INSIGHTS
Why is professional sports attractive for investors and what long-term impact is to be expected from COVID-19?
Professional sports, once largely the billionaires’ playground, is increasingly drawing interest from private equity firms, institutional investors, and special purpose acquisition companies (SPACs).
Sports is a global enterprise, with sports leagues increasingly competing to expand in foreign markets. More recently, the competition has left the pitch and entered the financial realm, with investors looking to tap into the global sports boom. Recent examples include CVC Capital Partners’ $2 billion investment in media rights of Italy’s soccer league Serie A, Silver Lake Partner’s acquiring a stake in City Football Group for $500 million, and Arctos Sports Partners raising $500 million to invest in European and U.S. sports leagues.
The appeal of professional sports to investors stems from a variety of factors:
- Stable media rights revenue and content that reaches loyal live audiences that appeal to advertisers
- Increasing team valuations, as investor interest grows and barriers to enter professional leagues remain high
- An increasing number of bidders for sports media rights
On top of attractive investment characteristics, sports associations, leagues, and teams are opening up for private equity and investment funds. Some U.S. leagues (MLB, NBA) have begun to loosen ownership regulations to allow institutional investors to acquire minority interests in clubs. The current crisis will only accelerate the trend of increased investment activity, as leagues and teams have a strong need for investment to weather the current situation. While shares of most publicly traded teams have seen growth in recent years, COVID-19 has had a negative impact with teams, leagues, and associations across the globe suffering due to games without fans and cancelled competitions.
Despite the current crisis, professional sports activity will soon return to pre-crisis levels: Respondents to Altman Solon’s 2020 Global Sports & News Survey say they are more interested in watching live sports than before the pandemic. As distribution the COVID-19 vaccine begins, the survey also reveals that fans are ready for live sports attendance to return – with less than 5% expecting to “never return again” to live sporting events. For investors in professional sports, the current climate presents attractive opportunities with multiple investment levers and considerations, including international expansion and new competitions, as well as synergies with adjacent sectors such as media, gaming, and gambling. 2021 promises to be a busy year for sports investing.
More details on the types of investors targeting professional sports, interest in leagues and sports viewers’ affinity to Pay TV, gaming, and gambling including country-specific data can be found in Altman Solon’s report Investors’ perspective on professional sports which is available upon request. Please submit the form below.
Thank you to Jonathan Hurd for his leadership on this piece.