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It\u2019s been four years since Deadpool<\/em> star Ryan Reynolds and It\u2019s Always Sunny In Philadelphi<\/em>a co-creator Rob McElhenney purchased Wrexham AFC<\/a>\u2014at the time, a non-league soccer team little-known in the U.S.\u2014and American family offices are still scrambling to grab a piece of sports franchises, according to Anushka Gupta, who leads Apex, the American branch of Goldman Sachs\u2019s family office subsidiary.<\/p>\n While Reynolds and McElhenney found their way to professional sports in 2020 through what was then a fifth-tier soccer team based in Wales, for which they paid $2.5 million, American family offices are looking for entry points among emerging sports, including the Ultimate Fighting Championship, surfing, and women\u2019s sports.<\/p>\n Speaking at the virtual Global Family Office Media Roundtable on Tuesday, Gupta said the interest in these emerging sports is about more than just the growth potential that comes from reaching a larger audience\u2014sponsors are changing how they view these leagues, in addition to potential opportunities involving sports betting. (The Supreme Court overturned<\/a> a bill restricting sports betting in 2018.)<\/p>\n \u201cThere\u2019s a big bucket of emerging sports where the opportunity feels nascent,\u201d said Gupta. \u201cBut the bid and demand across groups, in how much excitement and buzz there are on some of these emerging sports, is really a big area of focus.\u201d<\/p>\n The media roundtable followed a symposium with 170 Goldman Sachs clients and prospective clients from 15 countries. Based in part on those meetings, Gupta said that family offices\u2014generally defined as families with at least $50 million to invest\u2014are increasingly interested in sports investments.<\/p>\n In addition to the UFC and surfing, the most popular emerging sports include NASCAR, golf, sailing, rugby, and college sports, with a focus across leagues on women\u2019s sports, Gupta said. Specifically, she mentioned the National Women\u2019s Soccer League, the WNBA, and the Women\u2019s Tennis Association. A number of changes make these investments more enticing, including that women\u2019s sports sponsorships are up 22%, according to a report<\/a> by Sports United.<\/p>\n Family offices are mostly in the early stages of considering sports investments, evaluating factors such as whether leagues are open to expansion and how they handle media rights. \u201cThere\u2019s been a lot of focus on the rapid rise in media contract values,\u201d said Gupta, \u201cwhich has allowed engagement with a much broader audience.\u201d Many investors<\/a> view<\/a> sports as a largely uncorrelated asset class, making it a good hedge when markets are down.<\/p>\n Currently, many investors are looking to invest in their local communities, she said, a continuation of what Goldman published in its family office report last year. And increasingly, institutional investor interest in sports is making it more expensive to invest, although many leagues are also currently considering whether institutional capital can invest at all. American private equity firms didn\u2019t start investing<\/a> in European sports until 2006, and U.S. sports didn\u2019t open up to PE until about a decade later.<\/p>\n The best sports investments have wildly outperformed traditional assets. Perhaps most notable is Mark Cuban\u2019s 2023 sale<\/a> of a majority stake of the Dallas Mavericks, valued at $4.5 billion, which reportedly earned him a return of 1,478% after he paid just $285 million for the team in 2000. Private investment firm Arctos co-launched<\/a> a sports index to track the performance of franchises the same day as the event.<\/p>\n \u201cThe discussion around the broader sports ecosystem is continuing to be a big area of focus for family offices,\u201d said Gupta.<\/p>\n The areas of interest are different in Europe, according to Darren Allaway, a managing director at Apex who focuses on Europe, the Middle East and Africa. \u201cFrom a European perspective, we don\u2019t have a collegiate framework here,\u201d said Allaway at the same event. \u201cThe U.S. sports are important from a TV perspective, but not from a kind of visibility perspective, because there are no competitive leagues in baseball, hockey, basketball, football, etc. But soccer continues to dominate.\u201d<\/p>\n According to Allaway, just a few wealthy families have historically invested in the biggest European soccer teams, resulting in family rivalries throughout the continent. Through December, 22 Americans owned a piece of a European Football League team, according to The Athletic<\/em><\/a>. Increasingly though, secondary and tertiary leagues are appealing to family offices from around the world\u2014something much less common prior to Reynolds and McElhenney buying Wrexham (and producing the accompanying documentary, Welcome to Wrexam<\/em>). Previously, many small clubs frowned upon such outside investments as \u201cill will,\u201d Allaway said.<\/p>\n \u201cThat show has kind of changed the dynamic,\u201d he added. \u201cSo there are a lot of smaller clubs that are welcoming foreign ownership, potentially wealthy ownership, from families that have either no substantial interest and experience in sports, or this is their first foray and they\u2019re happy to make an investment, upgrade the team, and see if they can be more competitive.\u201d<\/p>\n<\/div>\n\n\u2018A big area of focus\u2019<\/h2>\n
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