Youth Inc. Building Fanatics x Amazon for Youth Sports

Youth Inc. Building Fanatics x Amazon for Youth Sports

Youth Inc. recently closed on a $4.5 million seed round led by Will Ventures.

The startup, co-founded by NFL tight end turned Fox Sports broadcaster Greg Olsen, is taking aim –at least to begin– at the fragmented youth sports fanwear marketplace.

“E-commerce is one of the last verticals that has not seen innovation [or investment] in the space,” co-founder Ryan Baise said.

The former Fanatics executive believes Youth Inc. can do “what [the e-commerce giant] has done, in terms of elevating the fan [merchandising] experience for the professional leagues and colleges,” for the long-tail, and command its share of a $10 billion fanwear market by “raising the quality bar, improving the ordering experience, and time to porch [with a DTC marketplace].”

The vision is a mix of Fanatics and Amazon, with a hint of Audacy sprinkled in.

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Baise spent seven years at Fanatics, the last three overseeing new ventures and strategic initiatives. The company launched a robust digital advertising business and its college and NIL arm during his time there. It also explored building a solution that would serve the long tail of fan apparel.

It was all that was left. Fanatics had captured the vast majority of the market share across pro and college sports.

So, the company embarked on a year-long diligence process to see if it could/should pursue the youth sports vertical.

Baise and the team found that many premium apparel brands (think: Peter Millar and Johnnie-O) were shying away from the category. Large apparel distributors (think: SanMar, Alphabroder) were absorbing so much of the margins, demand was difficult to aggregate, and managing IP for thousands of teams and schools was outside of their scope.

But many indicated if a platform capable of handling it all, along with fulfillment, existed that they would be inclined to participate.

“Those insights were meaningful. We knew we had to reverse-engineer the [DTC marketplace model],” Baise said. “And we curated a distributed network of decorators and manufacturers [that we were going to] bring onto the platform.”

Fanatics was largely supportive of the vision and its youth sports focus.

But the e-commerce giant came to realize the company is set-up to service a billion-dollar a year NFL business, or its half-billion-dollar a year NBA business; not to capture all the one and two million dollar a year businesses out there. It would need to reconfigure its supply chain to implement the strategy proposed.

And with the company gearing up for an IPO, now was not the time to do that. So, the company put a pin in the project and decided to instead focus on cleaning up its balance sheet.

But Baise had developed conviction around the concept and wanted to pursue it. Fanatics supported him doing so outside of its walls.

The long-time Fanatics exec knows the way to win the fragmented youth sports landscape is to build brand affinity, and you that by delivering a better commerce experience. However, the company still must find a way to get the target customer through the door the first time around.

That’s “another reason there hasn’t been a big business built in youth sports teamwear and fanwear,” Baise said. “Customer acquisition has been prohibitively expensive–especially from a paid media standpoint.”

So, his first order of business was to find a media partner that would help the commerce side of the house cut through.

“One of the first calls I made was to Peter Raskin, Greg Olsen’s agent,” Baise said.

Olsen had been the host of the Youth Inc. video podcast, the flagship property from Audiorama (a holdco seeded by Olsen, Vince Vaughn, former Carolina Panthers lineman Ryan Khalil and Powerhouse Capital at the peak of the podcast market). While the show found an audience during its 44-episode debut season in ‘22, investor taste for a new digital media network largely evaporated over that time.

“But a commerce offering, if done right, does scale,” Baise said. “And you can build a very large business around it.”

So, Audiorama pivoted and is now formally part of Youth Inc.

Youth Inc. is touting itself as a youth sports content and commerce marketplace. But the former exists to serve the latter. Its media arm, expected to launch this fall, will operate at break-even or ‘slightly profitable’.

“The point of it is not necessarily to drive as many ad dollars as possible to the bottom line,” Baise said. “It’s to create great content, provide value to youth sports families, and to aggregate commerce demand and fill a funnel.”

Because at the end of the day, Youth Inc. is in the audience aggregation business.

“You have to build a community around youth sports [to achieve the requisite scale],” Baise said.

Once Youth Inc. has done so successfully, it can focus on building out and executing on the company’s commerce vision. The business plans to launch that division in Q1 ’25.

Teamwear, fanwear, and equipment sold directly to high schools is a $10 billion/year market.

“The apparel piece is $7.5-$8bn, and about 30% of that [total] is high school,” Baise said.

BSN Sports, a subsidiary of Varsity Brands, is among the market leaders. The company is believed to do ~$1.5bn in revenue, largely on HS team uniforms.

But there is little in the way of market leadership for the countless youth sports organizations that make up the other 70% of annual team/fan apparel spend.

“That [part of the market] is still being serviced by local mom and pops that are sourcing product through big distributors, getting 30-40% gross margins on the product, and then decorating [it] with owned screened printing assets or [they have] a partnership with a local screen printer,” Baise said.

Youth Inc. knows it can create efficiencies in the space by altering long-held supply chain processes.

“We’re creating a system that facilitates decoration of the product for both the brand and consumer,” Baise said. “So, the decorator network will be holding inventory on our behalf, and we’ll be pulling that directly from [premium brands].”

By taking light positions in core skews the upstart should, in theory, be able to facilitate the design, fulfillment, and shipment of better-quality inventory more quickly.

Of course, the model carries additional execution risk.

But the upside is “once you’re aggregating demand and bringing premium fanwear to market for the first time, then [you can deploy the] Amazon 3P model with equipment,” Baise said. Youth Inc. can become “an affiliate network. [Now,] you’re the highway of the industry.”

An Amazon for youth sports if you will.

“We think we [can eventually brand out into other parts of the youth sports ecosystem and] scale this thing to hundreds of millions, if not a billion dollars plus in revenue,” Baise said.