Comment Text:
As an 8-year NFL veteran, I have seen the importance of sports in the United States. Fans and businesses have vaulted the NFL to nearly $20Bn in annual revenues with related businesses bringing in many more billions each year. Other major sports leagues bring the total value of the industry closer to $100Bn annually. The rise of sports betting and fantasy sports have created new revenue streams and brought fans closer to the game they love.
After I retired from the NFL, I launched Beyond The Game Network. Our group of 30 former pro athletes invests and partners with startups building the newest sports technology offerings. Since 2018, we have worked with 25 startups creating new companies in sports, media, gaming, and fitness. This work has given me a unique perspective on the sports industry. My business partner at Beyond The Game Network has traded trillions of dollars of futures, options, and derivatives during his 20-year investment banking career, so our group understands this market as well.
The Commission’s attempt to clarify the terms of §40.11 is an important step in overseeing the derivatives market. However, the proposed rules go beyond clarification and instead prohibit the use of these important instruments in the sports industry. This not only affects teams and players, but the broader sports ecosystem that also includes vendors, merchandise vendors, the hospitality industry, and much more. The sports industry is much more than just the game on the field. Its impact is felt throughout each city that hosts games.
A blanket prohibition on event contracts in sports would be short sighted and would stunt innovation, especially as the sports industry itself is still evolving. The sports industry is one of the most important in America and has continued to grow in revenue and importance with the American public. This can be clearly seen in TV ratings with the NFL alone making up 93 of the 100 top watched programs last year.
Another issue with a total prohibition on sports event contracts is the negative impact this will have on other industries, including hospitality and media. Sports are deeply intertwined in the culture and economy. However, with limited hedging options, a blanket ban against sports contracts will inevitably have ripple effects on hotels, restaurants, real estate owners, and others. These businesses could use sports events contracts to manage exposure with investments in their operations and growth.
Event contracts are useful tools in hedging economic risk for many industries, not just sports. For both retail participants and entities, there are only limited and expensive options for hedging risk based on an occurrence or non-occurrence of an event, but an event contract offers legitimate hedging opportunities for those who may not have another means to do so. For example, a restaurant near a sports stadium may want to hedge the possibility of cancellation or lower attendance that would impact their revenue for the day. Without event contracts, such businesses have no way to properly manage such risks.
While I appreciate the Commission’s efforts to add more clarity, I urge the commission to reject a ruling that has such a broad ban against a major industry. It will have detrimental impacts not just on the sports industry, but other related industries by preventing them from accessing markets to hedge appropriate business risks.
Thank you,
Andre Fluellen
Founder, Beyond The Game Network
NFL Veteran 2008-2016
