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How Private Equity Ruined American Youth Sports
How Private Equity Ruined American Youth Sports
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0:00
This is the Mandalay Bay South
0:01
Convention Center, and for 3 days in
0:03
April, it turns into an unintentional
0:05
display of everything that's wrong with
0:08
American youth sports.
0:09
The transformation begins on Good Friday
0:11
of Easter weekend, when crews turn the
0:14
massive Bayside exhibit halls into
0:15
uniform row after uniform row of
0:18
volleyball courts, 123 to be exact. The
0:21
next 2 days will be absurdly busy. Every
0:24
individual court will be played on
0:25
non-stop by a rotating set of eight
0:27
teams from 7:30 a.m. to 9:30 p.m.,
0:30
making for just under 1,000 teams in
0:33
total passing through the event. Each
0:35
team, composed of on average 10 players,
0:37
two coaches, and at least an equal
0:38
number of parents and family members,
0:40
means conservatively about 24 people per
0:42
team, so about 24,000 people at the
0:45
event. With all the whistles, squeaking
0:47
shoes, and screaming U11 to U15 girls,
0:50
it'll be [music] uncomfortably loud.
0:53
Without a single window, with absurdly
0:54
long concession lines, and absurdly
0:56
priced concessions, to the uninvested
0:58
onlooker, it would all seem an
1:00
impressive, but rather unappealing event
1:02
to spend much time at. But, to the
1:04
players, coaches, and parents duking it
1:06
out on the court,
1:07
>> [music]
1:07
>> this weekend means everything.
1:10
This youth tournament, the Red Rock
1:12
Rave, is sanctioned by USA Volleyball,
1:14
which, as the sport's governing body,
1:16
grants the tournament [music] status as
1:17
a national qualifier. And to everyone in
1:19
the club volleyball ecosystem, national
1:21
qualifiers are a big deal. Depending on
1:23
which division a team is in, if they
1:25
win, or place second or third in some,
1:28
they'll get a bid to go to USAV
1:29
Nationals in either Indianapolis or
1:31
Minneapolis. Getting to play at
1:33
Nationals represents a massive
1:34
achievement for clubs, coaches, and
1:36
players. So, right now, for every one of
1:39
the 950 teams in Las Vegas, a bid is the
1:42
dream, even if there are only 31 up for
1:44
grabs in total. And they're all paying a
1:47
pretty penny for the privilege of
1:48
chasing the dream.
1:50
For the clubs, the regional host, the
1:52
hotels, the sanctioning body, this
1:54
tournament means big business. To play
1:56
in this tournament, each of these teams
1:58
paid $950,
2:00
and that is just the tip of the iceberg.
2:02
Plastered on the court map distributed
2:04
around the event is the logo of the
2:05
company facilitating lodging for this
2:07
event, Casey Sports Housing, reminding
2:09
each parent at the tournament that this
2:10
is what's called a stay-to-play
2:12
>> [music]
2:13
>> event. This term is just what it sounds
2:15
like, a quid pro quo. Book hotel
2:17
reservations through a handful of
2:18
options that the tournament has
2:19
partnered [music] with, and your team
2:21
will be allowed to play. In this
2:22
situation, it limits options to the
2:24
Mandalay, Bay, Luxor, and a host of
2:26
other gaming and non-gaming hotels,
2:28
while still offering pretty competitive
2:30
rates. It's a pain, but it's hard to get
2:32
around when organizing massive events
2:34
like this. In other markets with more
2:36
alternatives like Airbnb, Vrbo, or an
2:38
extra room in a family or friend's
2:39
house, stay-to-play can feel
2:41
restricting, and the rates can also feel
2:43
artificially high. Whether fair
2:45
criticisms or not, stay-to-play brings
2:47
into focus the travel cost.
2:50
There are only a few teams here locally.
2:52
The rest are from everywhere: Colorado,
2:54
California, Idaho, Texas, Missouri, even
2:57
Hawaii. Three nights at a hotel then,
2:59
along with airfare or gas, and a mom and
3:01
a daughter are looking at a bare minimum
3:03
of $1,000, making their $95 share of the
3:07
tournament fee, if split between 10
3:08
girls, easy to overlook. Throw in a
3:10
sibling or a spouse coming along, and
3:12
the number goes up to ballpark $1,500
3:14
[music]
3:16
for the weekend in travel. The costs
3:18
continue to accumulate. Outside food and
3:20
drink are prohibited, so if you don't
3:22
smuggle it in, you're resigned to $12
3:23
chicken sandwiches, $10 slices of pizza,
3:26
or, especially popular with the kids,
3:28
$16 acai bowls throughout the three
3:30
days. Tournament merch is critical for
3:32
the kids to proudly show off they've
3:33
been to a big tournament, so another $50
3:35
on a hoodie. Should the parent actually
3:37
want to watch their kid play, there's an
3:39
entry fee of $27.50
3:41
plus processing, or a $65.40
3:44
three-day [music] pass. For the rest of
3:46
the family back home, these games are
3:47
streamed, but the entry-level
3:49
subscription for that [music] service is
3:50
$44.85.
3:53
Then there are the coaches. While the
3:55
kids' coaches are hardly compensated,
3:57
they're at least put up in a hotel and
3:58
given a travel stipend, which parents
4:00
are also on the hook for. They pay for
4:02
this, as well as the tournament fee,
4:04
through what are called club dues. Way
4:06
back in July, when teams were selected
4:07
after the tryout window opened, parents
4:09
agreed that on top of paying for their
4:11
kid to get four to six of these
4:12
tournaments, they'd also pay their share
4:14
to rent gym space, compensate a coach,
4:16
cover the club's insurance, and
4:17
generally keep the lights on. These run
4:19
about $2,500 to $7,000, depending on the
4:22
club, age group, and travel. While the
4:24
total may differ widely, what's common
4:26
in the space is for these club dues to
4:27
be pretty opaque. You're told the total,
4:30
but you're not exactly sure where that
4:31
money is going.
4:33
Put all of this together, for your kid
4:34
to play club volleyball with the travel,
4:36
food, entrance fee, and every other
4:38
nickel and diming that comes with each
4:39
tournament, and you're looking at a
4:41
$2,000 weekend, at the very least. Now
4:44
multiply that by four tournaments, then
4:46
add, say, $3,500 in dues, and a pretty
4:48
typical competitive club experience is
4:50
now nearing $11,500
4:53
for just the season. And if a kid starts
4:55
as a 12-year-old and ends up pursuing it
4:57
all the way through their 18s year, the
4:59
last as a junior, there are six more
5:01
years of these $11,500 seasons coming.
5:05
It's an extremely expensive investment
5:07
for a budding hobby or passion. But club
5:10
parents aren't treating this like any
5:11
old hobby.
5:13
Just like the kid that's pursuing the
5:14
ever-meaningful bid, the parent is
5:16
pursuing a dream, too. The dream of a
5:17
college scholarship. Of course, the odds
5:20
here are similarly small to the chances
5:22
of getting a bid. At just this one
5:24
tournament, there are nearly the same
5:25
amount of players as there are in all
5:27
Division I volleyball, without even
5:29
considering how many are on scholarship.
5:31
But anything that could potentially help
5:33
cover costs of an education that's
5:34
anywhere from $25,000 to $65,000 a year
5:38
or beyond feels worth pursuing. There
5:41
are lower levels of college play, too,
5:43
Division II, Division III, NAIA, but
5:46
none offer full scholarships that pay
5:47
all college dues and room and board. Not
5:50
all even provide partial scholarships to
5:52
cover the ballooning costs of college.
5:54
But the dream is too deeply ingrained to
5:56
look too closely at the numbers. The
5:58
people set to turn a profit off these
6:00
youth endeavors won't allow it. Drowning
6:03
out the less than stellar statistics
6:04
that fewer than 6% of youth volleyball
6:06
players will play in college and that
6:07
only 1.2% will play Division 1 are the
6:09
posts from tournament organizers on how
6:11
many college coaches will be in
6:13
attendance at this tournament. And it's
6:15
more than unlikely you'll run into any
6:16
reference to those slim odds when the
6:18
local club only brings up the college
6:19
players they have produced when trying
6:21
to secure kids' commitment and their
6:22
parents' club dues. The dream is even
6:25
culturally perpetuated, too, as it's a
6:26
massive honor within a parent's social
6:28
circle to send a kid into college
6:30
athletics. Something they can boast
6:31
about, something they believe serves as
6:33
a badge of good parenting. This dream,
6:36
shared by the kid, their coach, and the
6:37
parent, is so pervasive, so strongly
6:40
held, and such a money generator that
6:42
private equity has now gotten involved.
6:45
Across Red Rock Rave's 123 courts,
6:48
there's an increasingly common, albeit
6:50
pretty minimalist and easy to miss logo
6:52
adorning jerseys. It reads LOVB, but is
6:55
pronounced [music] love, and it
6:57
represents the most dramatic private
6:58
equity invasion into the sport. League
7:01
One Volleyball is technically a
7:03
professional league with a highly unique
7:04
business model. Only 2 years old, the
7:07
league has six teams with a few more on
7:08
the way. What makes it novel is that
7:10
this league also owns 90 youth
7:12
volleyball clubs around the US. This at
7:15
the youth level is presented as a real
7:16
plus. It means that the league supports
7:18
the grassroots of American volleyball.
7:20
It means there's a direct pipeline to
7:22
the pros. Furthering the excited buy-in
7:24
from players and parents alike, LOVB is
7:26
equal parts aspirational and empowering.
7:29
The company is proudly women-led and, in
7:30
their words, committed to empowering
7:32
women both on and off the court.
7:34
>> [music]
7:34
>> And seemingly each team in the league is
7:36
at least in part owned by professional
7:38
or former professional athletes, also
7:40
often female. For those playing at, say
7:42
Club V in Salt Lake City, well the
7:44
club's name hasn't changed, [music] well
7:46
the coaches and leadership has remained
7:47
the same, there's now the common
7:49
occurrence of one of the Love Salt Lake
7:50
City players walking into their gym.
7:52
It's all very exciting because it just
7:54
makes the big [music] leagues feel more
7:55
possible. But for Love, the grassroots
7:58
involvement isn't just something they're
7:59
doing out of the goodness of their
8:01
hearts, and it's certainly not why
8:02
they've received private equity buy-in.
8:04
To run this upstart professional league,
8:06
Love needs those club dues. And to
8:09
maximize the return, private equity
8:10
needs to see those club dues go up.
8:14
The money that's propped Love up has
8:15
come through a few different channels.
8:16
It has brand deals with Adidas and
8:18
Skims, it has broadcast deals with USA
8:20
and ESPN, and it's been backed by some
8:22
major investments by private equity
8:23
firms. The league has garnered somewhere
8:25
near $200 million in total funding led
8:28
by the Atwater Group and supplemented by
8:30
Ares Management Fund and Left Lane
8:31
Capital, while some individual teams are
8:33
now owned by groups like Synergy Sports
8:35
Capital. To make the private equity ties
8:37
even deeper, Love CEO Caitlin Gao came
8:40
from Bain Capital. And what's brought
8:42
all this private equity interest into
8:43
the space is not the upside of the
8:45
professional league, but the confidence
8:46
in a robust outlook for the youth
8:48
[music] side going forward. In Atwater's
8:50
words, it's not just about generating
8:52
returns, but also leveraging their
8:54
experience in media and entertainment to
8:55
engage fans in exciting ways and inspire
8:58
the next generation of exceptional
8:59
athletes. Effectively, they believe in
9:02
Love as a way to further perpetuate the
9:04
dreams that have parents spending more
9:05
and more money on youth sports. This is
9:08
private equity strategy beyond
9:09
volleyball, too. Because not only is the
9:12
space a $40 billion a year sector, it's
9:14
growing at 8 to 10% a year, and most
9:17
importantly, the system is
9:18
self-perpetuating. Parents are
9:20
increasingly finding themselves in a
9:22
spending war for more specialization and
9:24
more training time, so more money goes
9:26
into the machine.
9:28
It all creates a flow that looks like
9:29
this. The most money and the most
9:31
players at the grassroots level with a
9:33
disproportionate amount of money in in
9:35
to the players rising up the triangle.
9:37
And because of this structure, the
9:39
incentives, from the perspective of the
9:40
development of the game, are skewed.
9:43
There's the most pressure on youth
9:44
sports not to teach the game first and
9:47
foremost, but to sell dreams of bids and
9:49
college scholarships so that the gym
9:51
stays full and the club dues keep
9:52
flowing in. Then, of course, there's the
9:55
issue of access [music] in the first
9:56
place. As a player ages out of
9:58
introductory public programs and into
10:00
middle school and high school sports
10:01
that are publicly funded, these publicly
10:03
funded programs are so competitive and
10:05
carry so few players that a kid
10:07
practically has to play club to make the
10:09
team. And if club costs upward of
10:11
$10,000 a year, the sport immediately
10:13
turns a massive swath of the population
10:15
away. Beyond the cost, the travel and
10:17
time away from work is extreme. And then
10:20
there's the cultural factor that the
10:21
game begins to feel like it's only for
10:23
the wealthy and upper middle class. All
10:25
this has become so ingrained in the
10:27
American athletic consciousness that it
10:29
all feels second nature. But this
10:31
structure isn't the norm elsewhere.
10:34
This is called La Masia. Located in the
10:36
suburbs of Barcelona, Spain, this is
10:38
hallowed ground in the soccer or
10:41
football world. This is the historical
10:43
youth training site for FC Barcelona's
10:45
up-and-comers. Like at a competitive
10:47
volleyball club in the US, the kids here
10:49
were recruited and vetted and are
10:51
continually pushed to grow as players.
10:53
Unlike in the US, these kids, some of
10:55
which grow up to be Lionel Messi, Andres
10:57
Iniesta, Lamine Yamal, a few of the
10:59
game's biggest names in the past few
11:01
decades, do not pay to be here. Rather,
11:04
the opposite. They're being trained in
11:06
the club's ways while also getting paid.
11:09
In this situation, the financial aspect
11:10
of the triangle is effectively flipped.
11:12
As FC Barcelona is one of the world's
11:14
largest and most important clubs,
11:16
there's a lot of money coming in at the
11:18
top of the triangle, which it then
11:19
reinvests in its youth development to
11:21
ensure that the club is able to stay one
11:23
of the largest in the world by
11:24
developing world-class talent.
11:27
Perhaps it's unfair to compare a startup
11:29
volleyball league, a country that shown
11:30
the appetite at the youth level for the
11:32
sport, but has never developed its own
11:33
domestic professional league
11:35
successfully with one of the largest
11:36
clubs in the world's biggest sport. So,
11:38
instead take baseball. It's America's
11:41
national pastime and it's a profitable
11:43
entity at the highest level in the US.
11:45
And yet, the extreme financial demands
11:47
of youth baseball still exist in a very
11:49
similar manner to those in volleyball.
11:52
To keep up with your peers, you can't
11:53
just play at your high school or middle
11:55
school, you need to play travel
11:57
baseball. The dream here is alluring,
11:59
too, perhaps even more so. A high-level
12:02
high school player can get drafted
12:03
directly into Major League Baseball and
12:06
receive a multi-million dollar signing
12:07
bonus at 18 years old. For those that
12:10
aren't quite as promising, there's still
12:11
the college option and the ever-alluring
12:13
scholarship.
12:15
This isn't just a baseball issue. In all
12:17
American sports that generate revenue at
12:18
the professional level, hockey, American
12:20
football, basketball, little of the
12:22
massive profit brought in from endless
12:24
sponsorship and massive broadcast deals
12:26
is making it down to the youth level to
12:28
fund the development of the next
12:29
generation as college athletics sever
12:31
the connection of the pipeline. This is
12:33
a uniquely American problem as the US's
12:35
massive, expensive university system
12:37
also happens to be the dream destination
12:39
for top athletes. They want to play a
12:41
sport in college. Colleges offer
12:43
scholarships, stipends, and due to
12:45
increasingly relaxed rules over what is
12:47
considered an amateur athlete, some ways
12:49
to make some money, but they don't
12:51
invest in youth programs like FC
12:52
Barcelona and they shield the major
12:54
revenue professional leagues from the
12:56
pressure to invest in youth sports, too.
12:58
Rather than going through a development
12:59
pipeline where the highest levels water
13:01
the grassroots with access to the game,
13:03
coaches, and further and further
13:05
training for those that show the most
13:06
promise, in the US it's increasingly on
13:08
the drive of kids and the pocketbooks of
13:10
parents to begin opening opportunities
13:12
for higher-level play. It's all
13:14
hyper-individualist, hyper-competitive,
13:16
>> [music]
13:16
>> hyper-American.
13:18
But it just isn't working.
13:21
Across the sports landscape in the US,
13:23
there are indicators. At the highest
13:25
level of American sports, there's a
13:26
notable uptick in second generation
13:28
professionals. Ethan Holliday, who
13:30
signed the largest baseball signing
13:32
bonus out of high school, is the son of
13:33
legendary baseball player Matt Holliday.
13:36
Ashlyn O'Neal and the sisters Madison
13:38
and Avery Skinner are dominant for the
13:39
US volleyball team and are daughters of
13:41
former NBA players. It's not nepotism.
13:44
These young athletes are all extremely
13:46
deserving, driven, and capable. Rather,
13:48
these second generation stars are
13:49
becoming more common because their
13:50
athletic advantages are matched by
13:52
financial advantages. They've [music]
13:53
had the access through their
13:54
professional athlete parents to elite
13:56
training and high-level coaching their
13:58
whole lives. In soccer, no country has
14:00
more youth players than the US, but
14:02
because of barriers to access, clubs
14:04
incentivized to turn a profit and
14:05
compete for meaningless tournament
14:07
results rather than player development,
14:08
the US men's side failed to qualify for
14:10
the 2018 World Cup while tiny Iceland
14:12
held its own against mighty Argentina.
14:15
And in 2022, the men's team was knocked
14:17
out comfortably by the Netherlands,
14:18
[music]
14:18
whose population is slightly smaller
14:20
than that of the state of New York.
14:22
Then there's Norway. At the last Winter
14:24
Olympics, the nation of under 6 million
14:26
stacked up 18 gold medals, six more than
14:28
the [music] US, and 41 total medals,
14:30
eight more than the US. In the US, it's
14:32
common for older generations of coaches
14:34
and leaders to lament the fact that
14:36
everyone now gets a participation
14:37
[music] trophy. Not only is this not
14:39
true, as youth sports have never been
14:41
more competitive here than they are now,
14:43
but the nation might benefit from it.
14:45
Norway's sporting success is largely
14:47
attributed to its youth model that
14:48
prioritizes finding joy in the sport and
14:50
an internal love for improving at the
14:52
practice rather than just focusing on
14:54
results and scores and finishing
14:55
positions. A naysayer might push back
14:58
and say that it is culture and heritage
14:59
pushing this tiny nation in front of the
15:01
US in the Winter Olympics. That'd be
15:03
wrong. Their best triathletes are the
15:05
best in the world. Their distance
15:06
runners are beating East Africans and
15:08
Americans alike. Even their best men's
15:10
beach volleyball partnership is better
15:11
than any the US can produce. The United
15:14
States is unapologetically a
15:15
sports-obsessed nation. It's a massive
15:17
nation, too. And yet, in sports that the
15:20
rest of the world participates in, the
15:21
US does just okay. The talent is here,
15:25
but it's just not getting the
15:26
opportunity.
15:27
The problem is bigger than American
15:29
national teams in the highest reaches of
15:30
athletic achievement. It's a public
15:32
health issue. In a 2025 hearing, the
15:34
subcommittee on early childhood,
15:36
elementary, and secondary education
15:37
[music] discussed the negative
15:38
ramifications that declining numbers in
15:40
youth sports has on kids. With 70% of
15:43
all US kids quitting organized sports by
15:45
13, there's an ever-increasing number of
15:47
kids losing out on the benefits that
15:49
sports bring. Without sports, kids are
15:51
more likely to think negatively of
15:53
themselves, they're more likely to
15:54
become obese, they're less likely to
15:56
succeed in school, less likely to be an
15:58
active parent and raise an active child.
16:00
Hyper-specialization is burning kids
16:02
out. Hyper-competitive, results-oriented
16:04
approaches are leaving too many kids in
16:06
the cold. What seems increasingly clear
16:08
is that when we push on our youth
16:09
programs to produce wins, winners, and
16:12
more and more dollars, we're setting
16:13
ourselves up to lose in the long run.
16:18
Misaligned incentives and subsequent bad
16:20
outcomes also happens to be, in the
16:22
broadest sense, the story of Mustard's
16:23
latest episode of Unsealed called The
16:25
Virus That Infected Boeing, which is
16:27
available right now on the sponsor of
16:29
this video, Nebula. If you're watching
16:31
this video, you're likely aware of
16:32
Mustard's YouTube channel, and if you're
16:34
anything like me, you too are always
16:36
excited when their team releases another
16:37
spellbinding story with some of the most
16:39
amazingly detailed and cinematic 3D
16:41
motion graphics about some of the most
16:43
interesting aviation and engineering
16:45
stories out there. I was genuinely so
16:47
excited to find out that accompanying
16:48
Mustard's last YouTube release on the
16:50
context behind the first Boeing 707
16:52
barrel roll was an episode of Unsealed
16:54
that tells the larger story about
16:56
Boeing's rise and its problems. I really
16:58
think it illustrates just how valuable a
16:59
product Nebula is. Now, I may be biased
17:02
because I have a role in shaping what
17:04
Nebula is as a streaming service, but
17:06
because it's a platform designed by
17:07
creators, we can run the platform in a
17:09
way that allows everyone on the platform
17:11
to push really good content in that
17:12
direction. And Unsealed is a perfect
17:14
example. Unsealed is a series that falls
17:16
under the Nebula Plus umbrella, meaning
17:18
when the Mustard team puts all the work
17:20
their videos require to produce an
17:22
airtight script and stunning visuals,
17:23
they're naturally going to come across
17:25
storylines and ideas that don't
17:26
perfectly fit the video at hand. But
17:28
rather than tossing those out, with
17:29
Nebula, they become another standalone
17:31
video. The upshot is that everyone wins.
17:34
Fans of the creator now have another
17:35
20-minute hyper-detailed story to dive
17:37
into, Nebula adds another banger to its
17:39
catalog, and the Mustard team makes the
17:41
most of all the research they put into a
17:43
similar story. And Nebula Plus is just
17:45
one of the perks of the streaming
17:46
platform. There are Nebula first videos
17:48
that release early and without ad reads
17:50
that allow you to stay a week ahead on
17:52
some of your favorite series like Tom
17:54
Scott's England, which brings all the
17:55
exploratory intrigue and joy of
17:57
discovery of the Tom Scott videos of old
17:59
to Tom's homeland. Then, if you like our
18:01
content, there's just so much more of it
18:03
available through Nebula as Nebula
18:04
originals. Whether it's our comedy stuff
18:06
like Abolish Everything, our travel
18:08
competition Jetlag: The Game, or our
18:09
documentary projects like Scav, we've
18:11
now put a whole lot of content we're
18:13
really proud of on Nebula the past few
18:15
years. If you'd like to give it a try,
18:17
use my link
18:17
nebula.tv/wendoverproductions
18:20
to get 50% off an annual subscription.
18:22
That's just $30 a year or $2.50 per
18:25
month. It's not a lot, but it would mean
18:27
a lot to us, so thanks.
