The Greenwich Economic Forum, an annual gathering of institutional investors and asset managers, kicked off with a bold forecast from panelists about the future of financing structures in professional sports investments. During a panel discussion bathed in sunlight and overlooking Greenwich, Conn.'s picturesque harbor, George Pyne, CEO of Bruin Capital (a sports and media private equity firm), and Wyc Grousbeck, owner and CEO of the Boston Celtics, highlighted the ripe opportunities for fund managers in private equity, venture capital, and other asset classes within the sports ecosystem.
Private markets have already firmly established their presence in professional sports. According to PitchBook's PE sports dashboard, which tracks private equity ownership in four major US professional sports leagues, 63 major North American sports teams, with a combined valuation of $205.9 billion, have connections to private equity.
As leagues have relaxed regulations surrounding team ownership structures, investors have identified avenues for robust returns. Both Pyne and Grousbeck anticipate a surge in private market capital flowing into professional sports in the near future, with key players like sports-focused private equity firms Arctos Partners and Dynasty Equity driving this momentum.
For instance, in May, Arctos Partners, boasting interests in prominent teams like the Golden State Warriors, the Houston Astros, and the Sacramento Kings, reported a remarkable 69% year-over-year increase in assets under management (AUM), reaching a total AUM of $6.6 billion.
Nevertheless, Pyne noted that the financing of sports investments remains relatively "unsophisticated," primarily relying on equity and cash. This simplicity in deal structures can be attributed to the nascent stage of private capital's involvement in the sports sector. Several leagues still impose restrictions on debt and require approval for leveraged acquisitions. While these constraints are gradually easing, they have impeded the development of innovative financing structures.
As the sports investment market matures and attracts investors from private equity, venture capital, growth funds, and various asset classes, the sector is expected to embrace more deals financed with structured equity—an approach that combines elements of equity and debt, Pyne suggested.
The recent success of sports-focused firms reflects the growing interest from limited partners, which has had a direct impact on the leagues. One noteworthy example is the Saudi Arabia sovereign wealth fund's financing of a deal that merged the commercial aspects of the PGA Tour, the European Tour, and the Saudi-backed LIV Golf.
"The influx of capital is changing the game," remarked Pyne.
Additionally, both Pyne and Grousbeck identified increasing investment opportunities in professional women's sports, signaling a promising future for this segment of the industry.