Four years have passed since then. dead pool Starring Ryan Reynolds It’s Always Sunny in PhiladelphiaCo-founder Rob McElhenney bought Wrexham AFC, then a non-league soccer team little known in America, and American family offices are still vying to acquire parts of sports franchises, according to Anushka Gupta, head of Apex, the US arm of Goldman Sachs’ family office subsidiary.
While Reynolds and McElhenney entered professional sports in 2020 by spending $2.5 million on a Wales-based fifth-tier soccer team, the US family office is looking for entry points into emerging sports worlds such as UFC, surfing and women’s sports.
Speaking at a virtual Global Family Office Media Roundtable on Tuesday, Gupta said the interest in these emerging sports isn’t just due to the growth potential they could get from reaching a larger audience, but also because sponsors are changing how they view these leagues, as well as the potential opportunity to get involved in sports betting. (The Supreme Court overturned a bill restricting sports betting in 2018.)
“There’s a lot of budding opportunity in emerging sports,” Gupta said, “but the bidding and demand between groups and how much excitement and buzz there is around some of these emerging sports is really going to be a big area of ​​focus.”
The media roundtable took place after a symposium of 170 Goldman Sachs clients and prospects from 15 countries. Gupta said that in light of the meetings, family offices, generally defined as families with more than $50 million to invest, are increasingly interested in sports investing.
In addition to UFC and surfing, Gupta said some of the most popular emerging sports include NASCAR, golf, sailing, rugby and college sports, with an emphasis on women’s sports across leagues. Specifically, he cited the National Women’s Soccer League, the WNBA and the Women’s Tennis Association. A number of changes are making these investments more attractive, including a 22% increase in sponsorships for women’s sports, according to a Sports United report.
Many family offices are in the early stages of considering investing in sports, evaluating factors such as whether leagues are ready to expand and how they handle media rights. “There’s been a lot of attention on the exponential growth in media deals,” Gupta said. “That allows them to engage with a much broader audience.” Many investors see sports as a largely uncorrelated asset class and a good hedge during market downturns.
“A big area of ​​focus”
Many investors are now looking to invest in local communities, an extension of what Goldman said in a family office report last year, she said. And while the increased interest in sports from institutional investors has driven up investment costs, many leagues are now also looking at whether they can attract institutional investors. U.S. private equity firms didn’t start investing in European sports until 2006, and it wasn’t until about a decade later that U.S. sports opened up to PE.
The best sports investments have significantly outperformed traditional assets. Perhaps the most notable was Mark Cuban’s sale of a majority stake in the Dallas Mavericks in 2023. The sale was valued at $4.5 billion, giving Cuban, who bought the team in 2000 for just $285 million, a reported 1,478% gain on the sale. On the same day as the event, private investment firm Arktos co-launched a sports index that tracks the performance of franchises.
“The discussion around the broader sports ecosystem continues to be a big focus for family offices,” Gupta said.
Darren Allaway, Apex’s managing director for Europe, the Middle East and Africa, said the focus is different in Europe. “From a European perspective, we don’t have a university-level framework here,” Allaway said at the same event. “US sports are important from a TV perspective, but not from a recognition perspective because we don’t have the competitive leagues that baseball, hockey, basketball and football do. But soccer still dominates.”
Allaway said only a handful of wealthy families have historically invested in European soccer teams, resulting in family feuds across the continent. As of December, 22 Americans owned parts of teams in European soccer leagues. AthleticBut second and third tier firms are becoming increasingly attractive to family offices around the world – something that was less common before Reynolds and McElhenney bought Wrexham (and made the accompanying documentary). Welcome to WrexamIn the past, many smaller clubs shunned this kind of outside investment, seeing it as “bad faith,” Allaway said.
“That show has changed the game in some ways,” he added, “so there are a lot of smaller clubs out there who don’t have much interest or experience in the sport, or this is their first foray, who would be happy to welcome a foreign owner, a potentially wealthy owner, to invest, to see if they can upgrade their team and become more competitive.”
