Speaking as part of SporticoLive’s “Invest In Sports” summit, which will be shown online beginning Thursday at noon ET, Boehly says pro sports is unlike any other business—humbling because you can do everything right and still fail, yet exciting because there are no guarantees. Some might say the same for investing in the industry, which continues to see new waves of capital and growth opportunities.
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“Winning is valuable,” said Boehly, who joined Sports Industry Group’s Chuck Baker for a panel discussion called “Nurturing Global Sports Brands,” moderated by Sportico Editor in Chief Scott Soshnick. “Once you start winning more, and with regularity, you’ll have more opportunities for associations with equity and the brand.”
These associations and relationships are more imperative than ever as the landscape experiences a historic explosion of new capital across franchises, leagues and infrastructure. Despite the financial fallout of the pandemic, there’s been an unmatched collection of deals. The latest investment class includes a slew of new names, including athletes, celebrities and media moguls.
But perhaps the most interesting wrinkle has been the rise of private equity funding, with several examples of sports and PE coming together, like Elysian Park Ventures and the Dodgers.
Arctos Sports Partners, a sports private equity fund, is also a leader within the space, with stakes in the Golden State Warriors, Sacramento Kings and Fenway Sports Group (parent of the Boston Red Sox, Liverpool FC and Roush Racing). Ian Charles, a founder and managing partner at Arctos, says it takes unconventional thinking, coupled with changing league bylaws, for these investments to flourish at the highest levels possible, which in turn further drives up valuations for sports franchises.
“There’s so much potential growth in this ecosystem today,” said Charles, who joined fellow Arctos co-founder David O’Connor for a panel discussion called “Private Equity Investments in Professional Sports,” moderated by Sportico’s Brendan Coffey. “Bringing in growth capital can help these assets achieve their potential growth which sometimes can be constrained by internally-financed growth.”
Some of the current trends in sports investing likely are here to say. Allen & Co managing director Steve Greenberg says that there’s a new marketplace for limited partners, from institutions to wealthy families, which he believes is in its infancy. Greenberg added that pent-up demand factored in some recent sales, with similar deals likely stabilizing after 2022.
Regardless, the rise in investment from the private sector and from major companies has impressed even the most senior sports bankers.
“I’ve seen a flood of new capital coming into the sector that historically never thought about investing in sports assets,” Raine Group partner Colin Neville said during a “Bankers Roundtable” panel discussion, moderated by Sportico’s Eben Novy-Williams. “So it’s definitely going to get more competitive, but like always, the cream rises to the top.”
An array of topics came up during the summit, ranging from what prompted Arctos to be aggressive in buying limited stakes in franchises, to how e-commerce mogul Marc Lore and Alex Rodriguez secured ownership of the Minnesota Timberwolves and the WNBA’s Minnesota Lynx.
“Sometimes the best strategy for negotiation is to not negotiate at all,” Lore said.