matilda sung, ludis capital

Matilda Sung– Ludis Capital

Wednesday, May 25, 2022
Ludis Capital founder Matilda Sung is investing $500k – 1M at the intersection of sports media and technology.  
She explains how the NFL compares its social media efforts to those of other leagues, how sports betting is different in the US than in other countries and she clarifies who really owns the rights to digital assets like TopShop NFTs.

Matilda Sung is a partner at Ludis Capital and early stage fund that invests at the intersection of sports, media and technology. She’s also managing partner at a family office, Sung Capital Partners, and she was previously the director of strategy and business operations at the NFL. And before that she was at McKinsey.

Well, I figured we’d jump in and start talking about sports. And maybe you could start me with some of what you were doing at the NFL.

Yeah, totally. I was actually coming from a consulting background prior to moving over to the league. And in full disclosure, up to this point, I am a average sports fan.And so I said, Hmm, Um, And so I went in and I had a wonderful conversation with David Jerica, who was brought in to sort of run the media operations out of LA and now runs the entire west coast for the NFL.And so we started really hitting off in terms of noticing how people were consuming differently. They were on top of it in terms of understanding that folks were no longer going to the three and a half hours games in person.

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They were not spending thousands of dollars on season tickets nor were they even cable subscribers. And so they realized there’s this whole generation of sports fans that was just consuming so differently. And that pretty much became the emphasis of my role there, which is really to think about the next generation of fans and how do we service them on digital mediums.

And can you share some of how the NFL thought about what it did in digital?

Yeah. I would say, you?

know, top of mind for me really is how decisions were made and how they thought about opportunity

And I think a lot of it has to do with the fact that you’ve got a legal organization that has 32 club owners. So you’ve got the commissioner, which is sort of my boss, boss, boss. And then you brought the three, two owners who were also bosses.

And so me coming from digital, a lot of times we would have great ideas about how we can service the fan better.

We’re like, Hey, let’s make an investment here. And the way they thought about it, wasn’t so much, well, it could increase engagement. It could, you know, grow the audience, pile a little bit, all the metrics that I was used to coming from having spent time, Silicon valley previously they would think about it.

Well, it’s a dollar that gets split 50 50 between Billy and then the clubs. And on per club, you divide that 50 by 32. Now we have to ask yourselves, is that really interesting?

And it was very much revenue driven. versus well, can we make an investment and maybe it does knock it out of the park in terms of being revenue needle moving this year, but can we invest in something that can foreseeably set the stage to be the dominant form of engagement in the future?

And can you explain a little bit more about the business of the NFL and the 32 owners and how that business relationship works? For sure. So I think one thing to always note with the business of sports is the bulk of the revenue really comes from selling the media. The crown jewels is essentially the game and where the game gets aired, where the most eyeballs are. And that really comes on being broadcast on the major broadcast partners that we have.

And you’ll see, you know, last year they closed like a hundred billion dollar deal over 10 years. Right? So those are sort of the major drivers of revenue for the league. And then, so there’s a leak and then there’s like the 32 clubs, . But the league drives the negotiations at the national broadcast level.

And then they have this other segment, which is the world that I came from, which is digital, where we’re seeing over the last five, seven years growing, growing numbers of folks going into digital and you may be familiar with, I think it was like a Gartner chart that showed like cable subscribers versus digital.

it’s this sort of the infant’s graph. And you’re in this world of mine where people are like, wow, there are now more people who are OTT cord cutters. than there are cable subscribers. so I was in this growing world of digital consumersBut yet this segment from a revenue perspective represented sort of a drop in the bucket versus the large bulk of revenues that the league generates. So I think that’s one thing to keep in mind, going back to your earlier question, like why do we not pursue some of the projects that we propose on my end of the.

I think the pain to know that was shifting a lot when I first joined was, you know, it used to be just your major broadcast partners, right? At NBC’s ABC’s ESPN are coming to the table to bid, but then you started seeing technology first partners, the yahoos, the Amazons, and a lot of people keep talking about Facebooks and whatnot.

 And so the thing again, to see is just how slow the industry. moves–even though we know that that graph crosses itself and there’s more cord cutters and digital native first folks. The advertising dollars hasn’t necessarily followed as quickly.

I think the last year or two, we’re starting to see major advertisers realize like, Hey, there are eyeballs are meaningful. But TV still is the lion’s share of revenues, right?


And going beyond the media rights for the game, how did decisions get made between the league and the teams?


 it depends on different parts of the business. So I, you know, I can speak much more eloquently on the digital side where I operated. There are sort of this, it’s almost like a federal state government kind of, kind of set up where there was guidance from the league and the club.

There are suggested to follow So think about guidelines for the mobile app, ? , during my time, the whole intent was to get to some sort of parity of experience and functionality across the 32 clubs, mobile app experiences, because that would be the best for the fan.

Right. I don’t want to go to like a super techie 49ers club and be like wowed by their app experience and then go pick another club. That’s not as tech savvy and be like, totally disappointed. Right? And so the league would try to set standards if you will, and guidelines for things, and the clubs would be recommended to follow, do they follow?

They try. And then the second thing is there are strong clubs in there, less strong clubs, and that’s something I saw in owner’s meetings.

 larger market. Clubs with certainly half the poll in the room. And they also tend to be ones with greater investments and more technologically advanced. And they’re the ones with the innovation fund.

They’re the ones who have the data analytics team. So from those things, you sort of spiral and see, okay. Which ones are kind of calling the shots or working with the league at least to sort of set the stage.

So what’s an approximate budget of a club and of the league. I actually don’t know how big the NFL is.

Yeah. So from evaluation standpoint It was about 15 billion, , I want to say right before they renegotiated all the contracts that happened just last year. Well, thank you for the, little orientation on NFL. a little bit on this because I think it’s relevant to your investing as well. I’m curious about sort of the insights or the trends that you saw with regards to fan engagement.

Yeah. absolutely. I think first thing I would say around fan engagement is there is this challenge to get the fan, the content they want when they want, how they want, where they want. So if I take from that you know, Riff away as sort of the things that we are excited about right now. I think one is just the format of the game, There’s a population of fans that love the game dearly and its original format. Right. I think there is a. Number of newer, younger fans that are still compelled by the game, but in a much shorter bite-size format.

And so you have things like red zone, which will flip between sort of the critical moments of the game. So allows people to capture gist of what’s going on. Right. And those products are extremely popular, but it doesn’t mean that they’re consuming for three hours and 30 minutes. You’re consuming consuming maybe 10 minutes here and there.

And you know, the league historically want it to prioritize longer times for your audience, but then they had to sort of wrap their head around the fact that, well, the younger generation we’re fighting for timeshare, . , that’s not specific to sports, that’s everything in the media world.

Right. And so how do we service that category fans with type of content? I don’t think there’s any desire to shorten the game or change that format, but it’s a type of layering, All of that content servicing it in a way that they want that we’ve sort of seen some interesting things come out, buzzers, a company you may be familiar with.

Yeah, really good episode with Steve , who also does sports tech and invested in buzzer.

Yeah. So basically kind of catering to that red zones, five mentality. It’s like, how do you get notified into sort of the most critical moments of any particular sporting game and then being able to tap into it and then make a microtransaction around sort of how you can charge that fan for that segment versus like charging someone $300 for lead packs game pass, whatever it may be for the entire season.

It’s like 4 99 for the last 10 minutes of the game.

I love the notion of buzzer, which like buzzes me when an exciting play is happening for a player that I care about. Right.

Right? Exactly.

I love it.

It speaks to sort of a lot of things, right. But I think that’s one piece, I think the other piece is sort of around the type of engagement, I think historically we thought about it as, okay, there’s the games there’s game days and you watch the game you’re with your friends and then there’s like the non game days.

And one of the goals was always to think about, well, how do we continue the conversation extended. There were a couple of different formats, right? There’s like shoulder programming. You do behind the scenes with the athletes, you know, coaches talk there’s fantasy, the game elongates, sort of how people interact and come and come back onto the properties.

But I think right now what we’re seeing is with the emergence of web three technologies, whether it be metal versus, or cryptocurrencies or fan tokens or NFTs, you’ve now introduced this other format or vehicle upon which to further engage the fan on a much more intimate basis. Right. And that has really resonated well with that younger demographic You know, there’s some big names that have done some really interesting things last year, which folks are probably familiar with top shots is one of them.

Being able to. Digitize a moment, have a collection of it. And now I think they’re finally adding the gamification layer or the ability to share game-ify earn points, all the layering that comes with it to increase the interaction points of, the fans themselves.

I thought there was a lot of knock on sort of the top shots of the world that were, you know, the Lee would say they own those rights and the clubs would say they own the rights and what do you actually own? And, think you’re spot on saying that there is a rights question. The league owns the rights to that moment at the end of the day. I will say I will. Yes. Yes. So two things, three things I’ll say to that one is. The more Dopper the founder of NBA, top shots and others, who’ve kind of done this type of gamification can add functionality on top of the core at Ft the less important.

I think a fan is going to care about the fact that they don’t actually own that moment itself. The fact that my NFT can now earn me points, creds rewards crypto, because of what it is. And I have derived some value from this action if that is done right, I believe that’s, it wouldn’t necessarily make it a moot point, but I think it would make it less relevant.

The fact that they don’t actually own that piece.

And do you think it really is points and rewards What sort of form do you think are the more interesting layers to add on top?

Two things is simply said, I think one has to do with ego. And the other has to do with actual something that can have some comparable, valuable to Fiat.

 And the best ones will probably have a combination of both, any type of utility that offers both. We’ll probably have more stickiness across this fans.

So I think I interrupted you. You were talking about top shots, which I think is one that most of us know what are some of the other cool ones that you’ve seen

Yeah. . Yeah. There’s a company right now that we’re working with And it’s basically making a virtual sport league that operates 365 days of the year, 24 7. You don’t really have to wait for football season to store for it to work.

You’re able to buy into the large players that are known. You could also nurture collegiate players. There’s obviously the best of the sport in the game, but there’s also this element of like, I can actually make money out of this. So I think about successful um, game entities were folks that made money. You’re familiar, actually affinity. I really liked Zed run. That’s another one we like to talk about.

I don’t think I know that one. I know, actually, Anthony

That run is virtual horse racing.


They just raised their AE with injuries and last year we did not proceed to pay in that round but they are effectively a company that allows you to purchase horses and race them, or breed them. And you can make money breeding them or winning racists. And these horses come out of a, you know, four different lineages and there’s maybe two or three different variables that sort of dictate how they stand status wise and performance wise.

And I was blown away in terms of how. Excited people were by this. And when I went on myself I was kinda like, huh, the UI or a phase. It wasn’t really like the game that like, it’s kind of like roadblocks where I think I like robot kinda like, Hey, like I’m used to sort of like really slick Madden type, graphics and whatnot.

It was just sort of, there’s a blue horse, there’s a gold horse. There’s a white horse. Maybe there’s a pink horse. I don’t remember, but there’s like four colors. And when they do the racist, it’s just like this, it goes around. And it’s fascinating that to me, spells that people are probably more interested in the economy of things there.

The ability to make money off of that.

And so the first one you talked about, which is this, what do you say? 365 day a year. What is the underlying game? Is it a football game?

Yeah. So space off the premise of traditional football.

Is it fantasy Sports?

Yeah, so there Is a fantasy element to it, and then there’s also the developing a player element to it if you will.

 Can you educate me a little bit on the, is it name, image, likeness rules, because those have changed and what’s going on there. And is that going to have an effect on the things that you look at

for sure. We got really excited about this, everything around June of last year when the NCWA basically said that they were going to allow collegiate athletes to be owners of their name, image, likeness, which effectively is basically anything to do with their brand across Friday, have different channels as they choose historically has not been yet.

for college athletes? Has it been the case that you own it? If you’re a professional athlete,

Yes. As a professional athlete, you, have access to your entire NISL. There are policies that are set by the league that could affect how you use it. So for example, like the NFL for a while had a social media policy where I think it was like within 30 minutes of the game, you’re not allowed to do any social media posts.

I think they’ve since relaxed it, but that would be an example of how they put some parameters around that.

And are you seeing interesting trends or companies as a result of what players can do?

Yeah. So going back to sort of the collegiate level, cause that’s all the talk right now. I think that’s now open the doors for a collegiate athlete to leverage it, however, which way they want. You know, let’s say somebody has got a million or so followers on Instagram and the local Chick-fil-A wants to run a promo with them and offer them, I don’t know, 10 grand to do something, to do a post.

That’s now possible. What’s happening. Um, Why there’s a mad rush of, companies coming to the space is trying to navigate the And governance that?

colleges have around, which vendor partner or an athlete could use, or how do you find a partner? there’s been sort of a race right now companies coming to figure out how do we help the athletes figure out who to partner with while keeping within the rules and regulations of their colleges. Let’s keep going on sort of the themes that you like to invest in. It sounds like crypto is on the table. you ever invest in a new league?

Oh, I’m glad you asked that question. So my partner, my coachee and I are usually pretty aligned. There was a moment last year where we kind of went a different ways, which is great. need to have that but there’s a new league?

called three ice is basically based off of like 300, three hockey, basically overtime at HL

rules, so our fund does not invest in leaks. We invest in technology driven entities that drive sports consumption participation. So this was outside fund thesis, but coming from my time at the NFL and seeing how fans really just needed something more bite size edge of their seats can be easily put on digital, not just made for TV and have characters associated with it.

 It really resonated with me. So the founder I guess the commissioner and founder of the league is EGA Johnson. His father was a hall of Famer coach for the Pittsburgh penguins. And this is a son here. That’s running this and I was. Really taken by how he was thinking about running this league.

 it’s going to happen in the soft, this portion of the sports calendar.

So June to August, when there is really no other sort of competing sports which I think it’s clever and it’s set up for betting, which is what we want it to be. it’s set up for, quick consumption. And so . I’m pretty excited with the three eyes team. And that’s an example of a new league that we have invested in.

oh, so you did.

I did, I personally, I wrote a track to them. Yeah. Our fund did not. so my coach, he comes from the NBA and he’s just seen a lot of things fail and he’s just like, I can’t do it. I mean, that said though, are you feeling those three ball?

Ice cube

yeah. Yeah. Like, I mean, I think they got like billion five valuation

I’m curious. Can you riff a little bit on the NBA versus the NFL? And like, as you said, Sam is your partner, right? He comes from the NBA. You, are there certain things that are better or worse when you’re kind of looking across leagues?


Okay. Well now I’m no longer working at the NFL, so I can say this.

We used to compare a lot, especially on the tech side, especially on social media, because that is where they lead. We would go to meetings. That’s like, how many followers do we have? How many interactions do we have?

How many cats do we have? And we’re always multiples. There’s the MBAs like right here. And then. And I fell as next, but it’s distinct, distance behind the NBA and MLB and NHL, all that kind of stuff. So we do see them as a leader when it comes to try new technology.

And I think a lot of it stems from the commissioner and it stems from the ethos of the ownership, the NBA ownership trends younger, and how they came to their wealth was through this generation. It wasn’t passed on wealth necessarily. Ityou know, on new entrepreneurs that have made a big in their current lifetime, right.

Possibly through technology And that influences how they think about things. Adam silver is notorious for being very, I let’s say it’s risk-taking, but he has an appetite to try new things. And we’ll pivot, you know, as needed if things don’t work out. I think the NFL in contrast is a little bit more rigid.

I don’t know if you’ve seen Roger Goodell speak uh, and how his stance on every topic is very poised. And it’s almost like talking to Lee at the UN or world bank.

I think about the fed back in the day where, you know, it’s, just very composed And same can be said with, the ownership, the ownership trends a little bit older and the more traditional, and they’ve seen a bulk of their wealth degenerated through broadcast deals. So going back to your earlier question around some are digital very interesting, very exciting. Sounds sexy, but do we need to kind of wobble everything for that when we’ve got something that’s served us so well I think that influences decision making as well.

And what do you think about e-sports and maybe, do you think there are lessons from e-sports that can be applied to traditional.

Yeah. I mean, we’re talking about a category of folks that are the ones that we spoke of being a threat at the NFL, right? So the digitally native, the younger trending, And how do we get them further engage, whether it’s re tipping, whether it’s through micro-transactions during the stream and whatnot.But what’s also interesting is we looked at the data of types of fans that were growing e-sports versus traditional sports, there’s actually not that huge of a crossover. And so. we were crafting our thesis and thinking about sports and e-sports in general, we thought, yes, there was definitely from a tech perspective, there are definitely things that we believe we would get excited for that can also service e-sports or have a use case in there.

But really beyond that though there are some stark differences in the fan base and in terms of the actual sport itself. So we haven’t focused as much on that category of late.

Hmm. Can you explain how tipping works today and how it might work in traditional sports?

Yeah. Yeah. So you’re watching um, doesn’t even have to be a sports?

game. It could be your influencer. That’s. Just doing a great show, a comedy sketch, whatever it may be, and you’re loving it. And you’re able to click on a button that then sends over some degree of either crypto reward or points to them. So you can , show your love to them.

And while that happens in the digital world in the physical world, you show your love by purchasing merchandise or things that have the, have the name of the athlete associated to it. The other thing I want to call out right now, that’s really exciting. In a sort of a related sense is this concept of fan tokens, show interest dedication to a particular team, family athlete, whatever it may be. Chili sociopath is another one of our companies. They are a fantastic company that’s in the business of connecting fans more deeply with Team or athlete of choice.

and they basically issued fan tokens for teams. And these tokens would then allow fans to do things like vote on what the locker room color should be or what the team chat should be. If next time they have a win or a score

And fan tokens is a great way to do it. And there’s nothing about Santo cause they’re tradable as well. So they’ve launched a crypto token associated with it culturally in which you can trade in the crypto markets for it. So there is that appeal to those who may want to offload or do other types of activities.

Got it. So. Things like you can choose what chant we chant or the color of the flag or something

Exactly and everyone’s like, is this thing here to stay? Is this thing here to stay? And thing I’ll say is some of it is, is it really true innovation or is it digitization of things that was once. Digital. . And having spent time at the firm at McKinsey and seeing sort of disruption everywhere, this phase doesn’t really surprise me.

Yeah. Well I guess , you almost don’t care so much, whether it’s on the blockchain off the blockchain, it’s really about how easy it is to reach a huge number of people and help them feel connected.

Yes. And I would say the blockchain is probably in a better position to facilitate that task because you’re able to access many more people and in the secondary markets access that next layer of folks who might want to get engaged in something like this.

 , because you can sort of that, right. The facility of that. I also think it opens up the opportunity to invite folks who might not otherwise have been a fan first, but then becomes a fan. So two years ago I was invited to a talk across women on top shots. and they had five female speakers on there. And I think only one of them was an actual fan. Cause she was a sidelines reporter. The other four were. What was a crypto enthusiasts? The other was a crypto kitties person.

And that was what dapper labs with before top shots and anything, the others were just like collectible investor type folks. Funny because my friend, Katie then asked the question. What’s your strategy in terms of what moments to acquire and how do you think about it in a way each of them answered really sounded like a fan, how they thought about rookie strategy and trading things in and whatnot.

That it got me thinking. Sure. it.

was a small sample size, but wow. Something like this as opened up the door for folks who weren’t traditionally, NBA fans now become NBA fans. Oh, I think there’s something valuable there. We often talk about how do we capture the casual fan NFL and here’s a onboarding ramp that, that could possibly convert for you.

That’s such an interesting on-ramp to sports via people who are just smart on collectible strategy. Um, in our remaining time, what are other big themes you want to talk about? Like bedding AR VR.I think two other things budding, you just named and health and fitness, then the next phase of that for, for bed anxious real quick on that you know, the repeal PASPA in 2018 basically said at a federal level, that sports betting is now legal. And so for the. Three years or so, everyone’s just been sort of watching to see which states will turn green or make sports betting legal.

And so far you’ve got major states like New Jersey, New York, Michigan, California is not there yet. And what that represents is a large opportunity of revenue , for companies to service those sports betting needs. But at what we’re really excited about is the American sports betting market.

It’s distinctly different than what you have in say Europe, which is a very mature sports betting market. I spent some time in London on the trading floor and I got into sports betting there, and it’s no different than my Bloomberg terminals. I remember opening up sort of vague trade was, was where I used to go.

And. All the betters, there are pretty much used to sort of that interface, which is complex hard to understand and not easily accessible. . And here, I think America is really interesting because you’ve got this technologies that are able to create these interfaces that are accessible easy to onboard, easy to understand and easy to share with friends and use that opens up a much larger sports betting market and will include demographics that are not your traditional ones, And so I think if done, right, we could see some really interesting experiences that don’t even seem like sports betting at all. You’re not going to have like crazy money lines or like pluses and minuses and try to figure out what all those things are. It really is like, Is this team, but a winner or not, so you going to score a three more touchdowns or four more touchdowns, And so we’re excited about movement there in that space Isn’t a lot of the betting done through casinos. Aren’t licenses still sort of the traditional, I don’t know. Do you call them casinos?

Yeah. The operators.

Yeah, absolutely. Yeah.

Where there’s a house and they’ll take the other side of the bat. Right. And so there has been the emergence of this concept of peer to peer where I can wager you many on a particular game or opinion of sort and not have to deal with the house and that way whoever the exchange that’s running, this can take a percentage off of the bat that we do with each other, and a lot of this PDB type activity has been facilitated with the blockchain.

But yeah, so we’re still seeing, you know, a lot of the major operators have their stakes in the ground and getting into digital.

And so if you know, Bally’s Bally’s is sort of one of the top operators. And if you look at their M and a, if you just kind of opened up the news, I think for a period in like 20, 20 or 2019, like I think every other month there we’re buying something they’re buying some other digital entity in the, , sports betting fantasy type space.

They just were not in the business of figuring out what that front end experience might look like. . And so we think there’s opportunity to continue to innovate on the front end of things, to cater to that new emerging market that I spoke of earlier.

Great. Interesting. Okay. I cut you off. You were about to tell me about wellness in the

sports world.

So I think that’s where the last major bucket that we look at, , and I think the thing to note there is it’s sort of an evolution of things. We’re continued to be excited about Connected fitness devices. I think we can’t look at it on its own though. We no longer like, Hey, here’s a company that’s like a connected bloodiest machine or connected boxing.

Like that’s not enough. We need to think about a world.

where it crosses like physical and digital. How do We, bridge these two sides together? So thinking about experiences, I think about my time back in retail, when I was in consulting, like how do we figure out multichannel commerce is kind of the same thing?

How do we figure out like multi location? Fitness is no longer. Just about home is only just about the gym. Isn’t just about the office. It’s really the sort of ubiquitous universal type of fitness experience. And how do we service that?

 same with like connected devices I’ve been tracking sort of your biometric data and all that kind of fun stuff.

Right. It’s one piece of data. How do we connect it to the sleep data? How do we connect it to, you know, regular activity? How do we connect it to diet data? How can we have that universal view of things?

Wow. And I don’t think I really covered some of the basics. I’ve just what stage are you looking to invest in these companies? Tell me a little bit more about ludas before I run out of time.

Yeah, of course. So we’re early stage venture fund. Uh, We like to look at seed stage. We will look at some on occasion pre-seed So that’s a stage. Our check size is anywhere from 500 to a million for the first check. Um, So that’s a fund and we are at the intersection of sports, media and technology.

And we referenced that you sometimes do investing. And I think I mentioned that you have a family office, is that, know, also doing investing. Is there any relation there with, with Louis and what you’re doing?

Yeah. So I started with the family office, initially, some capital partners and the family is my husband’s family has generated a bunch of wealth in the health and wellness space. And so they like to invest in early stage within that space life sciences, biotech these are the areas that the family’s familiar with and want to give back to if you will

Got it. And you know, I think you told me that you have a lot of athletes as LPs involved with your fund, you know, anything you’ve learned from just being really around athletes and sort of the mentality and the culture of the sports.

Yeah, they’re incredibly passionate people. And it comes through in the work they want to do off field. And if there’s something that really resonates with them, it’s almost like finding a entrepreneur. That’s extremely passionate about something and that’s what makes them great as almost even spokesperson for some of companies.

 Well, I’ll just say it’s been great to get to know you. Congratulations on Louis. It’s really exciting.

Thank you so much for having me. It’s been fun.