Three Things I Learned This Week In Saas, Sports, Tech & Live Events -
1) AEG is changing the name of Staples Center to Cypto.com Arena and investing in a major renovation. No surprise with SoFi Stadium and the Intuit Dome entering the market along with the upcoming 2028 LA Olympic Games. There's a lot of speculation about risk taking these naming rights deals in what some think is a bubble. We talk to teams all day every day. They're very aware of what happened in the .com bust and the 2008 meltdown, as well as the many flameouts along the way. AEG isn't a new ownership group. They've got decades of experience here. They've papered every kind of contingency plan and have definitely seen Crypto's financial feasibility. In the end, AEG quietly buying back the naming rights in 2019 then selling them for $35m per on a 20 year deal is a master class. Companies who get outsized returns from naming rights are usually from one of two camps: a highly commoditized business or a new emergent and disruptive business. Crypto.com is the latter and they're betting on a trust transfer using AEG's flagship arena to have new crypto traders chose, and trust, their offerings due to affinity and validity. Don’t be surprised if it is highly effective if well activated.
2) Saas CFO's don't know what to do with pricing if inflation becomes a consistent issue for years. Most contracts have escalators and are multi-year, but the industry hasn't adjusted expectation yet. Customers expect to have 2% to 5% escalators which hit either annually or at term (up to 3 and 5 years). At 6%, inflation, longer term deals could have an impact on margins. Once the big Saas providers move, the others will follow.
3)"You have to wobble if you want to fly." I love this one. In James Altucher's book, he tells how the Wright Brothers experience owning a bike shop was a major influence on them being first to fly. The brothers watched kids learn to ride bikes and observed the ones who were willing to wobble, without slowing down, and continuing to build momentum, were the ones to learn fastest. Kids who panicked and stopped at the appearance of adversity, they took much longer. What a fantastic inspiration for those of us trying new things in business. Embrace the wobbles. Keep pedaling. It's the only way to fly.
View all episodes
