The Rise of Multi-Team Ownership Groups and Investors Buying Into a Region

The impact of the Coronavirus pandemic rocked the sports world years ago and caused depreciation of major sports teams. This left an opportunity for investors to capitalize and purchase ownership stakes in teams that have now established themselves as blue chip investments. In recent years there has not only been a rise in acquiring ownership within the money hungry sport organizations, but also in buying within a certain location. The trend can be seen with Alex Rodriguez purchasing the Minnesota Timberwolves & Lynx, Patrick Mahomes purchasing the Kansas City Royals & Current, Ryan Smith acquiring the Utah Jazz, Real Salt Lake, Utah Royals and the yet to be renamed Utah Hockey team. Although diversification has been popularized in purchasing sport entities, there are numerous advantages to those who have chosen to stick to teams in proximity.

Multi-club investors are using their organizations’ most popularized sports teams as bargaining chips to allow all their teams equivalent rights. By negotiating deals with larger teams, the smaller teams, a part of the ownership group can attach themselves, creating a lucrative opportunity for ownership. Populous Magazine explains how mutual benefits can extend to clothing and equipment, stadium naming rights, and broadcasting rights. Enjoining organizations as a mutual brand boosts fan engagement by reaching new audiences. The association of two brands can now incentivize their athletes and products together through advertising campaigns. This can lead to sports outlets posting their stars supporting one another as seen through the Simon Property Group, owners of the Indiana Fever and Indiana Pacers. 

As the Pacers continued their playoff run, Catlin Clark has been appearing at games to support the squad and meeting up with Pacers star, Tyrese Haliburton. With the roles reversed, Tyrese Haliburton has been seen embracing Caitlin Clark and the Indiana Fever bringing additional buzz to both teams. This symbiotic partnership greatly benefits ownership.

Ownership groups in the same region also can share the same facilities throughout their respective seasons. This has become increasingly common in the United States for Women’s and Men’s Basketball and Soccer. In basketball, there is only slight overlap between the NBA and WNBA which allows for an easier transition and year-round usage of the facilities. Being shared saves the ownership group money that they can now reinvest into another part of their brand. For soccer, there is significant overlap, but with away and home game schedules being balanced sharing facilities remains profitable.

Recently, major sport leagues have adapted their rules regarding types of investments that can be made into these billion dollar organizations. Investing this type of money can be worrisome so investors have found private equity partners to help strengthen their buying power. Sports Business Journal Author’s Justin A. Casey and Gregory A. Marino explained that, “Sports franchises provide existing owners access to liquidity, allowing them to cash out on a portion of the unrealized appreciation of their investment while preserving managerial control over team operations.” 

In essence, the owner can give away a part of their assets and in return still be the face of the organization. Since sports organizations are blue chip investments, the returns for the investors will yield in mid to long term periods. With anticipated growth of sport organizations valuations, the investors and their private equity backing both stand to continually profit. When investors do decide to pick a sports organization, they can realize the full potential of their investments through gaining ownership in multiple teams in a region. The aforementioned advantages of doing so can create greater long-lasting yields for those with the capital to invest in these high growth opportunities.

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