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Sports Follows Music to the Private Equity Industry



After the landmark purchase of the New York Mets to hedge fund manager Steve Cohen for $2.4bn, more teams will enter ownership by private equity firms. Traditionally, the wealthy individual investor has been the owner of major sports franchises, like Gail and Larry Miller, who bought the Utah Jazz for $24m back in 1985. They sold their share this fall to an ownership group, Qualtrics, for $1.6bn- 66 times the value they purchased for.

In times like this global pandemic, and the 2008 recession, sports assets sell at record values, sometimes outperforming more traditional investment benchmarks like the S&P 500. But the number of people who can just buy a franchise at these prices are few. American sports leagues have made adjustments so they can have investment vehicles as owners of multiple teams. The shift allows people to make these large purchases using the increasingly popular special purpose acquisition company (SPAC).

The Redball spac is the highest profile of these, currently negotiating a reverse merger with the Fenway Sports Group for two teams: the Liverpool FC, and the Boston Red Sox. It was created by Gerry Carter, Goldman Sachs Partner, and Billy Beane, the Moneyball legend.

The RedBall Spac acquisition is the next step in an ongoing transition in the sports ecosystem.

As the valuations in these sports clubs soar, they become an institutional investment asset type. It is the perfect storm for Private Equoty to swoop in on the sports world.

Check out this Financial Times article.