Nixon Peabody’s Hot Topics in the Middle-Market series welcomed a panel discussion to shed light on the growth and opportunity of investments in sports. The landscape in sports investing has shifted in recent years as more investors recognize the potential of sports franchises, leagues, and related businesses to yield significant returns. As private equity explores ways to enter the sports arena, it could pave the way for substantial growth.
The panel featured Michael Galatioto of GAMCO Investors, Inc., Kristen Kuliga, Esq. of K Capital Partners LLC, Christopher Ricciardi of NILLY LLC, Thomas Van Wazer of Vesper Company, Christopher P. Williams of Team 100 and Nirvana Water Sciences, and Jordan Graumann of United Soccer League, and was moderated by Nixon Peabody attorneys Shaziah Singh and S. Amy Spencer.
The Rising Value of Sports Assets and Opportunities for Investors
In recent years, sports have become a high-growth investment sector, even in the face of high inflation and rising interest rates. Investors have been increasingly drawn to professional franchises, women’s leagues, college sports, athlete brands, and emerging assets in the form of digital technologies.
The panelists discussed the valuations among major sports leagues hitting unprecedented high. In the past few years we have seen record breaking sale prices of major sports teams, including the NFL, NHL, NBA, and MLB. The trend is largely attributed to the scarcity of professional franchises, which boosts their appeal despite inflation. The latest surge we have seen is investments in soccer clubs. Soccer clubs globally are riding a wave of popularity, particularly among the younger generation. With record viewership during events like the World Cup and an increasing fan base, especially in the US, soccer has become an attractive market for investors. Soccer leagues like the MLS are experiencing valuations at nearly 10x revenue multiples, a number that outpaces most other sports leagues.
Women’s sports are witnessing exponential growth, with the valuation of teams in leagues such as the National Women’s Soccer League (NWSL) rising by 57% last year. Women are not only leading as consumers but also as a major growth sector within sports investments. Organizations like League One Volleyball are professionalizing youth volleyball, creating an ecosystem that combines youth participation with a budding professional league. By acquiring volleyball clubs and developing a network of cash-flowing assets, League One Volleyball exemplifies how women’s sports provide a strong foundation for investment.
Regulations and Challenges in College Sports
College sports are undergoing rapid transformation, particularly with the shift toward compensating student-athletes for their Name, Image, and Likeness (NIL). The House vs. NCAA settlement is expected to formalize direct payments from universities to players, introducing a level of professionalism in college athletics and reshaping athlete compensation and recruitment strategies.
However, the college sports landscape is far from stable. Conference realignments, the unregulated transfer portal, and inconsistent NIL rules have created what some call the “Wild West.” Yet this environment, ripe with change, offers potential for investment, particularly in college football, where media rights are highly lucrative.
With more athletes accessing wealth early in their careers, financial literacy is paramount. Investment education tailored for athletes—covering topics like budgeting, savings, and sustainable investment—can prevent financial missteps that were common among past generations. As leagues continue to implement player programming, younger athletes gain the tools to make informed decisions that could benefit them long after retirement.
Financial advisors, banks, and mentors play an increasingly important role in educating athletes on their financial options, enabling them to secure their wealth through balanced portfolios that prioritize long-term growth.
Athlete-Driven Innovation and Investments
As athletes explore how best to leverage their name, image, and likeness, NIL deal structures and emerging technologies are helping to secure these assets. Artificial intelligence, blockchain, and digital licensing are providing new ways for athletes to monetize their digital personas. By licensing their AI-generated likeness on blockchain, athletes can receive compensation whenever their digital image is used, a major advancement in protecting and monetizing their personal brands.
The panelists discussed the way in which athletes are increasingly capitalizing on their brands by investing in companies or establishing their own ventures. For example, one panelist mentioned one NBA star’s investment in a health beverage brand highlights how athletes seek long-term, health-oriented investment opportunities rather than just short-term endorsements.
Ownership of game-worn apparel and memorabilia has also become a popular form of investment. Innovations in blockchain and digital ownership allow athletes to retain a percentage of future sales, creating sustained revenue from one-of-a-kind items. This ongoing relationship with collectibles adds an element of enduring value to these investments, encouraging athletes to develop assets beyond their immediate careers.
Overall, sports investments are evolving, driven by the increasing valuations of franchises, growing popularity of women’s sports, and the monetization of athlete brands. As college sports, particularly college football, embrace a more professional model, and as technologies redefine asset ownership, sports will remain a vibrant and dynamic investment opportunity. The influx of private equity into sports has revolutionized how teams operate financially. Coupled with lucrative media rights deals, there has never been more potential for profit, which investors can capitalize on. Staying ahead of these developments can give you a competitive edge in understanding the future of sports economics.
