The SportsFolio Journal - February 18, 2020


SPACs are all the rave. Chamath Palihapitiya just filed for seven, yes, seven, this week. Just Another SPAC also filed this week. Its name? Just Another SPAC, literally.

This is where Big Sean comes in rapping (warning: original lyrics/video): “You boys all cap, I'm more Colin Kaepernick.”

In the midst of the SPAC boom, what caught our eye was the SPAC filed by Colin Kaepernick and Phoenix Suns co-owner Jahm Najafi. Its name is Mission Advancement Corp. The prospectus is here. This is the mission statement:

The mission of the Najafi/Kaepernick partnership is to identify, acquire and advance a company with the aim of creating meaningful financial and societal value.

Financial and societal value … as in transforming society through sports

Here is another excerpt:

Our platform is a combination of the significant experience, expertise, capabilities, resources and relationships of our director and officers, Najafi and our strategic advisors. We will leverage our differentiated and highly relevant platform for today’s consumer businesses to strengthen and advance a company that is addressing systemically consequential issues through its commercial activities, products and services, with the aim of creating meaningful financial and societal value post-business combination.

This is all good, the vision is amazing, the team is solid and of course, you have Colin. You feel great reading this, until … until you find out that one of the advisors is Valerie Mosley, a recent addition to the DraftKings board. 

We of course maintain that sports gambling and societal value are directly incompatible. You can’t have it both ways, guys. If you truly mean what you say, you cannot align yourself with sports gambling. If you do, you risk becoming just another SPAC.


More Big Sean…

I turn my Ws to M's, yeah I flip those

I might buy her red bottoms with the crypto

Three coins, that'll pay ya whole semester

But you gotta ride it better than a Tesla

Three coins pay for the whole semester? Well, Bitcoin is pushing on $52,000 at the time of this writing, so it’s more like half a coin for one semester. Is there still no Bitcoin 529 plan? Shocking. We must have missed it. 

There is a lot of hype on Bitcoin and there are not many critics left. Even Morgan Stanley appears to be “looking into whether the cryptocurrency would be a ‘suitable option for its investors.’” We don’t think so. 

The best case for Bitcoin has always been widespread adoption, not as an asset proxy, mind you, but as a currency. Could Bitcoin ever replace the USD? Dan Nathan doesn’t think so (he comes in at the 5:20 mark) because he is worried about this whole thing he calls “hopium.” 

“No one is talking about it right now. There are no more naysayers in Bitcoin.”

Kudos to you Dan. Somebody has to speak up and we are glad to see you are passionate about this. We completely agree that there are many red flags here. Now, we disagree with you on two counts. First, we feel you are giving too much credit to Bitcoin by calling it a risk asset. Bitcoin is not an asset. Second, we are talking about it and we will keep talking about it until people realize Bitcoin, not blockchain, is not much more than the 17th-century tulip.  

Another sane voice in this space is Aswath Damodaran. Now, it was good to see him sticking with his original position and reiterating that Bitcoin is not an asset. He is also on the record saying one cannot invest in Bitcoin. Aswath, you are absolutely correct, but if that is your position, why did you say, in this most recent post of yours, “Bitcoin and other crypto assets?” (emphasis ours) Surely that implies Bitcoin is an asset? Also, why did you say “if traders move on from bitcoin to some other speculative investment?” (emphasis ours) Surely that implies Bitcoin is an investment? You are one of the few who didn’t get tricked and as someone whose nickname is the “Dean of Valuation,” we feel you have a responsibility to be more careful with the wording. Of all people, when you imply Bitcoin is an asset and an investment, please understand that is what people hear. They disregard all of your other work on this topic, which is excellent. You have a platform and our hope was that you would pound the table more on the dangers of Bitcoin and do so with firmer terminology. 

Is it just us, or are people thinking that there is a subtle competition called “Who will dethrone Warren Buffet?” Now, you may or may not like the Oracle of Omaha, but it is undeniable that he is the GOAT when it comes to investing. If you are into thick books, consider picking up The Snowball: Warren Buffett and the Business of Life. Otherwise, let’s just say Warren Buffet might very well be one of the few people left who understands what investing really means. No wonder he called Bitcoin rat poison squared.

Now, let’s see what three important voices say about the Oracle of Omaha.

Aswath Damodaran:

Let us take Warren Buffett. He is not just a great value investor. People in value investing treat him like a God. Every word that comes out of his mouth they hang on to and I did listen to Warren Buffett talk because he gives his own line Berkshire Hathaway talk, which he usually gives at Woodstock in Omaha where people show up. As I watched him talk, my sense was this is a 90-year-old. He looks like a 90-year-old and he talks like a 90-year-old and there is nothing wrong. You have to pay heed to age but he looked uncertain. He looked unclear about what was going on and who can blame him. I looked at the substance of what he was saying and there was very little he said. People might not fly as much anymore really. This is the insight I am going to get by listening to Warren Buffett; therefore, I am going to sell airlines. I do not make that leaf. I do not see how people not flying as much means that all airlines are going to be bad investments. It might actually now make the airline business a bad business if some of these airlines dropped off in this game.

It is not that these investors are not successful investors. It is not that they have nothing of wisdom to offer to us. It is we who have to stop treating everything they say as gospel and start questioning. I taught people in my class; do not think anything because that is really how you become a better investor. You have to watch out for yourself, you have to come up with a way of thinking about markets that is unique to you. You cannot pair with somebody else. So I do not care how great an investor’s history has been or how wise they are. I would listen to them but it is my job to create my own perspective.

Well … Buffett’s age probably did not need to come up. That said, it is pretty clear that Aswath is advocating for critical thinking regardless of who is on the other side and that’s certainly a message we stand behind. 

Chamath Palihapitiya:

Nobody's going to listen to Buffett. Buffett doesn't have the energy to say what he said 30 and 40 years ago in 2021. And that's OK, he's basically earned the right to chill out and be the GOAT, but there have to be some other folks that take that mantle, take the baton and do it as well to this younger generation in the language they understand.

Again, we don’t think this is a matter of age. Tom Brady is old enough to be Mahomes’s dad, yet he still beat him handily. It is probably true that we might be close to some sort of pass-the-torch moment in finance. Does Chamath want to be that person?

Dave Portnoy:

I’m sure Warren Buffett is a great guy but when it comes to stocks he’s washed up. I’m the captain now.

No comment. 

Sports & Money

Canada is one step closer to sports losing its purity, also known as single-event sports betting. This is a bit surprising coming from Canada. Back in 2016, Loto-Quebec made news (Original site in French) when it said it was in the process of creating a blacklist for gambling operators. Two years later, the ban was rejected by the Supreme Court of Canada, which was seen as an interim step toward legalizing gambling.

Do you know what’s ironic? The path to the legalization of sports betting in Canada benefited from the exact opposite of what happened in the U.S. In connection with the Canadian Supreme Court ruling, a spokesperson for the Canadian Wireless Telecommunication Association said:

We have always been clear all Canadians are better served by a proportionate and symmetrical set of federal regulations than a patchwork of provincial regulations.

Essentially, the ruling was that this is a federal matter and provinces cannot do what they want. The province of Quebec was doing something unconstitutional, even when they were insisting that “the legislation had only been put in place to protect the people of Quebec.” In the U.S., on the other hand, states needed a federal prohibition, i.e. the Professional and Amateur Sports Protection Act of 1992 (also known as PASPA) to be stricken out as unconstitutional by the Supreme Court of the United States to move ahead with sports gambling legalization. The case was Murphy v. NCAA. We wrote and filed an amicus brief on it (pdf).

This doesn’t give you much confidence in the system, does it? In Canada, it was federal over province, which will result in more sports gambling. In the U.S. it is believed that it is the states over federal (though we disagree) that ultimately resulted in more sports gambling. 

Putting the laws aside … the gambling experience for the sports fan is subpar. Consider Carson Wentz being traded to the Colts. The Action Network reports on the Super Bowl odds for the Colts and not much has changed. It went from 25-1 to 22-1 in one place. Duh.

This is what you really want to engage with:

What is this, you may ask? These were the prices from the AllSportsMarket when the Eagles, with Carson Wentz at the helm, were truly in the zone. Wentz was incredible through the first 13 games, but suffered a major injury, ending his season. Well, the Eagles were on a mission, they put Nick Foles in, and didn’t miss a beat, ultimately beating Tom Brady and the Patriots in the Super Bowl. In fact, this feat looks even more incredible now. Mahomes, the baby GOAT, couldn’t beat Brady. The Falcons were up by 25 on the Patriots and they couldn’t beat Brady. Eli Manning has done it twice, and that’s it.

You may also ask why the Pats price was flat and the Eagles just kept climbing. Well, it’s all about expectations. Everybody knew the Pats were good. It was expected by many that they will make another deep run. Success was priced in. The Eagles, on the other hand, came out of nowhere, exceeding even the loftiest expectations, with the price adjusting every week. “Oh, they are even better than we thought.” The price declined slightly when Wentz went down (see the small clip in December), but corrected itself when it became clear when Foles was going to be equally effective.

Aren’t sports stock markets beautiful? You tell us, which one is more exciting? The odds moving from 25:1 to 22:1, or the continuous price action, 24/7? You know where we stand. Please give it a whirl on our learning market:, you can also download the iOS app from the Apple Store.