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HBSE flexing its financial muscle thanks to appointment of head of investments

David Abrams (Credit: HBSE)

  • David Abrams ‘formalizing and institutionalizing’ sports organization’s investment platform
  • Executive leading efforts to attract third-party external capital to create competitive advantages
  • Abrams will work with subsidiary HBSE Ventures and the Sixers Innovation Lab

Harris Blitzer Sports & Entertainment, the managing company of the National Basketball Association’s Philadelphia 76ers and National Hockey League’s New Jersey Devils, has taken a significant step to develop its wider business interests with the appointment of David Abrams as the organization’s inaugural head of investments.

Abrams formally joined the company six months ago but he is now being publicly introduced as the face of HBSE’s new investment strategy.

The 52-year-old has been tasked with leveraging HBSE’s expansive portfolio to lead its global investment strategy, drive future acquisitions, and support investments at the intersection of sports, technology, media and entertainment. He reports to HBSE chief executive Scott O’Neil.

Abrams was previously a senior managing director for Cerberus Capital Management and a London-based senior investment professional at Apollo Global Management from 2006-14. He was also a founder and head of Credit Suisse’s specialty finance investment business from 2003-06.

In his new role, Abrams focuses on identifying complementary businesses and assets, and leads HBSE’s efforts to attract additional capital as it scouts the sports and entertainment landscape for new opportunities in early-stage companies. Last year, Abrams helped HBSE successfully complete the merger of its esports business, Dignitas, with Clutch Gaming which included a follow-on $30m capital raise and led to the formation of a new parent company, New Meta Entertainment.

Abrams also works with subsidiary HBSE Ventures and the Sixers Innovation Lab, a business accelerator housed at the Philadelphia 76ers training complex, as they continue investing in early-stage companies that expand and complement HBSE’s business. These include sports drink Hydrant and U.GG, a burgeoning League of Legend’s coaching platform.

HBSE is looking to develop land outside the Prudential Center (Credit: Getty Images)

HBSE’s portfolio also includes the Prudential Center in Newark, New Jersey, the mixed-use 76ers Training Complex in Camden, NJ, 76ers Gaming Club (NBA 2K League), Delaware Blue Coats (NBA G League), and the Binghamton (New York) Devils (American Hockey League). HBSE is also a partner in sports and entertainment consulting firm Elevate Sports Ventures, and owns a majority stake in London-based Premier League outfit Crystal Palace.

“We are thrilled to add David to one of the most dynamic front office leadership teams in the sport industry,” O’Neil said in a statement. “Our business has incredible momentum, and we are now even better positioned to take action on opportunities at the intersection of sports, media and entertainment. David, and the strategic investment team we are building, have an unparalleled opportunity to leverage the competitive advantages of our global portfolio of world-leading sports and entertainment brands to drive future growth.”

HBSE co-founder Josh Harris added: “Disruptive technologies are creating widespread opportunities, massive access and greater connectivity for athletes and fans around the world. David Abrams, as HBSE’s head of investments, will help grow and evolve HBSE’s businesses as we continue to explore new, exciting opportunities across sports technology, media and entertainment.”

Abrams spoke to SportBusiness about how his appointment has enhanced and expanded HBSE’s current investment platform and what his goals are for the organization.

Why did you take this position and what is your specific remit?
My entire career has been in buying assets with a specific focus on turnarounds and improvements. I have a long-standing relationship with the two founders of HBSE [Josh Harris and David Blitzer]. I moved back to the US when my kids graduated from high school in Europe and went to university in the States; I was trying to figure out what I wanted to do next and try to combine my 30 years of experience in investment and banking with my passion, which was sports. It was a natural evolution as HBSE had combined some of its assets and was thinking about how to grow its organization.

I started having discussions with the principals [about] coming in and doing something which we thought was unique in the sports and entertainment world, which was basically, inside of a sports and entertainment business which has some world-class assets, to leverage that operational expertise and the internal strategy discussions that we have to really build an investment platform.

HBSE has been investing in various companies in the past few years, how does your appointment change or enhance what has happened in the past?
Now we’re formalizing what we’re doing with our investment platform and we’ve organized it into three distinct verticals: we have our innovation lab, which is focusing on start-ups and small entrepreneurs; we have a venture business, which we are currently growing; and growth equity.

It seemed like a good time because we had started some of these businesses, but in some ways they were sub-scale and there was no individual inside HBSE responsible for this. A lot of the leadership team at HBSE are great people, incredibly talented, but they have full-time jobs. I’m not going to get the phone call at 3am when the ice at the Prudential Center is melting but I will get the phone call at 3am about an investment opportunity.

We have this unbelievable platform which has incredible information flow. We’re involved in numerous aspects of the changing landscape of sports and entertainment, so we feel like we’re uniquely positioned to look at investment opportunities and hopefully help these companies grow.

Which types of industries is HBSE looking to invest in?
There is a massive secular shift taking place in the sports and entertainment landscape broadly defined. Individuals are consuming content in a very different way, they are very much focused on experiences, and technology is revolutionizing the way that we live and play. When you think about our core business, we are in the entertainment business.

We have to innovate all the time and we feel like the intersection of sports, media and technology is where we want to be, and it’s a fast-evolving ecosystem right now. For example, esports and competitive gaming didn’t really exist as an investable asset class call it seven years ago. But HBSE was one of the first organizations in the traditional sports world to acquire an esports team so we feel like we have a track record and history in our DNA of being early and identifying trends and opportunities. Now with me here, it’s my full-time job to not only find them but to also turn them into successful investments.

Do you have a particular budget?
We don’t really have a budget per se. HBSE is an operating company and its primary business is operating professional sports teams. We have a balance sheet that has capital to invest in our investment opportunities, but what you will see from us is combining our capital with third-party external capital to create additional competitive advantages.

When HBSE acquired, through our existing esports platform, the Clutch Gaming business, which the Houston Rockets owned and was in the League of the Legends, we raised external capital, bringing in two strategic partners that have really helped us broaden not only the investment opportunities that we see but helped us analyze and do due diligence that we couldn’t do before.

What have you been working on so far at HBSE?
There are three areas that we are prioritizing. Firstly, the growth in our venture platform. I was just at the NBA Tech Summit [in Chicago] and the pace of new businesses being created and entrepreneurs who see opportunities are accelerating at a pace which we’ve never seen. A lot of these companies require not just capital but also a strategic partner who can help them create the right business plan to capitalize on the technology. The venture platform is a business that we have seeded and we are currently out growing that platform, talking to new external capital providers and strategic partners.

Secondly, one of our mantras is also that we want to invest in the communities in which we operate. It’s a big part of our culture. Newark has been an underserved market for some time and so we very much are looking for opportunities in Newark where we can create more of a destination, to create jobs and create that fan experience that keeps fans coming back to the Prudential Center.

The third thing is growth equity. We have a couple of investments in there right now which require capital but also some operational and private equity expertise. This is where a lot of my skillset comes in as the easy part of investing is making the investment, the hard part is actually getting involved, helping create the business plan, trying to figure out the growth strategy, trying to raise capital, and ultimately setting these companies up for successful exit because at some point we will look to get a return on our capital.

It’s not exactly how the sports and entertainment universe has been set up. Most traditional sports teams, people buy them and hold them for a long time and people don’t have these dedicated platforms. So we’re looking at this like you would a traditional investment platform where: what is the return on the capital? Because if there is a better use for that capital elsewhere, then we’re going to put it on one of those opportunities.

Do you think your appointment is symbolic of a wider development in the sports and industry space, which is focusing as much on investment opportunities as running sports teams?
There has been a secular shift. Years ago, sports teams were owned by a local individual and, given the value of these assets and the amount of capital it takes to acquire them [now], they are not just small family businesses anymore. They are multi-billion dollar enterprises. It’s not easy to say, ‘I’m going to buy one and the franchise value is going to go up’, because these assets require strong operational expertise, they require capital, they require insight on where the entertainment world is going to be.

A lot of other organizations are investing in some venture but, as far as I know, no other comparable sports and entertainment franchise has hired someone of my background to really formalize and institutionalize an investment platform; not just with our platform, but with third-party strategic capital.

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