and OG, many that didn't adapt to the new world of simply managing much bigger companies, having to work with investors, having to deliver a plan and so on. So a lot of the OGs from there were replaced and didn't adapt to more structure and professional world. Only let's say a handful or a certain number of people are here still since the beginning: fnatic, SK the first team 20 years ago. It's incredible to see those people still around. And for us 11 years ago, which is a long time in our industry. So I think it's not easy in both directions to adapt. But more and more will go in a world where our industries. Much more mature and understood. And let's say, people will have cracked the code. We are not there yet. We still have very different ways to approaching the revenue generation, very different styles. So we are not there yet. In a few years, it will be different. So we're still in that period where there is that conflict and tension.

Alex 40:42

I think one of my last areas that I'm concerned about with hypesports is while there's a lot of curiosity from non endemic people, there is still a kind of generalisation. So what happens as a result of that is that you get. The big risk of contagion that comes from a single failure. What I mean by that is if everyone is really excited about, let's say women's football, but one of the funds that has been investing in women's football goes bust, The contagion of that one stakeholder doing things wrong or getting it wrong will taint the whole industry. There will be this assumption that, well, if they couldn't make it work, it doesn't work. Thesports doesn't work. The entertainment product doesn't work. I know in esports there have been one or two noticeable, like, when Faze had a lot of problems. That was seen because it was such a high and visible brand, when it really started to struggle post listing, it was considered a indicator of the industry. How do you deal with that? Cause it must be incredibly frustrating when someone who has a very different business model from you may even be looking at a different market from you has a problem. It might not be endemic to the scene. It might just be the management or whatever it is. They have a problem, they trip up and suddenly they sneeze and the whole industry has a cold. And, all the investors get nervous. All the sponsors start bailing. Nico, talk a little bit about it from the esports point of view.

Nico Maurer 42:11

We've seen that. And yes, It's a terrible feeling because you're like: Hey, we are doing things the right way, our own way to build for the long run. And you have people that make terrible decision and boom, it's impacting negatively our whole industry. But it would be a bit unfair to only look at the negative when on the other hand, For not enough tangible reason, everyone is interested and wants a piece of the pie. So it's overinflated at some point and Much too negatively perceived on the other hand. But I think Both go together. But we've seen that for example, we're trying to have financial discipline to again, build for the long run. We are here since 11 years. I want to be here in 10, 20 years. And then you have people making crazy moves. We can mention, for example, FaZe, which is one of the biggest names, biggest teams in esports. They did the IPO through a SPAC and suddenly the headlines were everywhere. FaZe is worth 1 billion, incredible for eSports, blah, blah, blah. So of course you have all the positives that come with that. But when one or two years after, FaZe is sold for 16 million. Then it's just impossible to get investment in the whole industry, in the whole esports. People just see through that headline. It's one specific failure due to one specific business model, extremely aggressive choices, that is indeed tainted all industry. And you have to live with it. You cannot do anything. You're at the mercy of those big market trends because investors are very much looking at each other. So when they want to invest, they all want to do that. And when suddenly they stop, they all stop. And, as a stakeholder, you can only ride the wave when it's going in the good direction and you have to minimize the loss, consolidate your position when you're in the downward trend. You cannot influence those trends no matter what you do. Even if it's unfair and terrible. So you just have to navigate. Leverage the maximum you can when it's going well, when it's well perceived. And just wait, consolidate, build when you're in a difficult time and wait for the next cycle.

Alex 44:11

Maggie, you concerned that something can go wrong, some club could get it wrong, and it's going to really just derail the whole evolution?

Maggie Murphy 44:21

Yeah, well, I am now. Um, no, I, you know, I think, I think up until now, when a women's team has failed, it's because of that dependency on the men's side of the club. And so you saw quite a few during the pandemic, the men's side trying to cut costs. And so the quickest, easiest thing to go was just the women's team. Short sighted in many cases, because actually I think this is the biggest growth area for most clubs. And when I talk about this, I'm not talking just about the Premier League clubs. I'm going all the way down through the pyramid. women's football is the growth area right now. So if you are a league two club in England, you should be investing into your women's side because you're going to have some really good opportunities to grow. But yeah, so up until now, the failures have been when it's been connected to a men's club. I think all you're seeing at the moment is the growth when you have separate investors: if you do have like a, an angel city, for example, it's just been sold for 250 million in the U S. It was valued at a hundred million about a year or two ago. So you can see the vast increases in the value. Angel city does generate a lot of money, does generate a lot of revenue. But lots of these valuations are just essentially where someone's willing to pay for it. Right. It doesn't kind of talk about the revenues, especially when you come into English football, where we're not making that much money just yet. So you now have a couple more separate investors coming in. If they get bored or if there's an impact on their other businesses and they need to sell up, I do see this as being problematic, and that comes back to my point about diversifying your revenue and not being dependent on anything or anyone. But I think that there will be some shocks. I don't know, maybe Nico can say, is it better to have the shocks sooner or is it better to postpone them and then figure out, try and have a plan before they happen in a few years?

Nico Maurer 46:07

I don't have the answer, but be prepared. That's what I can say.

Alex 46:12

so I guess, As we head towards the end, one of my final questions or probably my final question is, we obviously talked a lot about the important lessons that need to be learned from a hype cycle, from others hype cycles for padel. But I guess the question for me is, how do you spot the changing tide? Obviously in different industries, it looks different, but there might be some general factors, like red flags, where you're like: Oh, this means something's changing. This means that the wind is about to change direction. Do you, from your experience, especially Nico, but maybe Maggie as well, from maybe the US perspective or other perspectives, what are the telltale signs that something is changing and that that contraction or that realignment or that correction, whatever you want to call it, is about to happen and get ready, tighten the seatbelts, whatever it may be? You need to start taking evasive action or specific action to deal with that consolidation.

Nico Maurer 47:09

Uh, I don't think there's an easy answer to that. If we could predict, the world would be easier to navigate. But I would say maybe if you look at ratios between level of investment, salaries and the reality of the business. And let's say the way they're evolving one comparison to the other. At some point, you might see the bubble coming and it cannot be sustainable. So if it cannot be sustainable, it can end in different ways. And the worst could be a bubble that pops and suddenly everyone stops investing. But it can manifest in other ways. But let's say that specific Indicator, the ratio between salaries, investment, and actual pace of growth of the business might be a good one to look at.

Alex 47:55

Maggie, any telltale signs?

Maggie Murphy 47:57

Well, I think we're yet to see them really. I think the audience growth is obviously going to be a big one. So, on the back of theionesses winning the Euros, there was a, there was a big jump in audiences, but it did start to slip away. And so you get these moments where you get these spikes and that's where you have to really invest in your marketing and the reasons for those people to come back. So I think with salaries and wages going up, but without the revenue coming back in, it becomes fragile and I can see why someone would want to pull. Hopefully we won't see it, but we will likely see it, I guess.

Alex 48:30

Well, I think that probably wraps up our episode. Please like, share and subscribe if the content was thought provoking. Please comment on LinkedIn or Twitter if you have any recommendations around our format. Topics we should devote an episode to. Questions we should ask. Speakers we have to bring on. We want you all those driving the next phase of this industry's future to tell us what you want to hear aboutand, who from. Thank you Maggie and Nico for joining us today. We'll keep doing our best to cover All The Angles of the business around padel, episode after episode. Until the next one.