Sports deals are becoming AI protection
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Photo illustration: Brendan Lynch/Axios. Photos: Brandon Todd/NBAE via Getty Images
Sports is no longer a diversion for billionaires and private equity. It's a defensive strategy.
The big picture: Investors have come to view sports as the last bulwark against AI disruption.
- AI certainly will change pro and college team operations — including more dynamic pricing — but the core product will continue to be athletic competition. Flesh-and-blood humans performing for other humans.
Behind the scenes: Most private equity conversations at the Milken Institute Gobal Conference eventually became a conversation about AI, and its eventual potential to upend even blue-collar industries like plumbing and hair-cutting.
- "Sports" was always cited as the exception to the rule, suggesting that rising team prices won't plateau any time soon.
- There were variations on that theme in Miami for the F1 race. Sure, some folks were talking their books — but crowds at off-track "activations" spoke to both growing U.S. interest in luxe motorsports and the deepening desire for communal activity.
Yes but: Not all sports investments will succeed.
- First, a lot of new leagues have launched in recent years. They're startups, with the commensurate risk of failure. Particularly if the audience fragments so much that profit becomes impossible.
- Second, the NFL is about to renegotiate its media rights deal, which could pull revenue from other leagues. It's something that Peter Chernin discussed during our "BFD Talks" event.
- That's one reason that some PE investors are favoring youth sports — where the consumer is the athlete (or their parents), rather than a spectator.
Driving the news: The next big landmark sports deal may be for the NFL's Seattle Seahawks, who are on the block despite having just won the Super Bowl.
- Axios has confirmed that ArcelorMittal CEO and Boston Celtics alt governor Aditya Mittal is teaming with former Boston Celtics governor Wyc Grousbeck on a bid, as first reported by The Boston Globe.
- No word yet on who else is involved, although so far they're resisting PE fund participation (don't be surprised to see that eventually change, given that PE was involved in the recent Celtics sale).
- Also worth noting that Mittal lives in London and, if successful, would become the first NFL control owner to reside outside the U.S.
The bottom line: Sports doesn't scale like other industries, but it also doesn't risk obsolescence.
