Mar 23, 2023 · 57m · capital-allocators
David Abrams – Sports Ecosystem Investing at Velocity (Capital Allocators, EP. 303)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Capital Allocators, host Ted Seides interviews David Abrams, founding partner of Velocity Capital Management, exploring his transition from distressed debt investing at Apollo to backing high-growth companies across the sports, media, and technology ecosystem.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 10.2% of the talking time here. How this is scored →
Ted as informed peer 3.4 Guest teaching 2.8 Guest disagreement 0.0 Ted pushing back 0.0
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 51:26 David vents pet peeve on fund managers exaggerating returns
David expresses direct annoyance at peer investment managers boasting about exaggerated returns, representing his most animated critique during the conversation.
Hardest push from Ted ▶ 48:27 Ted points out the difficult fundraising climate for emerging fundsTed directly confronts the challenging macro backdrop of launching a first-time fund in a constrained LP liquidity environment.
Biggest teaching moment ▶ 16:05 David details Apollo's holistic solution-oriented underwritingDavid articulates how presenting multidimensional capital solutions enabled Apollo to acquire complex distressed loan books without competing solely on price.
Ted holds their own ▶ 24:04 Ted contrasts distressed pencil-sharpening with startup operationsTed sharpens the discussion by distinguishing the analytical skillset of buying distressed NPLs from the operational demands of tech startups and sports clubs.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Early Wall Street Career and Restructuring at the Argosy Group | 3 | 3 | 0 | 0 | Ted opens with standard biographical prompts regarding David's entry into Wall Street and boutique choices. David explains the historical context of the junk bond crisis and the origins of modern restructuring boutiques in a relaxed, narrative tone. | |
| Distressed Investing at DLJ and Launching the European Business | 3 | 3 | 0 | 0 | Ted inquires about the transition to DLJ and Credit Suisse and what prompted David's career choices. David recounts personal career anecdotes with Doug Ostrover and his entrepreneurial push into the German distressed debt market. | |
| Scaling Distressed Solutions and Franchise Growth at Apollo | 4 | 3 | 0 | 0 | Ted asks insightful questions about the structural advantages and limitations of operating within an investment bank versus an alternative asset manager. David details how Apollo used proprietary portfolio assets like Countrywide to create holistic solutions. | |
| Direct Investments: Keemotion, Minor League Baseball, and Crystal Palace | 4 | 3 | 0 | 0 | Ted explores how underwriting distressed debt differs from operating hands-on sports technology and franchise businesses. David details his early direct deals in Keemotion, minor league baseball, and Crystal Palace FC. | |
| Serving as HBSE CIO and the Formation of Velocity Capital | 3 | 2 | 0 | 0 | Ted asks how David institutionalized his direct investing by joining HBSE and subsequently spinning out to launch Velocity Capital. David details the HBSE investment thesis and the rationale behind launching an independent growth-stage firm with Arne Rees. | |
| Velocity's Investment Strategy, Focus Sectors, and Sourcing Architecture | 4 | 3 | 0 | 0 | Ted probes Velocity's targeted universe, non-control strategy, and proprietary deal sourcing network. David emphasizes disciplined domain focus across IP, data, and betting, explaining how collaborative syndication helps win growth deals. | |
| Underwriting Discipline and Portfolio Case Study: VideoSites | 3 | 3 | 0 | 0 | Ted asks about the differences in diligence between minority and control positions and how Velocity adds operational value. David illustrates with a case study of VideoSites, contrasting past pricing missteps at Keemotion with current commercialization strategy. | |
| Case Study: Carving Out and Revitalizing the X Games | 3 | 3 | 0 | 0 | Ted invites a deep dive into the corporate carve-out of the X Games from ESPN/Disney. David explains the operational turnaround blueprint encompassing digital distribution, dedicated sponsorship sales, and monetizing live game-day events. | |
| Firm Platform Infrastructure and Navigating the Fundraising Market | 4 | 2 | 0 | 0 | Ted notes the counter-cyclical difficulty of the contemporary fundraising market for emerging managers. David candidly discusses the trade-offs between raising capital during exuberant market peaks versus deploying during valuation resets. |
Statements from this episode (8)
Apollo was founded to buy distressed assets originally financed by Drexel
“And a firm I eventually went to work for Apollo came out of Drexel, and their business was buying up the assets that they had been the investment bank for that actually raised the money and issued all the junk bonds.”
Abrams sold his Yankees AAA team in 2021 but kept Crystal Palace
“We ultimately sold the Yankees AAA team at the end of twenty-twenty-one, and Crystal Palace, we still own.”
Why Velocity Capital Management refuses to invest directly in sports teams
“And we decided definitively we were not going to be investing in sports teams.”
Abrams admits Keemotion's premium pricing was a costly go-to-market mistake
“If we go back to Keymotion for a second, one of the lessons I learned, and it was certainly a mistake that I made, was our go-to-market strategy was pricing our product at a premium level, and in the case of Keymotion, we had by far the best technology and the…”
Velocity Capital Management invested in carving out the X Games from Disney
“Ultimately after a lot of stop and start negotiations and a long year-long discussion, it was carved out of Disney and the transaction closed in October, and given Arnie's historical knowledge of it and relationship, we invested in it in Velocity.”
ESPN operated the X Games without a dedicated sales or management team
“Inside ESPN, given the size of the X Games, the prioritization was on much bigger intellectual property. The NFL, UFC, Major League Baseball. So not a dedicated sales team to monetize the IP through sponsorship. So having a dedicated sales team, and by the way…”
The X Games historically generated zero game-day ticketing or hospitality revenue
“Historically just given the size of it for the game day events, whether it's the winter games in Aspen or summer games elsewhere, there were no game day revenues. So think of going to a baseball game where all the tickets are free and there's no hospitality an…”
Abrams: New York investors constantly exaggerate their fund returns and hide losses
“Especially being in New York, people exaggerating how great their funds are and how great their returns are. You only hear about, oh, I did that deal, or I did this one. There's a band of returns that are the top, and there are a lot of people who will say tha…”