23 Capital: creating new ways to monetize intellectual property in sports

Author:Catherine Jewell
Position:Communications Division, WIPO
SUMMARY

Stephen Duval and Jason Traub, are co-founders of 23 Capital, a capital and solutions provider for the sports, music and entertainment sectors. In a recent interview with WIPO Magazine, these visionary entrepreneurs share their insights on how intellectual property (IP) rights are creating value in the rapidly evolving sports sector and talk about 23 Capital’s role in the creation and recent... (see full summary)

 
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What is 23 Capital?

Jason: 23 Capital is a capital and solutions provider for the sports, music and entertainment sectors. We are not a traditional lender. We think more like a sports or entertainment company than a bank. We provide finance to entities and individuals across these sectors and across the financial risk spectrum.

Stephen: On the financing side, we monetize IP in the sports, music and entertainment sectors in relation to very top-tier contracts or receivables. On the solutions side, we help structure and create new IP, and find new ways to monetize or exploit existing IP to generate innovative new revenue streams. Creating IP and new ways to monetize existing IP is in our DNA.

What gap are you filling in the market?

Stephen: We bring a bread-and- butter offering to a world that has struggled for decades to access basic financing. We have built 23 Capital around our expertise and understanding of how IP drives value in these sectors. For 23 Capital, IP rights can be more valuable than the tangible, physical assets (e.g. stadia) owned by sports organizations.

Jason: IP is a very difficult asset for traditional institutional markets to fund, and those who trade in or otherwise exploit IP in the sports, media and entertainment sectors have never really had access to financing in the same way as companies operating in other sectors. 23 Capital delivers to the sports, music and entertainment sectors what is a core offering in other sectors, and IP rights are central to that endeavor.

Players and athletes are far more IP savvy today, and are increasingly breaking down what was one macro bundle of IP rights into multiple strands where the sum of the parts is greater than the whole.

Stephen Duval, Co-founder and Managing Director of 23 Capital

Why are these sectors so poorly financed?

Jason: There are a number of regulatory and risk-related reasons for this. First, banks favor tangible assets, on which they can easily place a market value and trade, over intangibles, which are more difficult to value and trade. For example, it is not so easy to sell a broadcast receivable from a top football club (e.g. the value of a Sky broadcasting payment to Manchester United) if there are problems in the market.

Second, issues around reputation also deter banks from engaging heavily in these sectors. For example, 10 years ago, the British bank, RBS, loaned a hefty sum to Liverpool Football Club. Then, when it all went wrong, the bank was stuck. As...

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