With major sports teams now changing hands in the amount of $6 billion, it is no surprise that the private sector has become a major player. PitchBook reports that 63 of the largest North American sports teams worth $206 billion have private equity investors or owners with PE relationships. But the National Football League is lacking in those numbers. It’s very popular with owners.
One active investor is Blue Owl Capital, which invests in sports teams through the HomeCourt Partners Fund. The fund reached $600 million in assets as of June 30. HomeCourt currently owns shares in the NBA’s Sacramento Kings, Atlanta Hawks, and Charlotte Hornets.
II recently spoke with Andrew Laurino, Blue Owl’s managing director, about the challenges of athletes and their participation in the sector. Although Laurino believes that business investment in sports will continue to grow, he says that the level of participation will need to moderate at some point.
Laurino’s comments have been edited for accuracy and clarity.
What are the most interesting things in the secret game right now?
Establishment of a sports business, including capital formation.
There is also a demand for products made from sports. It is the most intelligent wisdom in the world. People are very affected by teams and players. The value of this in the media is evident.
Will consumer spending on sports continue to grow?
Yes, it is a growing business that needs money to grow. Barriers to entry – regulations from players – should continue to fall as private investment continues to emerge. Few units with limited units are fixed. Fixed income, loans, and real estate investments will come in a big way. This is the tip of the iceberg.
Which areas are the most reliable? Maybe the NFL, which doesn’t allow private ownership?
The NFL is a white whale. It has a large, well-designed environment. All groups are beneficial. It is in a better position than almost any other organization out there. There are untapped resources, and they will eventually need the same amount of money that is provided when the inventory count is gone. They’re talking about how to get that money in, and it’s going to be a great opportunity as it evolves.
The place is another beautiful place. Teams are investing in stadiums, stadiums, and surrounding areas, often in public and private partnerships. There is an opportunity to have special funds, so that groups and governments can maintain their great commitment. And governments still get tax money. The area around these squares can be residential, commercial, commercial, or recreational. We are looking for more opportunities through other areas of the Blue Owl platform.
Will you invest in women’s sports?
The recent growth of women’s sports is an exciting area. Football is attracting money as the game continues. The US is leading the women’s soccer market. The WNBA is becoming more attractive, and there is potential to increase it.
Do you think private equity can increase the value of sports organizations?
Most of the buyers on the table manage the inventory and the amount of money over time. We don’t see that today. What is causing the economy to increase is the lack of goods. Where we participate – just a few people – we haven’t seen a big push. As independent funds and family offices come in directly, the competition builds [pressure] at a price. It’s bad if you’re looking to make money, but good if you’ve already made money.
Will stock prices ever fall?
As interest rates continue to fluctuate, there will likely be loans that are more sensitive to interest rate fluctuations. This creates many dislocations and investment opportunities. We see this a lot in European football. US leagues now allow only a handful. So they are insulated from rate volatility.
There is also the rule of majority. The appreciation of social media businesses is slowly declining, leaving less and less opportunities.
You also mentioned sports movie rights. Will they continue to rise?
For the near term yes. There is an evolution from the old way of distribution via radio and cable to a new way – streaming. Organic design is gathering more money and content.
There is an ongoing conflict between the old and new guards of the eye. There is a chance that they are streaming to grow, but it is not the limit. But sometimes the financial math doesn’t work and you hit your limits.
Talk more about the entry of family offices and other allocators in the exercise and what it might mean.
Family offices are an important consumer base, with independent investors and pensioners also showing interest in the investment. Sports money offers an unequaled interest rate, with a low level of security.
Private equity funds may mean shorter ownership periods than before, but the rise of green PE funds may reduce this. Strong wealth and pension funds can be owned by groups for many years, making ownership more stable.