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:
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Competition from tech companies like Amazon and YouTube is driving up the price of broadcasting games.
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Sports are supported by reliable revenue streams from soaring media rights values, loyal fan bases, and advertisers who want to reach them.
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Sports betting has created a fresh stream of income for teams and media companies.
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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.