Apollo, Ares Aim for Bigger Role Backing Sports Leagues, Teams
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Diverging Reports Breakdown
20 private-equity firms making big moves in sports, from investing in NBA teams to women’s and youth sports
This story is available exclusively to Business Insider subscribers. Since the MLB opened its doors to institutional investment in 2019, all the major leagues except the NFL have followed suit. Two-thirds of the MLB and NBA teams now have private-equity backing, according to a recent study. Some factors have made sports hot, in addition to the status they bring, such as the number of teams a firm can own in or the ownership share a fund can hold. A recent study bolsters the case for sports, saying it can offer strong returns in the field. And the field of potential investors is growing with companies helping rich clients in teams, which can drive up prices. It seems to be working for Arctos, which has built a building on the back of a long-term media-yielding company. It’s also working for New York City, which is the home of the New York Times.
Wall Street’s hunger for sports deals is showing no signs of easing as more investors flock to a perceived stable form of entertainment — creating potential big returns as well as concerns.
Since the MLB opened its doors to institutional investment in 2019, all the major leagues except the NFL have followed suit. Since then, private-equity firms have poured $54.6 billion into sports, according to PitchBook data. Two-thirds of the MLB and NBA teams now have private-equity backing, according to PitchBook.
Valuations have soared accordingly across sports. 2023 saw the NFL’s Washington Commanders sold for a record $6 billion to a group led by Josh Harris, a year after a group led by the Walmart heir Rob Walton paid $4.65 for the Denver Broncos.
A few factors have made sports hot investments, in addition to the status they bring:
Competition from tech companies like Amazon and YouTube is driving up the price of broadcasting games.
Sports are supported by reliable revenue streams from soaring media rights values, loyal fan bases, and advertisers who want to reach them.
Sports betting has created a fresh stream of income for teams and media companies.
The easing of pandemic lockdowns has reinforced the value of live entertainment.
“Post COVID, no content is more important than sports content,” Carlyle managing director Ben Fund told Business Insider. “Legacy linear TV and video providers need sports content to maintain the customer base, while the world has changed as for how it evaluates the performance for streaming platforms, with a greater focus on customer retention versus customer additions. Everyone in the ecosystem needs sports to make the ecosystem work.”
This thinking has brought in a new wave of investors. Some firms, like Arctos, are built entirely around sports. Huge investment companies, like Blackstone, are taking notice and jumping in, as are new entrants like Bluestone Equity Partners and GMF Capital.
Investing in sports teams is a long game, especially since teams’ values are subject to long-term media-rights deals and come with limits on the ability to exit. Sports investments are usually limited to minority stakes, while some PEs prefer to exercise operational control. And the field of potential investors is growing with Goldman Sachs helping rich clients invest in teams, which can drive up prices.
Leagues also restrict PE investments, with some caps on the number of teams a firm can own stakes in or the ownership share a fund can hold.
Several PE titans have made waves in sports as individuals, bypassing some of these ownership roadblocks. Harris, who bought the Washington Commanders and is a cofounder of Apollo Global Management, has invested in several teams with Blackstone Group’s David Blitzer. Lauren Leichtman and Arthur Levine, who invest through a family office and run PE firm Levine Leichtman Capital Partners, bought the San Diego Wave in a deal that valued the club at $113 million and marked the highest price ever paid for a controlling stake in an NWSL team, Sportico reported in March.
As private equity becomes more intertwined with sports, some veterans in the field are warning of a bubble.
“There is a tremendous amount of inexperienced capital chasing sports,” RedBird founder Gerry Cardinale recently said. “I just think everybody has to calm down a little bit. We need some sober, unemotional, non-trophy-hunting investing in sports.”
But others are unlikely to be deterred. A recent study bolsters the case for sports investing, saying it can offer strong returns in bull markets and fare better than other asset classes in downturns.
It seems to be working for Arctos, which has built a portfolio of minority stakes in teams on the belief that it can make operational improvements — its first fund was on track to well outperform its peers in 2023, according to PitchBook.
The NFL is considering opening its doors to institutional investors. There’s also rising investor interest in college sports and women’s sports, which have become increasingly commercialized.
Scroll down to read about the private equity firms, listed alphabetically, that have been making the biggest moves in sports in recent years.
14 private equity players investing billions in sports, from NBA teams to Fanatics, as league media rights skyrocket and betting booms
Private equity firms have already spent around $30 billion on sports-related deals this year. The value of media rights deals have shot up in sports as linear TV battles streaming. Sports betting has hastily altered the landscape, opening a new sector for media, leagues, teams, and other businesses to tap. There are still some experts and fans who fear that firms will focus more on profitability than product, as seen during CVC Capital Partners’ decade-long ownership of Formula One. But private equity isn’t going anywhere any time soon, especially as smaller sports leagues like the Professional Lacrosse League continue to grow and ancillary sports- related businesses seek investors.Below are 14 private equity firms — listed alphabetically by company — that have made prominent investments in sports through 2022.
The way money functions in professional sports is changing drastically, and it’s not just because more people in the US are now allowed to bet $5 on their favorite football team every weekend.
An influx of private equity investment is shaking up the space, creating opportunity — and uncertainty — as more major leagues and teams start to welcome institutional capital.
This year, private equity firms have already spent around $30 billion on sports-related deals globally as of September, after spending more than $50 billion in the sector in 2021, according to PitchBook.
While certain private equity firms like Arctos Sports Partners were established to focus mainly on sports, the industry’s growth has also attracted some of the world’s biggest investment firms, including Blackstone, which has a large portfolio across industries like real estate and infrastructure, but had few sports investments until recently. New firms like Dynasty Equity Partners are also emerging to invest in sports, though they’re just starting to make their mark on the space.
A few factors are drawing private equity firms to the sector. The value of media rights deals have shot up in sports as linear TV battles streaming, with Amazon’s new Thursday Night Football rights — the first NFL package exclusive to streaming — showing strong early viewership. Audience behavior is changing as sports media and content have gone digital. And sports betting has hastily altered the landscape, opening a new sector for media, leagues, teams, and other businesses to tap.
As a result, sports team valuations have skyrocketed. The Dallas Cowboys, the most valuable sports franchise according to Forbes, is worth $8 billion as of August, nearly $6 billion more than its 2012 valuation.
“There continues to be fervency in the consumption of sports media,” said Alex Michael, head of LionTree’s sports advisory business that worked on the sale of The Athletic to the New York Times. “As the cable bundle has frayed, you have deep-pocketed streaming players going after a passionate audience that both tunes in and pays, so there doesn’t seem to be any abatement in the value of those sports rights. They grow tremendously, outpacing the economy for a while.”
Major sports leagues did not always welcome institutional investors for fear of chaotic ownership structures. But with the exponential growth in valuation and struggles driven by the pandemic, many leagues have embraced private equity.
In 2020, the NBA, for example, created a fund called “HomeCourt” with Blue Owl’s Dyal Capital division. By 2021, multiple firms had stakes in NBA teams, though the league caps institutional ownership at 30% per team.
Despite the swell of capital flowing to the space, there are still some experts and fans who fear that firms will focus more on profitability than product, as seen during CVC Capital Partners’ decade-long ownership of Formula One. The firm earned billions of dollars when it sold the premiere motorsport league to Liberty Media in 2017, but was heavily criticized over the sport’s declining attendance. This sentiment is also felt in Europe, where private equity has begun to take over professional soccer leagues.
But private equity isn’t going anywhere any time soon, especially as smaller sports leagues like the Professional Lacrosse League continue to grow and ancillary sports-related businesses seek investors.
“A team can be a smart long-term investment, that is tax efficient, scarce by nature, and carries social currency, and that’s clearly an enticing proposition in an otherwise unstable economy,” Michael at LionTree said.
Below are 14 private equity firms — listed alphabetically by company — that have made prominent investments in sports through 2022.