- Private equity firms are investing more in sports teams, leagues, and other ancillary businesses.
- The sector is growing as media rights boost team valuations and leagues embrace institutional investors.
- From Apollo to Sixth Street, here are 14 private equity firms betting on sports.
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.