Sports investing offers investors tremendous returns with its high consumer demands, vast fan bases, and tremendous monetization potential. You could invest in Lewis Hamilton’s car or take your team all the way to Super Bowl victory – both can bring in substantial income potential in this exciting industry!
There is good news if you want to purchase a sports team without spending millions. Here are a few effective strategies for investing profitably in sports.
Investing in Leagues and Teams
Sports fan loyalty translates to big bucks for teams and leagues, making investing in professional sports franchises (either directly in them or indirectly via affiliates) an ever-increasing industry trend that can bring great returns for investors.
Investment in professional sports teams is typically reserved for the ultra-wealthy; teams are privately owned and cannot be traded like company stocks. But it is possible to gain exposure through betting platforms, media companies or esports (video game competition).
For those looking to capitalize on the sports industry without direct ownership, options like using an online betting app offer an accessible alternative. These apps not only provide fans with an engaging experience but also allow investors to tap into the growing sports betting market, which is becoming increasingly lucrative.
An additional advantage of investing in the sporting goods industry — which encompasses apparel, equipment and technology — is its uncorrelated growth opportunity; investing here provides diversification against economic downturns as demand for sporting goods typically remains steady over time regardless of overall economic trends.
Bottom line, while sports market investing can be an attractive opportunity, it should not be treated as an all-or-nothing proposition. Advisors need to fully comprehend the dynamics that drive value creation across leagues, teams, and related businesses and weigh the risks against potential returns before considering making this type of investment a part of their client’s portfolio. It may be wise to restrict any professional sports investments to no more than five percent.
Investing in Sports Media
Even investors without billions to spend can still profit in sports investing. Media companies typically hold exclusive agreements with sports leagues, reflecting the increasing influence and profitability of sports broadcasting. Furthermore, licensing agreements allow some companies to sell merchandise with team logos or mascots (Electronic Arts is known for producing Madden NFL series while Take Two Interactive has NBA 2K series).
As the industry has expanded, an increasing number of private equity firms have established funds specifically dedicated to investing in sports franchises and leagues. These funds cater to investors seeking an asset class less correlated with stocks but expected to experience rapid growth over the next decade; some managers specialize in TMT (Telemedia/media/entertainment), while newcomers like Ares Capital, Blue Owl Chernin Group or Elysian Park (more of a VC firm) may provide more exposure in this space than older names such as Ares Capital or TMT or media/entertainment).
Women’s sports offer an intriguing avenue of opportunity. Men’s events have traditionally dominated TV ratings, yet viewership for women’s events is steadily increasing and is likely to boost team franchise values.
Investing in Sporting Goods
Brand loyalty in sports is as strong as that between opposing team players, which makes investing in sporting goods an attractive proposition for sports investors. Not only are merchandise sales increasing rapidly; the industry is expanding via other revenue sources like esports and sports betting as well.
With the rise of social media, platforms like Melbet Instagram are becoming vital in connecting brands with their audiences, offering real-time updates and promotions that drive engagement. This growing digital presence further enhances brand loyalty, opening up new avenues for revenue generation in the sports industry.
Major American leagues are exploring new growth opportunities in Europe to broaden their base and offer investors additional revenue-making potential. Such moves could change the industry landscape while creating moneymaking possibilities for investors.
Many dream of owning their hometown favorite professional sports team; however, owning such an investment may be out of their budget. Luckily, private wealth firms are starting to create vehicles to assist accredited and qualified investors gain access to sports investments.
Investors can gain exposure to the sports sector through publicly traded companies that sell sports equipment or have licensing agreements with major leagues and teams, however these shares won’t give investors access to box seats or any of the other benefits associated with owning an franchise.
Investors seeking opportunities in sporting goods can explore this space by purchasing shares of major retailers, like Foot Locker (FL) or Dick’s Sporting Goods (DKS), or investing in sports-related technologies or arenas owned by public corporations. Before taking this plunge into sports investing waters however, investors should carefully consider their investment strategy and risk tolerance before making their move.
Investing in Esports
Esports (or electronic sports) has quickly become a global phenomenon and offered investors new monetization avenues to invest in the sport they love – making investing easier than ever and offering investors access to various investment vehicles for participation.
Professional esports teams require substantial investments in terms of training, equipment, infrastructure and ongoing expenses to compete at high levels. Investors can purchase shares of a team’s corporate parent or invest in companies related to them – many exchange-traded funds like GSFE and EVRG are dedicated to investing in esports teams – or invest in company affiliated with its ownership such as companies that create broadcast technologies or gaming hardware or software such as NVIDIA graphics cards, game developer Activision Blizzard or Huya in China which provides game streaming platforms – these exchange-traded funds are dedicated exclusively.
Investing in esports remains in its early stages for both average investors and accredited investors, although opportunities are slowly opening up. Texas-based Arctos Partners has created vehicles accessible to private wealth investors that combine private equity with venture capital funding; such as targeting teams with an original value proposition such as an impressive community strategy or existing relationships with well-known brands or media companies that they think have potential for rapid expansion and scaling up.