With the Super Bowl right around the corner, we thought it would be fitting to focus on the growing role of private equity in sports.
For a long time, owning a professional sports team was seen as a personal venture or a generational investment and private equity and other institutional capital was largely on the sidelines. Indeed, when you think of the iconic teams and their owners, you picture names like Jerry Jones of the Dallas Cowboys or the Steinbrenner family of the Yankees – not private equity firms.
But today, that is all changing. Private equity firms are making their way onto the playing field as major sports leagues relax ownership rules and existing owners look to partially cash out. Just last year, the NFL gave the green light for select approved private equity funds to buy up to a 10% stake in teams1, joining several other major sports leagues that have opened their doors to institutional capital in the past five years (Exhibit 1).
These rule changes have sparked a wave of private equity activity. Today, 71 major North American sports teams, collectively valued at over $205 billion, are now either backed by or affiliated with private equity (Exhibit 2).2 And the opportunity is still vast. Of the currently 153 teams across the NFL, NBA, MLB, NHL, and MLS, 82, or more than half, still do not have private equity involvement.3 And when you factor in growing areas like women’s sports, college sports, eSports, and even various international leagues, the potential for private equity to make an impact is sizable.
So why is private equity so eager to get in the game?
Well, for starters, the global sports market is massive, connecting nearly 8 billion people worldwide. And it’s not just about owning a sports team directly – it extends into media rights, merchandising, real estate, and even sports betting. Today, the global sports market is worth more than $460 billion annually and is expected to nearly double to $860 billion within the next decade (Exhibit 3).4
That’s a lot of growth potential and a big part of it is being fueled by media and streaming rights – especially as competition between Big Tech and legacy media heats up. Take the NFL for instance. Back in the late 90’s / early 2000’s (1998-2005), the average annual value of its media rights contract was around $2.2 billion. Today it’s $6.5 billion (Exhibit 4). And with the push for exclusive streaming rights from companies like Amazon and Netflix, that number is expected to jump to $12.3 billion over the coming decade – a nearly fivefold increase from the early 2000’s.5
And it’s not just the NFL cashing in. The NHL is expected to see its media rights revenue grow by 3.1x over the next decade, the MLS by 2.8x, and the NBA by 2.6x.6
What does this all mean?
Well, bigger media right fees translate to larger revenue and profit sharing amongst the teams and their related businesses, ultimately pushing up valuations. Indeed, valuations for major sports teams are soaring (Exhibit 5). In the NBA and NFL, average franchise values have increased by a staggering +650% and +300% over the past ten years.7 For context, the S&P 500 has only risen by about +200% during this time.8
Across the major North American sports leagues (MLB, NBA, NFL, NHL), franchise values have compounded at +14.4% annually for the past 20 years, easily outpacing the S&P 500’s +10.7% growth.9 Private equity firms are seeing this continued growth and want in on the action.
The Future of PE in Sports
As private equity steps up to the plate, there is significant potential for these teams and the underlying assets to continue appreciating. Unlike traditional owners who might view a team as personal or generational investments, private equity sees these assets as operating businesses with untapped potential. PE firms are focusing on things like increasing operational efficiencies, consolidating and commercializing assets, and finding new ways to grow revenues through things like cutting-edge technologies to enhance fan engagement.
Surprisingly, this model isn’t new for private equity. In 2022, Sixth Street Partners invested €360 million to renovate Real Madrid’s stadium, boosting projected annual revenues from $168 million to $447-$491 million.10 Similarly, when CVC acquired Formula One in 2006, it restructured the business, expanded the race calendar, and secured lucrative media deals, ultimately increasing F1’s enterprise value to $8 billion before its 2016 sale to Liberty Media.11
And more recently, private equity has been investing heavily into data analytics and artificial intelligence (AI) to enhance various aspects of sports operations. For instance, in 2024, Gemini Sports Analytics secured significant funding to develop advanced AI-driven platforms aimed at optimizing player performance and strategic decision-making.12
As we look ahead, private equity is not just investing in sports – they are actively reshaping the industry.
For more on Private Equity’s involvement in the sports industry, check out our latest episode of Beyond 60/40 where we sit down with Marc Lasry, Co-Founder, CEO, & Chairman of Avenue Capital Group.
1. National Football League, as of Aug. 27, 2024.
2. PitchBook, as of Jan. 22, 2025. Note: PE-backed teams have received PE investment. PE-affiliated teams are backed by individuals from the PE industry.
3. PitchBook, iCapital Investment Strategy, as of Jan. 22, 2025.
4. Houlihan Lokey, “Sports Market Update - Fall 2024,” as of Sept. 7, 2024.
5. Houlihan Lokey, “Sports Market Update - Fall 2024,” as of Sept. 7, 2024.
6. Houlihan Lokey, “Sports Market Update - Fall 2024,” as of Sept. 7, 2024.
7. Forbes, Sportico, Statista, as of Jan. 22, 2025.
8. S&P Capital IQ, iCapital Investment Strategy, as of Jan. 22, 2025. Note: S&P 500 return based on 2014-2023.
9. Arctos, U. Michigan Ross, iCapital Investment Strategy, as of Jan. 22, 2025. Note: Franchise values based on the Ross-Arctos Sports Franchise Index as of Sept. 2024.
10. Sixth Street, as of May 19, 2022.
11. Forbes, “How CVC Has Made $8.2 Billion From Formula One Auto Racing”, as of Apr. 15, 2014
12. SportsPro, as of Apr. 17, 2024.
INDEX DEFINITIONS
Ross-Arctos Sports Franchise Index: The Ross-Arctos Sports Franchise Index seeks to provide a real-time, data-driven gauge of aggregate franchise valuation growth for the largest North American leagues (NFL, NBA, MLB, and NHL). The quarterly private asset index covers more than 60 years of North American franchise transactions.
S&P 500 Index: The S&P 500 is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 of the top companies in leading industries of the U.S. economy and covers approximately 80% of available market capitalization.
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