Sports as an Asset Class: What Private Equity Investors Should Know

Professional sports have become a cultural constant, and fans can't seem to get enough. Nearly three-quarters of U.S. internet adults (73%) watch sports regularly, according to a 2025 S&P Global survey, fueling a U.S. sports media ecosystem valued at over $85 billion.¹

And yet the supply side of this demand remains relatively fixed. The beneficiaries of this popularity among the big three professional sports leagues are 32 NFL teams, 30 NBA teams, and 30 MLB teams. This scarcity of supply, combined with the emotional pull of team loyalty, and the development of areas adjacent to team-controlled stadiums is fueling interest among institutional investors.

Audience appetite for live sports and differentiated fan experiences have pushed franchise valuations to levels that challenge even the wealthiest prospective owners. In 2023, the Washington Commanders sold for $6.05 billion, a record at the time, only to be surpassed in 2025 when the Boston Celtics changed hands for $6.1 billion. Then, in October 2025, the NBA approved the sale of the Los Angeles Lakers for $10 billion, a staggering figure that redefined the market.

With multiple teams now changing ownership at over $6 billion, the capital demands are outpacing the capacity of all but a few solo buyers. Liquidity needs aren't limited to new entrants. Legacy owners are increasingly seeking capital to fund rising expectations for the fan experience. That pressure is creating a rare access point. Currently, private investors can now gain minority interest access to marquee franchises through professionally managed private equity funds.

The emerging opportunity also brings unique risks and challenges. The factors that drive pricing, liquidity, and risk in sports franchise ownership reflect a complex and evolving convergence of scarcity, media economics, and investor psychology. As private equity opens the door to institutional participation, investors should understand the characteristics that make sports franchises a compelling and distinct asset class.

The following sections examine several of these dynamics, beginning with valuation models and the structural constraints driving demand.

Franchise Valuations: Pricing a Market That Guards Its Playbook

Historically, franchise valuations were headline curiosities that surfaced only when a majority owner sold out and often the decision was disconnected from certain fundamentals. Ownership was traditionally viewed as a passion play, not the performance-driven investment that new private equity investors seek. While institutional capital demands rigor, pricing remains complex because transactions are infrequent and influenced by factors beyond basic cash flow.

Public Benchmarks vs. Deal Reality: Widely cited sources such as Forbes provide useful reference points, but these valuations often reflect headline numbers rather than transaction-specific dynamics. Sophisticated investors dig deeper, triangulating across internal financials, market sentiment, and comparable transactions to arrive at defensible pricing.

The Emotional Premium: Scarcity and prestige exert a powerful influence on valuations. Iconic teams in major markets frequently command prices well above financial models, driven by fan loyalty and the intangible value of association. This "emotional premium" is a defining feature of sports investing and a key reason why pricing can diverge from traditional fundamentals. This premium can change dramatically when a team wins a championship, or as the Kansas City Chiefs experienced recently, a star player begins to date a global musical superstar, pulling in additional fans who may not even know the rules of the game.

Minority Stakes: Minority interests in major sports franchises typically trade at a discount to pro-rata team value because they lack all the governance rights, voting power, and board access. These discounts reflect limited control and the perceived illiquidity of such positions. Each league has specific criteria on what percentage of a franchise can be owned by a private equity firm.

Media Control as a Value Driver: Each of the "Big Three" leagues (NFL, NBA, MLB) operates its own streaming network, creating direct monetization channels and reinforcing the durability of media rights as a core revenue stream. The NFL, for instance, recently sold NFL Network, RedZone, and NFL Fantasy to ESPN in exchange for a 10% equity stake in the network, a strategic move that enables the league to earn revenue from ESPN's broader sports coverage even during the NFL off-season. Revenue sharing in the NFL and NBA has allowed small-market teams to remain competitive with franchises in major cities, promoting parity both in the standings and in the financials.

MLB has not yet made this shift, but it could emerge during the next collective bargaining negotiations in 2027. Currently, owners are pushing for a salary cap, while players are seeking a larger share of media revenue. These dynamics may steer MLB toward the revenue-sharing model successfully adopted by the NFL and NBA, distributing income across all teams rather than allowing the majority of revenue to flow to large local markets such as New York, Chicago, and Los Angeles.

In addition, the NFL and NBA media rights revenue-sharing models make it easier to expand into foreign media. This structure allows all teams in these leagues to benefit from competitive bidding among traditional broadcasters and streaming platforms around the world. Control over distribution is a major factor in valuation and a differentiator from other entertainment assets.

Stadium-Adjacent Economics: Valuations increasingly extend beyond ticket sales and broadcast revenue. Retail, hospitality, and entertainment districts adjacent to stadiums have become material contributors to franchise economics. Stadium-adjacent development is now a core part of the investment thesis, offering long-term cash flow and ancillary growth opportunities.

A vivid illustration of this trend is the Metropolitan Park project in Queens, where Mets owner Steve Cohen is partnering with Hard Rock to transform the area around Citi Field into an $8.1 billion sports and entertainment district. The plan includes a Hard Rock casino and hotel, a live music venue, retail and dining spaces, and 25 acres of new parkland, all adjacent to the stadium footprint. Beyond enhancing fan experience, these developments create diversified revenue streams and long-term cash flow.

Global Reach and Growth Catalysts: Major American leagues are expanding internationally, unlocking new sponsorship and media rights opportunities. Globalization adds another layer of upside potential for investors underwriting long-term growth. The Los Angeles Dodgers, for example, includes notable Japanese superstars, such as Shohei Ohtani, Yoshinobu Yamamoto, and Roki Sasaki, an alignment that enables the team to monetize media and broadcast deals in Japan. Similarly, the NFL has introduced regular-season games in Europe, Mexico, and Brazil that consistently sell out, signaling strong international demand for American football.

Blended Valuation Strategies: The most sophisticated funds combine public benchmarks, internal financials, and market sentiment to create a blended approach that reflects both tangible and intangible drivers of value.

Private Equity Approaches: Institutional buyers often employ discounted cash flow (DCF) models that incorporate projected stadium upgrades, media rights renewals, and ancillary revenue streams. Technical pricing strategies, such as sourcing deals from owners with varying cost bases, can reveal opportunities below market value.

As institutional capital accelerates into the "Big Three" leagues, the ability to source defensible valuations, grounded in both tangible fundamentals and intangible drivers, will become a key competitive driver. Yet, an investment at even the most disciplined entry point risks its thesis without a viable exit path. League restrictions have historically made liquidity a structural challenge. But today, innovative fund structures and secondary markets are creating optionality where none existed before. The next section explores these liquidity strategies and why they matter for performance and portfolio design.

Unlocking Liquidity and Exit Paths in a Scarcity Market

For fans, team ownership is the ultimate dream. Ask any die-hard supporter what they'd do with the keys to the franchise, and the answers come fast: fire the coach, sign that missing superstar, slash ticket prices. In reality, ownership changes are rare. Families such as the Rooneys, who have held the Steelers for nearly a century, or Herb Simon, steward of the Pacers for over four decades, are not likely to sell anytime soon. For generations, these franchises have been built on continuity, with liquidity almost nonexistent.

That began to change after COVID-19, when even legacy owners faced rising capital needs. To bring in institutional dollars, leagues had to offer some flexibility.

To be clear, franchise ownership is not about to become a free-flowing market. Liquidity remains constrained, and optionality comes through specialized structures, not open exchanges. Investors should understand these mechanisms before participating in an asset class that's still defined by scarcity, even as it evolves toward greater accessibility.

Key Liquidity Considerations in Sports Investing

• League Liquidity Differentiation: The "Big Three" (NFL, NBA, MLB) offer deeper buyer pools and clearer resale pathways, making minority stakes more tradable than in emerging leagues or niche sports.
• Portfolio Flexibility: Illiquid positions can lock up capital for years, increasing concentration risk and limiting rebalancing options, which is especially problematic for LPs managing multi-strategy portfolios. Predictable liquidity paths allow LPs to model distributions with greater confidence.
• Structure Design: GP-led secondaries and SPVs embedded in fund strategy signal proactive liquidity management, which is critical for underwriting and differentiating managers in a crowded alternatives market.
• IRR Sensitivity: Extended lockups in less established leagues depress modeled returns; liquidity features in Big Three-focused funds can improve performance metrics without sacrificing exposure to growth.

Scarcity remains the defining feature of sports ownership. With only 92 teams across the "Big Three" leagues, supply is fixed, and demand is fueled by multi-generational fan loyalty. That entrenched base supports resale value, making minority stakes in marquee franchises far more tradable than positions in emerging leagues or niche sports, where exit risk is significantly higher.

For LPs, this differentiation matters. Predictable liquidity paths in the NFL, NBA, and MLB allow investors to model distributions with greater confidence, while speculative leagues introduce uncertainty that complicates pacing and capital recycling. In a multi-strategy portfolio, illiquid positions can lock up capital for years, increasing concentration risk and limiting flexibility.

To address these challenges, managers are embedding liquidity solutions directly into fund design. GP-led secondaries, SPVs, and curated private marketplaces are emerging as tools to shorten decade-long lockups and create optionality without disrupting the underlying investment thesis. These structures signal proactive liquidity management, a critical factor in underwriting and a key differentiator in a crowded alternatives market.

Still, liquidity is not uniform. The "Big Three" offer deeper buyer pools and clearer resale pathways, while emerging leagues carry higher exit risk and lower certainty. The WNBA provides a useful example: despite two decades of NBA support, profitability remains elusive. For investors, this highlights the importance of distinguishing between leagues with proven economics and those where success is highly speculative. A private equity position that ties up capital for decades without generating returns would fall short of institutional performance standards.

The Risk/Return Profile of a Distinct Asset Class

Sports franchise investing defies easy categorization, but the growth drivers are distinct and emergent. Expansion into new markets, escalating media rights agreements, and the monetization of adjacent opportunities, from stadium development and mixed-use real estate projects to global sponsorships and digital platforms, have transformed franchises into dynamic growth engines.

Viewed through this lens, sports might ultimately be considered a form of growth equity, offering long-term appreciation potential, while remaining uncorrelated to traditional growth equity exposure.

Lower Correlation to Traditional Markets

One of the most compelling attributes of sports franchises as an asset class is their independence from traditional market cycles. Unlike public equities or fixed income, franchise performance is not tethered to GDP growth, interest rate movements, or broader macroeconomic indicators. Instead, revenue streams are anchored in fan engagement, long-term media rights agreements, and sponsorship deals, drivers that remain resilient even during periods of economic volatility.

During periods of economic stress, fan engagement can remain strong, and in some cases intensify, when teams perform well. Winning seasons often provide an emotional outlet and a sense of optimism, reinforcing franchise revenues through ticket sales, merchandise, and media consumption, even when broader consumer sentiment is challenged.

League-level revenue sharing and multi-year broadcast contracts provide structural downside protection, insulating cash flows from short-term shocks while preserving the potential to capture higher revenues during broadcast rights negotiations. This mix of stability and distribution channel competition translates into appreciation potential, making sports ownership a natural diversifier for high-net-worth and institutional portfolios. For investors seeking to reduce correlation risk without sacrificing growth, sports franchises offer a unique blend of scarcity-driven value and contractual revenue durability.

The Growth Equity Case for Sports

Sports franchise investing increasingly reflects the hallmarks of a disciplined growth equity strategy. The investment thesis is built on attractive entry points, operational enhancement, and structured exit planning.

Buying at Attractive Prices: Scarcity and illiquidity create pricing inefficiencies, particularly in minority stakes. These positions often trade at discounts to pro-rata valuations due to limited governance rights and perceived exit risk. For managers with insider networks and technical pricing expertise, this environment offers opportunities to secure high-quality assets below headline valuations, similar to sourcing in traditional private equity. By acquiring small minority stakes ("odd lot" positions) from other shareholders, private equity firms can often purchase at a discount. The price concession reflects the liquidity premium: small owners are willing to sell for less because the firm is providing cash at the time they want or may need liquidity.

Adding Value Beyond the Field: Growth doesn't hinge solely on team performance. Institutional investors can unlock upside through strategic initiatives: stadium modernization, mixed-use real estate development, global sponsorship expansion, and digital monetization. These levers transform franchises into diversified platforms with multiple revenue streams, amplifying appreciation potential.

Appreciation with a Reasonable Exit Timeline: Historical franchise valuations have compounded at rates rivaling private equity returns, driven by structural scarcity and escalating media rights. Today, innovative fund structures, such as GP-led secondaries, SPVs, and curated marketplaces, are shortening lockups and creating predictable liquidity paths. This evolution enables investors to model exits with greater confidence, aligning sports exposure with the pacing and recycling needs of multi-strategy portfolios.

Risks to Consider: While the growth equity case for sports is compelling, investors should weigh several risks. Liquidity risk remains significant, as minority stakes can lock up capital for years despite emerging secondary solutions. Regulatory and league management risks include governance restrictions, approval processes, and potential shifts in revenue-sharing models. Operational risks such as stadium development delays or cost overruns can impact projected returns. Media rights renegotiations introduce uncertainty, particularly amid evolving streaming dynamics. Reputational risks tied to franchise performance or scandals may affect sponsorship and fan engagement. Finally, concentration risk is inherent in an asset class defined by scarcity, limiting diversification and amplifying exposure to single-team economics.

Citizens Private Wealth's Perspective

For investors seeking long-duration growth with lower public market correlation, sports franchises offer a compelling proposition within an asset class defined by scarcity and cultural permanence.

The opportunity requires research and preparation. Investors should understand the pricing dynamics, liquidity strategies, and risk profiles before entering this market. These factors impact the return potential and the alignment of sports exposure with broader portfolio objectives.

Citizens leverages its strong network in sports ownership to provide clients with informed views on this rapidly changing market. As this asset class matures, Citizens in partnership with Citizens Private Wealth, will remain a resource for those ready to explore how performance on the field can translate into portfolio performance.

To explore the catalysts behind private equity's rise in sports, read our first article in the Cultural Capital series: The Business of Sports: How Private Equity Has Become a Star Player.