2 hours ago - Sports
Private equity's place in pro sports is here to stay
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Illustration: Lindsey Bailey/Axios
"When will sports leagues push private equity out of team ownership?"
- Fans have been asking some version of that question a lot lately. Probably because of the Lakers deal, which will include Thrive Eternal.
- Or maybe it's about Arctos buying into the Atlanta Falcons. Or even Dragoneer's Marc Stad agreeing to acquire control of the Minnesota Timberwolves and Lynx, even though that one doesn't involve institutional capital.
The short answer is: Never.
- The leagues want private equity involvement. It's not an invasive gold rush that they'll soon tire of suffering through.
Leagues are run by owners, not by the commissioners who serve at their pleasure. And private equity is very good for owners.
- Their prized assets are suddenly very liquid, after decades of relative illiquidity. And that increased liquidity has beget rising valuations.
- Private equity enables owners to sell just a sliver while maintaining control (and bragging rights).
- It also enables full club sales, as prices have skyrocketed past the financial means of almost all individuals.
Fan apprehension — or outright opposition — to private equity ownership is understandable.
- Treating teams as financial assets is anathema to fandom. Having a portfolio of minority ownership stakes in the same league is close to treason.
- There's also a burgeoning belief that private equity is behind the ongoing surge in ticket prices, although that seems to be more feeling than fact.
We don't yet have enough data to know if private equity ownership helps win championships, which is what fans care most about.
- But even if fans could prove that it actually hurts, it wouldn't change much.
The bottom line is that private equity helps owners make more money, so private equity is in sports to stay.
