Arctos Sports Partners’ Assets Balloon to More Than $3.9 Billion
Sports private equity fund Arctos Sports Partners disclosed it began the year with $3.94 billion of assets under management, according to a recent filing with Securities and Exchange Commission. That’s about $1 billion more than the firm had in October.
Arctos disclosed to the SEC those assets in an annual Form ADV, a requirement for firms that manage investor money. The form doesn’t detail Arctos’ investments beyond its focus “on the professional sports industry and sports franchise owners.” Sportico has reported that the fund is a limited partner in six MLB teams, controls large minority stakes in two NBA squads, a couple of NHL franchises, soccer club Real Salt Lake and part of Elevate Sports Partners. The fund also seeks to invest in European soccer clubs and other global sports as well as related businesses, including media and entertainment assets, and the stock of publicly traded companies that own sports teams, according to the filing. Arctos managing partner and majority owner Ian Charles declined to comment.
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The filing discloses that Arctos has 24 employees and generates its revenue through a combination of fixed management fees, reimbursable expenses and carried interest, the amounts of which aren’t disclosed in the document. The Form ADV isn’t intended for general consumption. Regulators use the information disclosed to help them judge systemic risk to the financial system by seeing how Wall Street leverages assets and how more Byzantine functions—like custody and back office operations—are structured. For that reason, much of the information contained in the document offers only tantalizing hints about the private equity fund.
In Arctos’ case, it has 11 investment pools within its structure, including one $1.22 billion fund named ASP Naismith, presumably after the inventor of basketball. Most other funds appear to be discrete pools of money for specific investors. That allocation may be driven in part by the fact that $745 million of total assets are classified as non-discretionary, meaning clients specify every action a money manager undertakes with their money.
Arctos began operations in late 2019 as private equity became more interested in investing in teams and the broader sports industry. The company has grown quickly, gathering in nearly $1 billion in assets after about a year of operation. Arctos notes that demand for sports assets is strong, stating in part in the filing, “In this highly competitive environment, the valuations of many potential target investments have recently risen to historically high levels as measured by multiples of EBITDA.”
In addition to the private equity business, Arctos is a sponsor of a separate, sports-focused SPAC. Named Arctos NorthStar and led by Arctos managing partner David “Doc” O’Connor and former baseball executive Theo Epstein, the SPAC has $316 million to consummate a merger by February 2023.
The recent Arctos filing states the fund is permitted to invest in SPACs “expected to pursue the acquisition of companies in the sports, sports entertainment, media, data analytics and related sectors.”
Presumably, that could allow the SPAC to more easily finance any proposed mergers it may pursue, an area that has been a stumbling block for the slumping blank check industry.
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