How to Get Rich From the New NFL

In 1994, Robert Kraft bought the New England Patriots for $172 million.

Nine Super Bowl appearances and six Super Bowl rings later, that sum seems laughable.

The Patriots franchise has become one of the most storied in NFL history. And as the championship rings and banners have piled up, the value of the team has skyrocketed.

Today, the New England Patriots are worth upward of $4 billion.

That’s a 2,225% gain on Kraft’s original purchase price!

But it isn’t just NFL arenas where Kraft is making waves – and money. There’s another sport where he’s also a team owner.

And some are calling it the sport of the future: esports.

I’m talking about competitive video games.

I know, many of us instantly want to chuckle or derisively snort at the idea. But the reality is there is already big money in esports. And this is merely the beginning.

Now, competitive video games are nothing new.

Those of us who grew up in the video game era often played local tournaments with our friends. We’d sit in someone’s basement playing round-robin tournaments on everything from Pong, Missile Command, Donkey Kong, Samurai Shodown, Star Fox, Street Fighter, GoldenEye, Mario Kart and a laundry list of others.

We’d build LANs, or local area networks, and play Doom, Unreal Tournament, StarCraft and Command & Conquer.

The reality is, for as long as video games have existed, there have been professional tournaments.

In fact, the first tournament recorded was in 1972 at Stanford University. First prize was a year’s subscription to Rolling Stone.

Not to mention, popular culture has plenty of films and songs honoring “Pinball Wizards.”

The main difference today is that since 2000, esports has relocated from basements, apartments and arcades to arenas.

And the prizes have grown from magazine subscriptions to multimillion-dollar paydays. In August 2019, 16-year-old Kyle “Bugha” Giersdorf walked away with $3 million for winning a Fortnite tournament in front of a crowd of thousands at New York’s Arthur Ashe Stadium.

And that doesn’t include the audience following the action online or on TV.

At the same time, professional esports players are cheered and jeered in the same manner as traditional athletes as esports’ fan base grows.

It’s a piece of this pie that Patriots owner Kraft raced to get his hands on early.

In the summer of 2017, Riot Games began selling franchises for its League of Legends for $10 million.

Not to be outdone, Activision Blizzard (Nasdaq: ATVI) started selling its extremely popular Overwatch League franchises for $20 million.

Kraft bought one of these – the Boston Uprising – to add to his storied Boston franchises.

And the Boston Uprising quickly made a name for itself, earning a playoff berth in its inaugural year.

Today, those League of Legends franchises are worth upward of $50 million and Overwatch League franchises are valued between $60 million and $80 million.

That’s a triple-digit return in a little more than a year!

And esports isn’t slowing down. Its actually picking up speed.

Since 2015, esports revenue has increased at nearly a 40% pace every year.

For instance, global esports revenue surged 38% in 2018 to more than $906 million. Last year, revenue jumped another 24% to more than $1.1 billion. By 2021, revenue is conservatively expected to top $1.65 billion.

Yet, in North America, esports is still in its infancy…

But as we’ve seen over the past year, this is likely short-lived.

Activision has signed a deal with Disney (NYSE: DIS) to broadcast Overwatch League on cable TV. This includes ESPN, Disney XD and ABC. Already, tournaments are being streamed on Amazon’s (Nasdaq: AMZN) Twitch and Alphabet’s (Nasdaq: GOOGL) YouTube.

In Arlington, Texas, the $10 million, 100,000-square-foot Esports Stadium Arlington was completed last year. It’s the largest dedicated esports arena in North America. And it’s partially owned by Infinite Esports & Entertainment, which is owned by another major league sports executive: Texas Rangers co-owner Neil Leibman.

Esports is transforming into a global phenomenon. In 2019, the worldwide competitive video game audience was a massive 454 million people!

And the prize money pools for marquee tournaments top those of the Daytona 500, U.S. Open, Tour de France and Kentucky Derby.  In fact, the Fortnite tournament that Bugha won had a total purse of $30 million!

For investors, there are a variety of ways to grab a piece of the action.

I’ve already listed several here – Activision, Disney, Amazon, and Google…

There are also other video game publishers, like Electronic Arts (Nasdaq: EA), Nintendo (OTC: NTDOY) and Take-Two Interactive (Nasdaq: TTWO)…

Then there are other platform operators, like Sea Limited (NYSE: SE) and Tencent (OTC: TCEHY)…

And even chipmakers, like Nvidia (Nasdaq: NVDA) and Advanced Micro Devices (Nasdaq: AMD)…

That’s means there are a lot of flavors to choose from. There are a number of working parts and plenty of different teams to root for.

So you could go out and grab some shares of each.

But for some investors – especially those just starting out – price may be an issue, as many of these companies trade for $100 or more per share.

Beyond that, esports is merely getting underway in North America. But in countries like China, Japan and South Korea, esports is already huge… and becoming gargantuan.

There are great investments, such as Bandai, Capcom, Kingsoft, Konami and Ubisoft, that don’t trade on U.S. exchanges.

All of this can put investors just starting out at a severe disadvantage.

Because of this, one of my favorite approaches to investing in the booming esports industry is with the VanEck Vectors Video Gaming and eSports ETF (Nasdaq: ESPO).

This exchange-traded fund (ETF) holds companies that earn at least 50% of their revenue from video gaming and/or esports.

That means investors can snag a little bit from a bunch of different opportunities in one stroke and still profit on the outstanding growth of esports itself.

And the VanEck Vectors Video Gaming and eSports ETF’s top holdings are a who’s who in the space…

We see all of the names we want, from video game publishers to chipmakers and platform operators, as well as a number of attractive Asian holdings.

In 2019, the esports ETF surged 43.2%. Year to date in 2020, it’s up nearly 20%.

Pretty soon, your kids and grandkids are going to be rooting for their favorite esports teams… if they aren’t already.

Franchise owners will be raking in the cash, like Kraft, Leibman and others who claimed a stake early.

Esports revenue has grown almost 40% each year since 2015. And that’s a pace no one looking to make money should ignore.

And you can score gains and win alongside those owners, players and teams by investing in a broad range of companies at the heart of this soon-to-be multibillion-dollar global phenomenon with the VanEck Vectors Video Gaming and eSports ETF.

It’s your one-stop shop to potentially get rich from the new NFL!

Action to Take: Buy shares of the VanEck Vectors Video Gaming and eSports ETF (Nasdaq: ESPO) at market. Make sure it doesn’t make up more than 1% of your portfolio. This is a speculative play on the growth of a nascent – but booming – industry. And use a 25% trailing stop to protect yourself.