Private equity and venture capital firms are taking the lead in investing in the global sports services arena in 2023, owing to the sector's diverse revenue streams and expanding audiences.
A total of $2.29 billion worth of deals, or over 76% of the aggregate value across the sector, were backed by private equity and venture capital in the year to Oct. 25, S&P Global Market Intelligence data shows.
Private equity's proportion of the total investment value has been growing since 2020. At the current pace, private equity's share of the sector's overall investments in 2023 is on track to mark a six-year high.
Overall sports services deal value and volume with and without private equity involvement are expanding after a slowdown in 2020.
Investments in the sector totaled $14.10 billion across 219 transactions in 2022, the highest value and deal count since 2018, according to Market Intelligence data.
The data includes whole company and minority stake acquisitions, asset deals and rounds of funding of sports teams, professional sports clubs, sports agents, promoters, nutrition and instruction services.
"The value of sports content is growing exponentially," Michelle Wilson, founder and co-managing partner of Isos7 Sports Investments, said during an interview at the SuperReturn North America conference Nov. 6.
Underpinning that value are the diverse revenue streams that flow to professional sports teams, including broadcast, ticket sales to live events, and a growing sports betting market that is expanding the audience for sports and enhancing engagement with sports leagues, Wilson said.
Audiences are also set to expand as 2.5 billion people who do not have access to the internet are expected to get online in the coming years, George Barrios, founder and co-managing partner of Isos7, added.
The firm is particularly excited about global sports audiences in Africa and India. Other investment trends they are watching include professional cricket, European football and women's sports.
"We think sports is going to do disproportionately well over the next 10 years,” Barrios said.
– Download spreadsheet with data featured in this story.
– Check out KKR's outlook on private equity fundraising and exits.
– Read about Carlyle Group's expectations in the private credit arena.
Private equity backed six of the 10 largest sports services transactions in the year to Oct. 25.
An investor group including Nord Anglia Education Inc. and BPEA EQT's Baring Private Equity Asia Fund VIII completed the largest transaction overall, acquiring sports education company IMG Academy LLC for $1.25 billion.
Chelsea Football Club Ltd.'s $500 million funding round with Ares Management LLC was the second-largest deal, followed by the announced acquisition of Brazil-based Coritiba Foot Ball Club em Recuperação Judicial by Splack Participações SA for $265.2 million.