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☕ Private Equity in Sports: a double-edged sword, Cosm again, best season opener ever, 26 job offers, etc.

☕ Private Equity in Sports: a double-edged sword, Cosm again, best season opener ever, 26 job offers, etc.

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Olivier Spaeth
September 09, 2024

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Top Story

Ares Chairman Tony Ressler

Private Equity's Sports Gamble: A Double-Edged Sword

The influx of private equity into the sports industry has reached unprecedented levels. From the NBA to the NFL, major leagues worldwide are welcoming institutional investors, eager to capitalize on the sector's lucrative potential. However, as this trend accelerates, questions arise about the long-term implications for both sports organizations and investors.

The allure of sports for private equity is clear: guaranteed revenue streams, passionate fan bases, and a proven track record of resilience. Yet, the industry's appeal extends beyond financial metrics. The "respect factor" and the perception of safety during economic downturns make sports a desirable investment.

"Financially, if you're looking at asset weights across multiple industries, sports franchise returns have outperformed most asset classes over five, ten, 20 years." - Andrew Umbers, partner at Oakwell Sports Advisory

Andrew Umbers, partner at Oakwell Sports Advisory

For sports organizations, private equity offers a strategic advantage. By injecting capital and expertise, these firms can help teams navigate the complexities of the modern sports landscape, from digital media and technology to stadium infrastructure and women's sports development. However, concerns persist about potential conflicts of interest and the potential for short-term gains to overshadow long-term sustainability.

While the deal-making frenzy continues, the question remains: who is getting the better deal? Some experts argue that sports organizations have benefited significantly, gaining access to capital and strategic guidance. Others contend that private equity firms are exploiting the industry's unique characteristics for their own gain.

The future of private equity in sports is uncertain. As the industry evolves, new opportunities and challenges will emerge. The ability of both sports organizations and investors to adapt and navigate these changes will determine the ultimate impact of this transformative trend.

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