Latest Private Equity Targets: Live Sports


Some might think that the fascination and competition to own a sports team has attracted investors such as Silver Lake, CVC Capital Partners, and Clearlake Capital Group.

Instead, the value of live sports content and the rights to it have helped generate interest in the sector.

this week,


Ares

Management (stock ticker: ARES) has announced its first dedicated fund focused on investing in sports teams, leagues and franchises, as well as media and entertainment companies.

Ares spent 18 months marketing the pool, which raised $3.7 billion, including $2.2 billion in equity obligations and $1.5 billion in expected leverage and related transaction instruments, according to Sept. 15. statement.

“We felt there was just no one doing what we were trying to do,” said Mark Afolter, Ares partner and co-head of direct lending in the US. “We will invest in the balance sheet up and down.”

Ares has many of different companies. It is one of the largest private lenders to American and European mid-market companies. It also has a private equity firm that acquires controlling stakes and invests in distressed positions, as well as its real estate and infrastructure divisions. In 2021, Ares launched a wealth management company targeting high net worth retail investors and financial advisors.

Shares of the company, which are down 8% this year, were trading Friday at $74.64, down 2%.

Avolter said that through the Sports, Media and Entertainment Fund, or SME, which has been managed through the direct lending business, Ares will seek to invest in European and American football clubs. It will also target Major League Baseball, the National Hockey League, rugby and other sports.

In the field of media and entertainment, Ares will focus on the rights to catalog music and songwriters; Companies that provide lighting, knobs, and props for studios throughout North America; In addition to companies that own media-related assets.

“Our view is that there is incredible growth across these segments. It is really driven by ratings attributed to original content,” Afolter said.

Afolter said the company will provide loans — large, small and medium loans — to teams and businesses. He said Ares will also seek to acquire minority stakes, and make preferred and ordinary joint investments. (With preferred stock, investors are ranked higher than common stock, but below debt.)

To date, the fund has concluded 19 deals, including investments in Atlético football clubs De Madrid, Inter Miami, San Diego Padres and McLaren Racing. The statement said that about a quarter of the complex has been invested.

Private equity firms have been investing in sports teams for years. Executives cited the value of live sports content as a draw. The sale of broadcast and media rights is now the biggest source of revenue for most sports organizations, according to World Intellectual Property Organization.

NFL in 2021 Occurred Media rights agreements with


CBS
And the

NBC, Fox, ESPN,


Amazon

With a combined value of about $110 billion over 11 years,


The New York Times

mentioned. Afolter said sports teams’ media rights are one example of how clubs are generating recurring revenue streams, including sponsorship revenue, that are attracting investors.

Broadcasting has also increased the value of premium content, using live sports Among the most sought after assets. in June,


apple

tear 10-year deal to broadcast every match live in Major League Soccer.

“We’ve seen a huge demand for new and original content among fans and streaming platforms and networks, and this has led sports-related companies to require flexible and scalable capital to help support this secular growth,” Avolter said in a statement.

So far this year, private equity firms have made 221 sports investments, worth $31 billion, as of September 9, according to data from PitchBook. That compares with 440 deals, totaling $58.4 billion, in 2021, which is a record year for mergers.

Recent deals include CVC Capital Partners $2.4 billion Investing in LaLiga, Spain’s professional soccer league, last year. This year, partial owner of Clearlake Capital and the Los Angeles Dodgers, Todd Boehly led a consortium to He buys Chelsea FC for 2.3 billion pounds ($2.6 billion). Silver Lake also in 2022 raised its stake in Manchester City Football Club, becoming its second largest shareholder, Bloomberg. mentioned.

However, Ares is one of the few that has a fund dedicated to sports.

Dial Capital, a unit of


Blue All Capital

(OWL), has a file Swimming pool That minority invests in sports teams. Deals include Phoenix Suns, Sacramento Kings, and Atlanta Hawks.

There is also Arctos Sports Partners, which Make Passive minority investments in professional sports franchises. Arctos which Starch $2.1 billion with her first fund, she invested in Golden State Warriors, Tampa Bay Lightning, Chicago Cubs, and Real Salt Lake.

Write to Luisa Beltran at luisa.beltran@dowjones.com


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