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Alternative Market Briefing

Sports investing grows as investors look for yields

Thursday, September 01, 2022

Bailey McCann, Opalesque New York:

Sports investing is gaining traction with fund managers and investors alike. The strategy involves taking minority ownership stakes in sports teams to get a benefit as the valuation of sports teams continues to rise. Many investors got interested in sports investing during the pandemic. According to data from PitchBook $2 billion was spent purchasing stakes in sports teams in 2021 alone.

Investors like the media rights that come along with sports teams. Those rights have led to significant increases in value over the years and now with the addition of online sports betting and the development of new competitions like eSports, investors are betting on long-term growth prospects.

Houston-based CAZ Investments is one firm taking advantage of the opportunity. Christopher Zook, chairman and CIO of CAZ Investments, says that sports assets are attractive in part due to strong pricing power and the inflation protection that comes from owning high-value, difficult-to-replace real estate assets with low levels of leverage.

According to Zook, valuing a sports investment is similar to valuing any other kind of investment. Sports teams typically have locked in sources of revenue like tickets to live events but also media and advertising. All of these can be evaluated and tend to be relatively locked in even if there are issues in the broader economy like inflation or the possibility of a recession.

"There are very durable sources of......................

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