Private Equity Sports Market: Insights on the Current Ecosystem
A look at the 6 key players, a market map, and insights from an experienced sports investor/founder.
Most outlets are focused on sports team investments at the moment…
But here are some insights on the sports private equity market as a whole (which impacts everyone).
I’ve also included a bit from my podcast with Donn Davis, an early investor in multiple billion-dollar sports companies.
Let’s Dive In 👇
Investment Ecosystem
While many people, funds, and institutions have invested in at least one sports asset…there are still relatively few thematic players.
And that makes sense, given the asset class is still relatively new:
PE firms are about 15 years old
VC firms are about a decade old
Sports team-specific PE firms are about 4 years old
Sports investment can be separated into six buckets:
SportsTech VC - invest solely in SportsTech companies
Accelerators - take equity upfront to build into their network
Banks - institutional investors helping to commoditize the space
Nation States - global players like Saudi Arabia deploying into sports
Old PE - invest $50M+ to acquire majority stakes in sports assets/tech
New PE - invest $100M+ to buy minority stakes in traditional sports teams
Here are some of the groups (join the Profluence+ Community for the full list):
And while M&A is up in 2024…private financings are at their averages.
H1 2024 Private Deals
Through the first six months of 2024, private financings remained flat compared to H2’23 (360 deals), with 342 deals raising $1.9 billion in new capital.
Early-stage financings continue to make up most of the total (over 80%).
Two trends to keep an eye on:
As the public markets neutralize and interest rates fall, the broader IPO markets are expected to continue improving.
Several sports tech companies are exploring IPOs again, and I could see some of them list in 2025.
Sports Investing Insights
From the Profluence podcast with Donn Davis — quoted by him.
“Rewind 10 years to when I was the managing partner of Revolution, our venture capital fund with Steve Case and Ted Leonsis…
Very few saw the infrastructure of betting and gaming; we did Sportradar, now worth several billion.
We did DraftKings. It's now a 20 billion company.
We were the first group to buy an esports team (Team Liquid), now the most successful team.
I did that for many years before starting the PFL, which is now valued at over $1 billion.
If you want to build, make money, and have an impact, you have to focus on global growth. So that's where I spend all my time.
The average sports team grows 4% annually and gets 80-85% of its revenue from the U.S. market.
So that's domestic with minimal growth.
That only works if you're a billionaire and you're in your community.
Founders/Team
Putting my investor hat back on, I think of it in two ways:
The actual leader of the company
The team they put around them
If the person leading the company cares about one other thing in the world, that company will fail.
For example, the DraftKings co-founders worked nights and weekends for months and were rejected by 40 VC firms before getting their first investment.
You have to live and die every day for its success.
Then, when I look at the team…
I look at the overall skill set and expertise necessary to deliver, right?
Too many people can’t come from just one area: sports. Yes, you have to have sports expertise, but also other areas.
Product Success
It all starts with the product.
Every company I've been involved with is a consumer company (and consumers use products):
So from the very beginning of AOL, we knew we were a consumer product company, not a technology company.
DraftKings is a consumer product company, not a technology company.
The best companies make technology invisible and use it to make the product more accessible, interesting, and engaging for consumers.
Technology is a tool, an enabler — the more invisible it is and the more it's used to make the product more accessible, the better.
Relating this to a sports league like the PFL, only three things matter:
revenue
viewership
engagement
So when we look at technology or at partners who are providing us with new solutions, I say, what's it going to do for viewership, engagement, or revenue?
PE in Sports
Private equity in sports is not really playing a helpful role right now.
What do I mean by that?
First of all, private equity is a big umbrella:
Buyout firms on one end — private equity firms invest in things that have already been successful and that are already profitable.
Venture firms on the other end — VCs are the ones who build companies. They're people who understand businesses, take risks, and help build them.
So most of the private equity firms in sports, with due respect, do not help anyone build anything.
Right now, those are the people who are really just securitizing Barcelona's 20-year media rights or liquidating billionaires out of domestic pro sports teams.
That's not an investment in sports. That's a financial engineering task.
So, to me, most private equity firms treat sports as an asset class, which might as well be real estate or any type of debt instrument.
We need more people who invest in growing things and help create jobs, economic returns, and assets — like what early investors did for the NWSL.
Those funds tend to be smaller and those people tend to be fewer. I want to see more of that. And that would help everybody across sports.”
Tough Times for VC Fundraising
Pitchbook shared a few recent charts that capture the environment for VC fundraising. The outlook: not great.
Particularly for first-time funds, which are both rarer and smaller than we’ve seen in recent years.
That’s quite the drop-off.
I bring this up as it impacts startups building within sports and its adjacent verticals — as there are fewer early-stage capital backers in the space.
Podcasts 🎙
Great discussions this past week:
Tyrre Burks - Founder, Player’s Health (listen here)
Insurance is a growing part of the sports industry; this has many unique insights.
Peter Frintzilas & David Geaslen - Youth Sports Panel (listen here)
This conversation will significantly accelerate your learning if you want to understand youth sports better.
I appreciate you reading today!
Cool to see the sports investment ecosystem get more attention and for Profluence Capital to continue playing a growing role in its evolution.
Peace,
AP 👋
Always on point. 👏