If you had a billion dollars to spend, how do you think you might use it? Well, private equity firms are living the dream of every 15-year-old and have focused their attention on professional sports franchises. PE firms are investing substantial capital across the major professional sports leagues.

“It’s a tremendous asset class. It is extremely resilient in troubled economic times, it’s had long-term appreciation,” says Salvatore Galatioto, president of sports-focused investment bank Galatioto Sports Partners. “Its media content value is second to none, and as technology continues to improve and people are able to record their favorite shows and edit out commercials, virtually everyone that watches sports watches it live and so advertiser value continues to go up. There are a number of really good reasons why private equity should look at this business.”

Ares Management Corp. announced this week that it has raised $3.7 billion of dedicated capital for its Ares Sports, Media and Entertainment Finance fund focused solely on investing in sports leagues, sports teams, sports-related franchises and media and entertainment firms. This is the firm’s inaugural fund focused on the industry.

The fund has already committed capital to 19 portfolio companies which totals about $1 billion across the industry including investments in Atlético de Madrid, San Diego Padres and McLaren Racing.

Ares is not the first American private equity firm to invest in professional sports in 2022, but the fundraising shows the interest in the industry. And since the number of sports franchises largely stays the same, demand will likely grow as this interest persists. Galatioto says he expects valuations for the industry are only going up.

“I think it is a value investment,” says Galatioto. “If you are a sentimentalist, if you want to buy a stake in your favorite team you can do that directly. But I continue to believe that these assets will grow in value and be an attractive place to put money.”

Are you involved in investing in professional sports? I’m looking for sources for a feature story in the next Mergers & Acquisitions. Drop me a note and let’s connect at cl[email protected].

-Cole Lipsky