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Commercial Question

Private equity: sport’s new signing

updated on 28 June 2022


Why are private equity funds starting to invest in sports clubs and leagues?



Ownership in professional sports franchises has historically been limited to high-net-worth individuals or collective fan ownership, with sports teams and leagues slow to adopt private equity capital and institutionalise.

Fast forward to 2021, when private equity funds spent $51 billion on sports transactions globally ($22 billion of which was in Europe). The trend has continued into 2022 with the Boehly Group consortium’s $4 billion acquisition of Chelsea FC (primarily funded by US fund Clearlake Capital) dominating the English media headlines after they won a fiercely contested bidding process.  

So, why the huge shift?

1. 2020 was a turning point

The covid-19 pandemic provided private equity funds with unforeseen access to sports teams and leagues. Sports leagues sought to stem revenue losses with a proposed sale of their overseas broadcasting rights to private equity bidders as lockdowns slashed match-day cash flows and media income.

2. The main attraction

Investments in sports clubs and leagues primarily represent stable investment opportunities in professional sports’ most coveted asset: its league and club media rights. Long-term media rights deals provide a stable income and protect clubs against substantial valuation drop-offs in recessionary periods, which looks like it may be increasingly important throughout 2022 and 2023.

Sponsors sense opportunities for long-term growth from cross-selling a league’s broadcast and sponsorship rights in an era of on-demand streaming, with potential double-digit appreciation from even low-yield investments. Sports organisations have been able to penetrate new global markets as jumps in viewership in the Americas and Asia are predicted to drive the valuation of sports media rights from $48.6 billion in 2019 to $85 billion by 2024.

Match-day revenues, sponsorship deals and ancillary income streams provide added value, driven by a unique brand loyalty of club fan bases. 

The state of play: funds catching up to CVC

CVC Capital Partners is the key player outside of the US with a diversified set of investments across different sports including:

  • 2006-2017: a $1.4 billion buyout of Formula 1, which it sold for £3.5 billion after its 11-year ownership.
  • 2021: a £365 million investment for a minority 1/7th share in the European Six Nations Rugby tournament.
  • 2021: the acquisition of the Gujarat Titans, a newly formed Indian Premier League cricket team. This is the first significant private equity investment in Indian professional sport. 
  • 2021-2022: an 8.2% stake in the broadcasting and sponsorship revenues of La Liga, Spain’s first-tier football league, for the next 50 years. La Liga will use CVC’s €2.0 billion injection of growth capital to grow its technology, innovation and internationalisation.

After the pandemic, US-based private equity funds are rivalling CVC in this sector after stepping up their sports investments. Arctos Sports Partners, set up in 2020, is exclusively dedicated to sports and leads the way in the US after closing a $3 billion private equity fund in October 2021. Their investments in US elite sports teams include Boston Red Sox (baseball), Golden State Warriors and Sacramento Kings (basketball) as well as Liverpool FC in England. Silver Lake, another US private equity fund, beat CVC in the bidding process to acquire an 8.6% stake in the New Zealand All-Blacks rugby team.

Issues private equity funds must consider

Barriers of entry

There is a well-established hierarchy and limited number of the elite and most profitable sports institutions. The competitive bidding processes for these teams drives up the price, as shown by Chelsea FC’s acquisition price of $4 billion this year. The National Basketball Association (NBA), for example, restrict institutions from owning over a 30% stake in any team, limiting potential returns.


Funds must consider the trade-off between professional sports’ profitability and cash flow with potential conflicts with passionate fan bases. Silver Lake had to reduce its target stake in the All Blacks from 15% to 8.6% after facing vocal opposition in New Zealand over selling to US institutional investors.

Threat of relegation

When targeting European teams who are not part of the traditional elite in their respective leagues, funds must carefully consider whether the targets are at risk of relegation to a lower league, which could materially reduce their media rights income. After Burnley FC’s relegation from the English Premier League to the Championship, it is believed that ALK Capital’s TV broadcast revenue will drop from around $130 million per year to $4 million per year.

What to expect moving forward

More private equity funds are expected to invest capital into the sports industry to tap into this previously inaccessible asset class.

As Vivek Ranadivé, majority owner of the Sacramento Kings, pointed out after Arctos Sports Partners took a 17% stake in his team for $1.8 billion: this deal has “a high ceiling, but also a high floor”.

Revenue streams from media and sponsorship rights with match day revenue provide a ‘high floor’ for investors in both clubs and leagues. New media rights deals for live streaming, commercial deals for sports betting and non-fungible tokens act as options that may offer substantial value-add to investors and a ‘high ceiling’ on their returns.

Luke Chouhan is a trainee solicitor at White & Case LLP.

“Any views expressed in this publication are strictly those of the authors and should not be attributed in any way to White & Case LLP.”