Professional sports have evolved far beyond the boundaries of the playing field, transforming into one of the most lucrative and dynamic sectors of the global economy.
What was once the domain of passionate billionaires and city-bound loyalties has now entered a new phase, where institutional investors, private equity firms, and technology innovators are shaping the future of sports ownership and business.
This week we will dive into the rapidly changing landscape of sports as an investment class. From skyrocketing team valuations to the rise of youth sports and the booming media rights industry, the business of sports offers compelling opportunities for investors seeking resilient, high-growth assets.
The Changing Game of Sports Ownership
For decades, owning a professional sports team was viewed as a passion project for billionaires. While the love of the game remains a factor, the business of sports ownership has entered a transformative era.
Institutional investors such as private equity firms and hedge funds are joining the game, reshaping the landscape of team ownership and sports investments. Let’s look at some key trends redefining ownership:
1.1.1 Skyrocketing Valuations
The value of professional sports franchises has grown exponentially. The National Football League (NFL) serves as a prime example: In 2014, the Buffalo Bills were sold for $1.4 billion. Less than a decade later, in 2023, the Washington Commanders fetched a record-breaking $6 billion. This rapid appreciation underscores the demand for these high-profile assets.
1.1.2 Relaxed Ownership Regulations
Historically, leagues like the NFL restricted ownership to individuals, keeping institutional capital at bay. However, recent changes have opened the doors to private equity and other institutional investors, aligning the NFL with leagues such as the NBA and European soccer associations.
1.1.3 Global Expansion of Sports Ownership
In Europe, sports ownership has long embraced diversity. Clubs like Manchester City (NYSE: MANU) are backed by sovereign wealth funds, while teams like Liverpool FC attract private equity investors. This international model demonstrates how blending financial strategies with cultural relevance can drive value creation.
Sports as an Asset
Sports franchises and their associated industries have evolved from being mere symbols of wealth into sophisticated, multi-faceted business enterprises, capturing the attention of the financial world.
A key reason for this shift is the non-cyclical revenue growth sports provide. Unlike other industries, sports generate consistent income through ticket sales, merchandise, sponsorships, and media rights, regardless of economic downturns. This resilience positions sports investments as a relatively recession-proof sector, offering stability in uncertain times.
Another major driver is the media rights boom, which has significantly elevated sports revenues. The rise of streaming platforms and lucrative media rights deals has propelled leagues like the NFL to new heights.
For example, the NFL’s annual media rights revenues have soared from $2.2 billion in 2000 to $10 billion today, and this upward trajectory shows no signs of slowing as digital platforms expand global engagement.
Finally, scarcity creates value in this exclusive market. The limited number of professional sports franchises, combined with a growing population of high-net-worth individuals, ensures demand for ownership far exceeds supply. This scarcity not only drives robust valuation growth but also enhances the allure of sports investments as both cultural assets and financial powerhouses.
Next Wave of Sports Investment Opportunities
While team ownership is the most visible avenue of investment, a host of adjacent opportunities offer significant potential. These include youth sports, technology, stadium real estate, and ancillary revenue streams like fan engagement platforms.
1.3.1 The Youth Sports Boom
Youth sports are a burgeoning sector, particularly in countries like the United States and China. Rising participation rates and increased spending on training, travel, and equipment make this an attractive market for investors seeking untapped growth.
1.3.2 Technology Transforming the Game
From data analytics to augmented reality (AR) fan experiences, technology is reshaping the sports ecosystem. Innovations in player performance tracking, sports medicine, and virtual engagement offer scalable business opportunities for investors.
1.3.3 Stadiums as Revenue Hubs
Modern stadiums are evolving into multi-use facilities that host concerts, corporate events, and retail spaces. These developments create diversified income streams and elevate the overall valuation of sports franchises.
Future Trends Shaping the Industry
The next five years promise transformative growth across several key areas in sports, including women’s sports, direct-to-consumer streaming models, and international market expansion.
Women’s sports are gaining significant momentum globally. Historically underfunded and underappreciated, women’s sports leagues are now experiencing a surge in popularity, with increased media coverage and corporate sponsorships. Investors with a long-term perspective are starting to recognize the untapped potential in this growing sector, which offers strong returns for patient capital. As more attention and resources flow into women’s sports, the opportunities for growth in both participation and fan engagement continue to expand.
The rise of direct-to-consumer (DTC) streaming models has revolutionized how fans access sports content. Traditionally dominated by cable and satellite providers, sports broadcasting is now being reshaped by global streaming platforms like ESPN+ and Amazon Prime. Leagues and franchises are increasingly leveraging these platforms to reach fans directly, particularly in emerging markets. This shift allows teams and leagues to connect with a broader, more diverse fan base, while also driving significant revenue growth through subscription models and digital content sales.
As Nicole Pullen Ross of Goldman Sachs stated, “Welcome to the revolution.” Sports are no longer just games—they’re high-growth, globally appealing business ventures that demand attention from savvy investors.
International branding and expansion is another major avenue for growth. Sports leagues are focusing on growing their global presence, tapping into new markets where there is immense potential for fan development and commercial success. The NFL, for example, has hosted games in London and Munich to increase its European footprint, while the NBA continues to enjoy strong popularity in China. Expanding into these untapped international markets presents opportunities not only for revenue growth but also for enhanced global visibility and a more diversified fan base.
1.5 Sports Stocks to Consider
The sports industry offers a wide range of investment opportunities beyond team ownership, spanning entertainment, media, and gaming. Here are some standout companies worth considering:
Vail Resorts (NYSE: MTN)
Vail Resorts operates 42 premier mountain resorts, making it a leader in ski and mountain tourism. With steady growth in outdoor recreation, this stock offers exposure to a resilient and lucrative sector.
Churchill Downs (NASDAQ: CHDN)
Known for hosting the iconic Kentucky Derby, Churchill Downs also owns gaming properties and a sports betting platform, tapping into the fast-growing online betting market.
TKO Group Holdings (NYSE: TKO)
Combining WWE’s entertainment empire with UFC’s dominance in mixed martial arts, TKO Group is a powerhouse in combat sports, offering multiple revenue streams from media rights, live events, and merchandise.
Madison Square Garden Sports (NYSE: MSGS)
As the parent company of the New York Knicks and Rangers, MSG Sports provides direct exposure to high-value sports franchises and emerging e-sports opportunities.
Manchester United (NYSE: MANU)
One of the world’s most recognizable sports franchises, Manchester United boasts a global fan base and growing media rights income, making it a unique pick for international sports exposure.
Rogers Communications (NYSE: RCI)
Canada’s leading telecom company also owns stakes in the Toronto Maple Leafs and Raptors, blending media assets with a foothold in professional sports.
Liberty SiriusXM Group (NASDAQ: LSXMA | LSXMB | LSXMK)
With interests in Major League Baseball’s Atlanta Braves, Formula 1 racing, and various media ventures, Liberty SiriusXM offers a diversified way to invest in sports and entertainment.
