The Business of Sports: How Private Equity has Become a Star Player

A decade ago, professional sports team ownership was largely reserved for billionaires and legacy families who viewed franchises as status symbols and passion projects rather than financial assets.

Today, the playing field looks vastly different. 74 major U.S. sports teams representing a combined valuation of $258 billion have private equity (PE) ties.¹ This shift was driven by soaring franchise valuations (according to Forbes, the average NFL team now worth $7.1 billion), a media rights boom (like the NBA's $76 billion deal), and liquidity pressures exposed during the COVID-19 pandemic.

As leagues reformed ownership rules, allowing private equity to acquire stakes in teams, subject to strict caps and structural limitations, PE seized the opportunity. Firms like Arctos, Ares, Sixth Street, RedBird, Dynasty Equity and Harbinger Sports Partners have launched dedicated sports funds, raising billions to invest not just in teams, but in stadiums, media rights, and adjacent real estate.

Private equity's rise in sports has been swift, but it didn't happen overnight. To understand the current momentum, it's worth revisiting the catalysts that propelled PE onto the playing field.

Ownership reform: Private equity's fast break

In 2019, Major League Baseball was the first of the major North American sports leagues to break tradition, quietly revising its ownership rules to allow private equity firms to acquire minority stakes in teams.

One year later, the COVID-19 pandemic emptied stadiums and slashed revenues. In an interview with Sportico, MLB commissioner Rob Manfred revealed that teams collectively amassed $8.3 billion in debt and faced up to $3 billion in operational losses in 2020 alone. What seemed like a potential catastrophe for investors turned out to be one of several notable catalysts that opened PE up to the rest of the major sports. With the revenue drop creating liquidity problems, NBA, NHL, and MLS soon revised their own ownership rules to welcome institutional capital.

And in 2024, even the ultra-exclusive NFL ownership club voted to allow private equity firms to acquire up to 10% stakes in teams, a move that signaled just how far the rulebook had changed. This historical shift across sports is due to the confluence of several factors.

Rising prices for scarce assets

Franchise valuations have soared across all major U.S. sports leagues, pricing out many individual buyers and creating demand for structured capital solutions. NFL teams, for example, have seen valuations climb 1,100% from 2000 to 2023, according to a Goldman Sachs report. Recent transactions like the Washington Commanders and Los Angeles Lakers exceeding $6 billion and $10 billion respectively.

With most leagues capped at around 30 teams and few expansion plans on the horizon, scarcity is a defining feature of the market. This limited supply drives premium pricing and intensifies investor competition, turning team ownership into a high-stakes, high-demand asset class.

Liquidity pressures and ownership reform

The COVID-19 pandemic delivered a financial shock to professional sports, exposing the fragility of traditional ownership models. With stadiums empty and media revenues disrupted, teams across leagues faced unprecedented challenges.

Faced with urgent liquidity needs, leagues began rethinking capital access. Private equity emerged as a solution, offering minority stake sales and operational funding without threatening majority control. According to Bain & Company, the pandemic acted as a critical inflection point, accelerating the shift toward institutional capital as leagues sought stability and new growth models in the face of unprecedented revenue disruption.

Media rights as a revenue engine

The NBA's landmark $76 billion media rights deal, finalized in the wake of pandemic-era liquidity pressures, marked a turning point in franchise finance. It not only elevated team valuations but also provided the kind of long-term, predictable revenue streams that made minority stake sales more attractive to institutional investors. The timing of this deal, and others like the NFL's $10 billion per year media distribution agreement that began in the 2023 season, closely aligned with the ownership rule changes that opened the door for private equity participation.

Across major leagues, media rights remain the largest and most reliable revenue source. In the NFL, media deals account for approximately 66% of total league revenue, while the NBA and MLB derive 54% and 49%, respectively, from national and local broadcasting agreements.² These long-term contracts, often spanning a decade or more, serve as valuation anchors for franchises and provide the financial stability needed to support PE investment.

As sports migrate from traditional broadcast to streaming, new monetization models are emerging, with technology giants like Amazon, Apple, and Netflix competing for rights. PE firms have the ability to create value within this digital transformation by investing in media platforms, production studios, and content delivery innovations. This enables teams and PE firms to benefit from the shift toward direct-to-consumer models and personalized fan experiences.

Fan engagement and monetization

The sports ecosystem is rapidly professionalizing, and investors are increasingly focused on monetizing fan intensity. Loyalty, passion, and emotional connections to teams are now being translated into scalable revenue streams.

Key areas of innovation include:

• Fantasy sports and gamification, which deepen fan involvement and create new advertising and sponsorship opportunities.
• Online betting integrations, now legal in many states, which offer real-time engagement and open up lucrative partnerships with sportsbooks and data providers.
• Digitally enhanced fan experiences, such as augmented reality, personalized content feeds, and interactive live-streaming, which extend the game-day experience beyond the stadium.

By backing scalable fan engagement solutions, PE investors are helping transform sports from a seasonal pastime into a year-round, multi-platform entertainment engine.

Strategic value beyond capital

Private equity firms in professional sports create value beyond capital infusion, serving as strategic partners who bring operational rigor and help franchises evolve into professionally managed enterprises. By applying lessons from other industries, PE firms are refining how teams operate and grow in value.

Operational upside and professionalization

Private equity's influence on sports franchises is most visible in the way it professionalizes operations and drives strategic upgrades. Teams are increasingly run like high-performing businesses, adopting best practices from industries such as technology, media, and consumer goods. Data-driven decision-making now informs everything from player performance to pricing strategies, while AI-powered content tools help tailor digital experiences and deepen fan engagement.

At the same time, PE firms are investing heavily in physical and digital infrastructure. Stadium renovations and surrounding real estate developments are transforming venues into multi-use destinations, such as Sixth Street's partnership with the San Francisco Giants that includes a commitment for improvements in and around Oracle Park. Enhanced hospitality offerings, premium seating, and entertainment districts are elevating the game-day experience and creating new revenue streams.

On the digital front, franchises are modernizing with CRM systems, advanced analytics, and fan engagement platforms that foster long-term loyalty and operational efficiency.

Together, these efforts reflect a broader shift. The business of sports is becoming more sophisticated, data-informed, and growth-oriented, with private equity firms leading the charge.

Cultural capital and brand visibility

Beyond financial returns, sports investments offer cultural relevance. Private equity firms gain access to entertainment ecosystems and global fan bases. These assets that can elevate their brand and expand their influence. This visibility helps attract top talent, build strategic relationships, and open doors in adjacent industries such as media, technology, and consumer products. In many cases, the cultural cachet of owning a stake in a major sports team becomes a brand-building tool in its own right.

Strategic partnerships and ecosystem building

Private equity's approach to sports is often holistic. Firms invest across the entire value chain, creating interconnected portfolios that unlock efficiencies and compound returns. Arctos and Ares, for example, have invested in both franchises and the infrastructure that surrounds them, while Harbinger Sports Partners is building a diversified portfolio of minority stakes exclusively across the three major sports leagues. These ecosystem strategies earn PE firms influence in defining the future of sports, positioning the firms as long-term players in the industry.

A new era of franchise finance

Private equity's rise in professional sports marks a turning point as teams evolve from legacy-owned institutions into professionally managed enterprises. Citizens Private Bank is well-networked in this space and works closely with fund managers pursuing emerging strategies across sports, media, and entertainment.

For those interested in sports as an investment opportunity, our Cultural Capital series includes an additional resource that explores what makes this asset class unique, covering valuation dynamics, liquidity strategies, and risk-return profiles.

If you'd like to continue the conversation, please reach out to our team.