How to Invest in Sports
If it's springtime, Forbes is out with its annual list of baseball franchise values. The billions involved might make you wonder how to invest in sports.
If you're a fan, you already know how to invest in sports. The question is whether you can turn your passion into a reasonable – and tangible – rate of return.
As CAIS Group notes in a September 2024 report, sports is "a culturally resonant sector with long-term staying power that appears poised for continued growth."
Everybody dreams of doing something like playing third base or even pitching for the New York Yankees. And a lot of us do get to do stuff like go to Yankee Stadium.
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But future "Seinfeld" icon George Steinbrenner paid Columbia Broadcasting System (CBS) $8.8 million for the Bronx Bombers in 1973. According to Forbes, Major League Baseball's flagship franchise is now worth $8.2 billion.
We can all get our heads around the benefits of that kind of upside. I'm sure CBS, which is now part of Paramount Global (PARA), appreciates what might have been.
Indeed, the evolution of sports from programming into content over the last half-century is a big part of the massive rise in franchise values across MLB as well as the National Football League, the National Basketball Association and others like them all over the world.
So, here's how to invest in sports – for real total returns.
Equity listings are a slam dunk
Nasdaq Chief Economist Phil Mackintosh recently wrote about the history of publicly traded sports teams. "Equity listings are a slam dunk for sports teams" is a great line.
And, as Mackintosh notes, "Pro sports teams have been publicly traded on and off for decades."
The NBA's Boston Celtics went public in 1986, right after Larry Bird led them to their 16th league championship. A flagship franchise like the Yankees, the Celtics went private again in 2002 in a $360 million deal led by local private equity billionaires.
After adding a couple more banners to the rafters at TD Garden, they were just sold for $6.1 billion.
Both the Cleveland Guardians of MLB and the National Hockey League's Florida Panthers traded on the Nasdaq for a few years in the 1990s.
Right now, the MLB's Atlanta Braves (BATRA, BATRK) are listed on the Nasdaq.
The NBA's New York Knicks and the NHL's New York Rangers trade publicly through their parent company, Madison Square Garden Sports (MSGS). So do the Toronto Blue Jays (MLB), Maple Leafs (NHL) and Raptors (NBA) through Rogers Communications (RCI).
The London-based Barclays Premier League is the biggest soccer league in the world. Its flagship club, Manchester United (MANU) is listed on the New York Stock Exchange.
German football club Borussia Dortmund (BVB) is listed on the Frankfurt Stock Exchange. And Italy-based Juventus Football Club trades through Exor, a holding company listed on Euronext Amsterdam under the symbol EXO.
The NFL's historic Green Bay Packers is publicly owned but not publicly traded. The team has offered stock sales to its supporters but is a nonprofit organization. The Pack is purely about the passion.
According to Forbes, Nielsen Sports data suggest the real, real opportunity is old-fashioned motorsports: Formula 1 (F1) is the fastest-growing annual series in the world. And F1 parent Liberty Media (FWONA, FWONK) is listed on the Nasdaq, with the FWONK shares part of the Berkshire Hathaway equity portfolio.
TKO Group (TKO) is a way to invest in non-traditional sports. TKO owns the Ultimate Fighting Championship (UFC) mixed martial arts series and the World Wrestling Entertainment (WWE) professional wrestling operation.
ETFs Are a Layup
The evolution of sports from programming to content has also allowed for the expansion of what we think of as "sports."
The best ETFs to buy probably have some of this exposure. You can also invest in thematic exchange-traded funds focused on a number of sub-sectors and emerging industries.
It's a broad range of businesses that includes sports betting. It also encompasses digital sports entertainment such as esports and gaming.
And then there's sports broadcasting and sports and athletic technology such as wearables and energy drinks and foods marketed to athletes.
The VanEck Gaming ETF (BJK) is the No. 1 example of a sports-themed ETF. BJK launched in 2008 as the first global gaming ETF and now has $26.7 million in assets under management.
It charges 0.67% per year, or $67 per $10,000 invested.
Top holdings include Flutter Entertainment (FLUT), Aristocrat Leisure (ARLUF) and VICI Properties (VICI).
REITs
As it is for the best ETFs so it goes for the best REITs: They probably already have some exposure to the ever-expanding sports industry.
Real estate investment trusts own and operate real estate properties. That includes commercial properties such as stadiums and arenas as well as related training and other team facilities.
Buying a sports REIT is a way to diversify your portfolio and generate income from dividends.
Top sports-focused REITs include VICI Properties as well as Gaming and Leisure Properties (GLPI).
Private equity players
Here's where it gets rich. Since 2019, U.S. professional sports leagues have been expanding their rules for who and what can invest in their franchises.
This is a particularly lucrative trend for accredited investors. It opens up opportunities in companies – and teams – that aren't publicly traded.
"There is a tremendous amount of inexperienced capital chasing sports," notes RedBird Capital Partners founder Gerry Cardinale, who thinks "everybody has to calm down a little bit."
Cardinale advocates for "sober, unemotional, non-trophy-hunting investing in sports."
According to the Securities and Exchange Commission, you're an accredited investor if you have a net worth greater than $1 million, excluding the value of your primary residence.
Another way to qualify is if you earned $200,000 or more ($300,000 with a spouse or partner) for the previous two years and you expect the same level of income for the current year.
Of course, if you aren't an accredited investor, there are private equity ETFs focused on how to invest in sports.
The place to begin your research is the Invesco Global Listed Private Equity ETF (PSP), which has about $260 million under management.
The expense ratio is steep at 1.79%. Top holdings include Blackstone (BX), the world's largest alternative asset manager with more than $1 trillion on its books.
Blackstone hasn't made direct investments in sports teams. But it continues to explore its opportunities.
And David Blitzer, a senior Blackstone executive, owns stakes in the NFL's Washington Commanders, the NBA's Philadelphia 76ers and the NHL's New Jersey Devils through his firm, Harris Blitzer Sports & Entertainment.
Blitzer clearly has ideas about how to invest in sports.
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