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Private Equity Dives Into Sports Investing As Valuations Boom
Sports team ownership , once the dominion of individual billionaires , is making room for private capital . By Christopher Williams
BASKETBALL FANS REVERE MICHAEL JORDAN AS THE best basketball player of all time and the fierce and charismatic competitor who led his Chicago Bulls to six National Basketball Association championships in the 1990s . Private equity investors , though , likely regard the long-retired legend as a champion investor who sold his majority stake in the lowly NBA franchise Charlotte Hornets for a reported $ 3 billion .
That represented a whopping 990.91 % uptick from the $ 275 million the now 61-year-old Jordan paid for the stake in 2010 .
That ’ s a score any investor — whether or not they ’ re a hoop fan — can get excited about .
Those kinds of nosebleed valuations for sports franchises are pulling private equity into the booming game of sports investing . Since 2019 , when Major League Baseball became the first of the big North American leagues to open franchise ownership to outside investors , private equity has poured $ 59 billion into sports investing — and the spigot remains open .
Bulls are smartly betting that the growth of investing in professional sports leagues both here and abroad is just in its first quarter . National TV broadcasting rights for the NBA , the National Football League , Major League Baseball and the National Hockey League are soaring ; this year the global sports TV contracts hit a high of $ 62.4 billion . Media rights are the fuel powering the rocket that is franchise valuation , and market observers don ’ t see it falling back to Earth anytime soon . The number of sports-focused funds is also expected to expand to absorb all that capital gushing into the alternative asset class . Furthermore , women ’ s sports teams , such as those in the WNBA , which has recently gained more attention because of the rivalry between Caitlin Clark and Angel Reese , are spurring intense interest , along with emerging sports ranging from lacrosse to men ’ s volleyball to bull riding . Women ’ s soccer especially is drawing eyeballs and multibillion-dollar TV rights deals .
To meet the demand from RIAs , advisors and high-net-worth investors , some firms are democratizing sports investing , which has otherwise been the sandbox of multibillionaires like Steve Ballmer , the former Microsoft CEO and longtime owner of the Los Angeles Clippers . In March , alternative platform GLASfunds of Cleveland added the sports-focused HomeCourt Partners Fund from alternative asset manager Blue Owl Capital to its platform . The fund will allow investors to get a piece of the sports action for as “ little ” as $ 50,000 , according to the firm . HomeCourt is a $ 627 million vintage buyout offering started in 2021 and has had invest-
SEPTEMBER 2024 | FINANCIAL ADVISOR MAGAZINE | 39