Alternatives managers have developed a taste for sports investments in recent years, with private equity and VC investors actively backing sports federations, leagues, teams, players and even sporting data providers. The global sports market is forecast to grow by almost a quarter in the next four years, with a 5.6 percent CAGR, according to Markets and Research.
Private equity and venture capital accounted for six of the ten largest sports deals of 2023, and made up over 75 percent of total transaction value up to 25 October.
Football teams seem to have caught the eye of private equity, scoring multiple high profile investments including a $500 million investment in Chelsea FC by Ares Management, and Sixth Street’s $125 million deal to become majority owner of Bay FC, a new National Women’s Soccer League team.
Impressive revenue multiples have seen England’s Premier League become a focus for private equity, especially across the “Big Six” clubs. In addition to Ares’ Chelsea FC investment, 2023 saw minority stake investments in both Liverpool FC and in its owner Fenway Sports Group by Dynasty Equity and Arctos Partners.
Returns for sports investments can be enormous, as demonstrated by CVC’s legendary investment in motorsports racing championship Formula 1. In that deal, the firm turned a $952 million investment in 2006 from its CVC European Equity Partners IV fund into a more than $6.7 billion return by exit in 2016, marking at least a 7x money-on-money return, according to a source familiar with the transaction.
