It’s been over a year since our NFT sale. Countless hours have been dedicated to researching, developing, and executing on a strategy that will ultimately lead us to our goal of owning an NBA team. All of our efforts have resulted in hours of meetings with majority, minority, and prospective owners. We are just getting warmed up.
Taking a second to remember why we started: there’s real value to democratizing ownership to a global fanbase. We’ve heard from multiple credible sources, the fact ownership is willing to engage with the “kids on the internet that want to buy an NBA team” is an accomplishment in itself. In just a year, we’ve gone from “what if?” to “when?”.
Our goal is ambitious. Our approach is novel. Our strategy is unconventional. Yet, we’ve made massive strides in making sports history.
The purpose of this piece is to summarize the insights we’ve learned from meeting with owners and/or ownership groups from around the league. DAOs by nature require a high degree of communication in order to succeeed. While we can't bring 6,000+ members to meetings with NBA owners, it’s important to deliver findings and insights from these meetings to the rest of the community that had such a profound impact on getting us to where we are today.
Listed below are areas of opportunity for Krause House based on the hours of valuable discovery directly from front office, owners, and ownership groups. In addition, we’ve outlined exemplary projects produced by community members that have helped build our case and prove our capabilities as a collective. Lastly, we’ve provided some open-ended questions to help provide inspiration for the next wave of projects to help reach our lofty mission.
The opportunities based on our conversations can be categorized into four buckets (pun intended 🏀):
Additional Revenue Streams
Distributed Talent Pool
The first three have been atop the owners’ minds for a while. For a few reasons we’ll go over, each of these have seemingly increased in priority over the past few years. The rise of social media creates wider distribution channels for content, thus franchises are looking for innovative ways to engage and grow their fanbase. This opens the opportunity to increase loyalty in existing fans, develop new fans, and in turn, drive more revenue for the franchise.
The last opportunity mentioned is not as intuitive to owners until we’ve had a chance to explain the unique value propositions of Krause House. Tapping into a distributed talent pool of working professionals is promising, albeit challenging. However, owners are interested to hear ways we can tap into the potential energy of the fanbase to help with team initiatives.
The structure of each opportunity is as follows:
Owner’s Thoughts - Summary of the problem space and how owners/front office think about the opportunity for success.
Krause House’s Advantage - Ways in which Krause House offers a distinct competitive advantage over traditional prospective owners and/or ownership groups. These unique selling points have been landing nicely when talking to owners as well as front office.
Exemplary Projects - Examples of projects built within Krause House that show evidence to support our ability to solve said problem.
Food for Thought - Open-ended questions that hopefully inspires Jerrys to continue to build and develop towards the mission based on the respective opportunity.
For some time, the relationship between franchises and their respective fans has been mostly abstractive. By giving fans the opportunity to contribute to success off the court, teams can deepen the connection and loyalty of their supporters.
Engaging fans is more than just t-shirt cannons and seat raffles. Demand to engage local and global fans before, during, and after games is higher than ever. There’s significant opportunities to offer more exclusive content, behind-the-scenes access, interactive features on websites and social channels, as well as developing new mobile apps that allow fans to engage with the team and each other in new and exciting ways.
It's likely that the use of technology will continue to play a significant role in enhancing the fan experience. For good reason, owners are obsessed with delivering the highest amount of value to their fans.
The front office recognizes that the fan experience is a constantly evolving concept. They committed to staying at the forefront of new trends and technologies in order to offer fans the best possible experience. Krause House provides something that hasn’t yet been seen from an ownership perspective: a digitally native network of die-hard fans to assist with research and development, partner with cutting-edge technology companies, and work with industry experts to stay ahead of the curve and offer new and exciting experiences to our fans. We are the fans, and that serves valuable to the leader of the franchise.
The goal of fan engagement is to create a deeper connection between fans and the team. The fan experience should always be rewarding. As a community of 6,000+ fans, there’s no better entity on the cap table that could speak to the benefits of fan engagement. Ownership and front office has been impressed with our ability to mobilize a community of basketball fans to execute around a specific function or task.
The distributed nature of our community is a superpower. The ability to plan, coordinate, and execute high quality events, experiences, products and services remotely adds a distinct advantage that few (if any) front offices provide.
Members of Krause House provide a litmus test that is highly correlated with the “everyday fan”. The ability to swarm talent around fundamental fan experience problems is a strong value proposition to any owner/ownership group.
The Pig Pen
Contributing Member(s): Uncle Jon
Details: IRL fan activation for The Ball Hogs, a Krause House owned and operated BIG3 Team.
Contributing Member(s): Mario Lopes, Boosh, Denny, Kevtae
Details: Blending digital & IRL challenges, Heat Check rewards basketball fans for their daily actions
Contributing Member(s): greg_, Crabtree
Details: A decentralized media platform powered by the world's greatest basketball community
What areas of fan engagement is Krause House uniquely suited to do better than current teams?
What does digital fan engagement look like? In what ways is it better than local/IRL activations?
How do we leverage our reach to attract in partner and sponsor opportunities that will directly benefit the fans?
Over the past few decades, the NBA has experienced a significant rise in popularity outside of the United States.The proliferation of social media platforms like Twitter, Instagram, and Facebook has allowed fans all over the world to follow their favorite NBA teams and players in real-time, regardless of their geographical location.
In the past, international NBA fans had limited access to games and highlights, often relying on TV broadcasts that aired only a handful of games per week. Fans from all over the world can now follow their favorite clubs and players on social media, watch game highlights, and even stream games via streaming services.
This newfound access to NBA content has not only increased the league's global audience but has also created a sense of community among international fans that is still largely untapped by the franchises. Fans from many nations can now communicate with one another and share their passion for the game, fueling the expansion of NBA basketball abroad.
Average League Pass viewership this season is up 42% internationally compared to a year ago.
The NBA has 2.1 billion followers globally across all leagues, team and player platforms. Among those followers, 70% are from outside the U.S.
The NBA dominates social media presence with over 210 million subscribers / followers worldwide which is more than any other league in the world.
In 2021-22 the NBA generated 13 billion views across social media platforms worldwide
Every owner in the league is actively exploring opportunities to expand their team's presence internationally. The plan is to invest in building the brand in both thriving and emerging NBA markets by playing more games overseas, partnering with local businesses to create marketing campaigns, and building relationships with international media to increase global awareness.
Front office and ownership have been very keen to see how Krause House can help with overseas exposure. They’ve been impressed at our ability to experiment with local-language content and community activations, all while establishing a presence on social media using fan-generated content.
Interestingly, most owners view international growth opportunities as vital to the long-term success of the team; however, it needs to be done with calculated and thoughtful execution. All of them recognize the potential of international expansion, but most are taking a cautious approach to ensure it’s done in a way that makes sense for their respective team. When asked how they see Krause House assisting, their main focus was on identifying key markets that are a good fit for their brand, and developing targeted strategies that resonate with local fans.
International fanbase is divided and team-agnostic
Fans of the NBA outside the US have the highest affinity towards players, not teams. This provides a massive opportunity for small market teams to acquire and engage fans in thriving international markets. By pairing the existing fanbase with newly acquired global fans, Krause House can turn a local NBA franchise into the internet’s home team.
The community that never sleeps
Fandom is a 24-hour lifestyle. Lucky for us, Krause House is an international, digitally-native organization.
Roughly 50% of our community is based outside of the United States. Our members are located in thriving basketball markets such as Southeast Asia, China, and LATAM. The diversity of people within The House embodies the perfect representation of the NBA fanbase. Basketball is a global game with global fans. What better way to understand the needs of international fans than allowing a global community agency over non-operational components of a franchise?
Philippines Court Refurbishment Contributing Member(s): Uncle Jon, DBag, Mike Swift Details: Uncle Jon, DBag, Mike Swift | Official KH activation in the Philippines
Casa de Krause
Contributing Member(s): Josh Phelps
Details: Washington, D.C.-based youth leadership and development nonprofit organization that gives at-risk youth from D.C. a once-in-a-lifetime opportunity to spend a month during the summer in the highlands of Guatemala. KH sponsored the camp tournament.
After doing activities in Central America and SE Asia, how can we continue our momentum in emerging basketball markets such as Brazil, Portugal, and Spain?
Can teams leverage the NBAs global reach on social platforms to attract new fans? How?
Are there ways we can assist with creating localized content and establishing partnerships with local media, businesses, and charities in international markets?
NBA teams earn revenue through a variety of means, including ticket sales, merchandise sales, corporate sponsorships, and media rights deals. In recent years, teams have begun to investigate alternative revenue streams such as virtual and augmented reality experiences, streaming services, web3/crypto products, and non-endemic corporate sponsorships. Teams will have greater opportunities in the future to monetize their digital assets, including social media, websites, mobile apps, and other digital platforms. Additionally, as technology advances, clubs may experiment with new ways to communicate with fans remotely, perhaps even put them in game.
It’s worth noting, the aforementioned opportunities are tightly correlated with our ability to drive revenue for teams/clubs. In other words, our ability to drive fan engagement and expand a global fanbase in turn will increase revenue from current lines of business and allow teams to create new or improved sources of income.
Player empowerment is a catchall for the fact that the league has done a terrible job of empowering teams. The players have all of the leverage in every situation.
-- Unnamed NBA General Manager, The New Yorker
As player contracts get more expensive each year, and inflation continues to have an impact on professional sports franchises, the owners' interest in ancillary revenue streams are higher than ever.
During our meetings, emerging opportunities like esports and sports betting were mentioned a handful of times. Front office and ownership are considering partnering with companies in those industries and leveraging the existing fan base to create new revenue opportunities.
More traditional revenue streams with opportunities were also mentioned: ticketing, merchandise, and sponsorships. Owner’s have expressed interest in learning how Krause House can take traditional revenue streams and apply innovative solutions to help drive profits.
A few examples:
Dynamic pricing – adjusting prices in real-time based on factors such as team performance, opponent, and time of year, to maximize revenue
New ticket packages and subscription models – flexible ticket plans that allow fans to choose the games they want to attend, and season ticket packages that come with additional perks such as access to exclusive events and merchandise.
IRL fan experiences – In-stadium mobile apps for wagering, ordering food, and real-time statistics.
Personalization for the fan – exclusive access to players, personalized merchandise or customized food and beverage options.
The consensus amongst owners and their respective front office is the belief that emerging technologies have the potential to disrupt the traditional sports industry. All of them wish to be at the forefront of that disruption.
It can be argued that Krause House is just a curation layer for NBA fans all over the world. Our bench of talented working professionals and problem-solvers make us the most value-additive ownership group on any given captable. Our unique perspective gives us an advantage when it comes to developing new sources for revenue generation.
As we continue to define (and redefine) best-in-class governance and coordination models, owners will lean on us to surface novel ways to drive new and existing revenue streams.
Krause House NFT Sale
Contributing Member(s): KH Core Team
Details: Initial target of $1m was hit in less than 15 minutes. Entire collection was sold out within a few days, generating ~$4.5m USD total.
We like to think of ourselves as a dam — Krause House is a structure harnessing the chaotic power of your fan base to be used in specific ways helpful to an organization.
You can make an argument that fans, up until now, have been widely viewed as “fungible” assets. Fans fill the stadiums, watch games, and buy merchandise. However, each fan offers their own set of experiences and talents that could potentially bring value to the franchise.
Krause House supports next-generation owners through unparalleled bench strength in developing and executing team-tailored fan-engagement initiatives.
The ability to leverage a distributed pool of talented professionals is unintuitive at first. However, after a number of conversations with ownership groups, they quickly realize this is a distinct competitive advantage for first-movers.
Krause House is presenting a fundamental shift in the existing relationship between a franchise and its fans. Over the past year and a half, we’ve learned there’s no better community on the planet that can service the needs of incumbent owners and tackle this eminence challenge.
The biggest pushback we have seen around KH human capital has been around one central idea: trust. Proving that individuals/teams within our community can continuously deliver results is certainly a headwind; however, quality projects like NFT NYC and KH Analytics will help build legitimacy when done consistently.
Wisdom of the Crowd
There’s a seemingly large cognitive dissonance between billionaire owners and the everyday fan. Sourcing innovation from a community of fans is the pathway to becoming the internet’s home team. Krause House has spent hours developing and refining ways to surface the brightest ideas to move basketball culture forward on road to fan ownership.
Our unique structure demonstrates diversity of opinions and perspectives, the ability to aggregate information effectively, and produce results around a specific task or decision that the group is making. This type of ownership has never been seen before in the NBA.
Once the best ideas have been sourced and discussed, how do we allocate the best talent to turn ideas into reality? Similar to a coach pulling players off the bench based on roles, Krause House can source labor through its international distributed community of contributors based on team-specific needs.
Projects/Teams that are projected to have the most impact are those that are deemed important, but not critical. This presents a unique talent arbitrage opportunity for initiatives that the owner feels will help increase the value of the franchise, but isn’t willing to hire in-house. For example, media, events and product engineering.
Krause House offers a variety of skills and talents that can be easily deployed into front office to produce or supplement initiatives beneficial to the organization
Contributing Member(s): Jonez, DBag, Shanny, Alex Brands, +more
Details: In less than 60 days, the KH Experiences Team came together to pull off what was widely regarded as the best event of NFT NYC
Contributing Member(s): BayesianBaller, greg_
Details: a front-end dashboard data visualization based on a report created by Krause House Analytics (using the Indiana Pacers as an example)
All in for Sport
Contributing Member(s): Shanny, DBag, Lewwwk
Details: An experiment to coordinate development of a perpetual funding mechanism for inclusion and empowerment in and through sports
What areas of front office operations are important, yet underserved?
How do we determine what individuals and/or teams are the most qualified to assist?
How does Krause House build trust with owners to allow for the deployment of Decentralized Sports Operations (DSO)?
We are building talent and a reputation that’s too good to be ignored. Krause House’s unique value proposition becomes more obvious by the day. This powerful new integration between franchises and fans unlocks dimensions that fundamentally changes the landscape of sports.
Although there have been, and will continue to be challenges ahead, the greatest accomplishments are often achieved by those who refused to accept limitations. If there’s one takeaway from our meetings, it’s that success is well within reach.
Let’s keep going. Let’s make history.