Three Things (8/28)

NFL approves PE ownership

NFL owners voted to allow certain private equity firms to take up to 10% stakes in teams for the first time in history. The firms, which include Carlyle, Ares, and Blackstone to name a few, were approved to do deals with six teams each and collectively intend to commit $12 billion of capital. The NFL has been discussing possible PE ownership of teams for several months and is one of the last major sports leagues to allow it.

Increased valuations of NFL teams has shrunk the pool of potential investors that can afford ownership, which prompted the change. The selected firms wouldn’t have the power to make executive decisions, but a minority stake could earn the PE firms a portion of teams’ revenue streams: tickets, sponsorships, merchandise, advertisements, licensing, etc. The NFL will now have access to fresh new capital that can fund new stadiums while also easing the buying and selling process for minority owners.

Klarna profit soars on AI investments

Klarna, Stockholm-based buy-now, pay later company, posted profits of over $66 million during the first half of the year after posting a loss of over $44 million a year earlier. It’s planning for its public debut next year, which could value the company at $20 billion up from the $6.7 billion valuation it received in 2022. Since then, the company cut costs dramatically by partnering with OpenAI to increase productivity in its customer service segment via ChatGPT.

The company was mindful of keeping operating expenses in check while making AI investments, which increased average revenue per employee 73% year-over-year. It seems they’ve even outpaced large public companies with the speed at which they’ve seen return on AI investments, and we expect the CEO’s results-forward mentality should attract profit-hungry investors come the IPO next year.

Walmart to sell collectibles

Walmart has added pre-owned items and collectibles to its online site in hopes of stealing market share from Amazon and eBay. The company is focused on growing its e-commerce business, which saw a 22% increase in online sales last quarter, and plans to offer high-end beauty products and collectibles to expand the customer base and increase website traffic.

It seems Walmart is hoping to retain its already price conscious customer and attract new ones by offering high-end items (watches, golf clubs, or handbags) that they wouldn’t expect to find on Walmart’s site for lower prices. Expansion of its marketplace will also create new revenue streams through advertising and fulfillment services. Not only does the collectibles and refurbished items space fit Walmart’s value oriented brand, but it’s also a hugely profitable market that is open for the taking.

Disclosures:

As of writing: AMZN is a holding in Titan's Flagship strategy, and OpenAI is a 4% position in the ARK Venture Fund.

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