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Illustration: Aïda Amer/Axios

Private equity has long dabbled around the edges of professional sports, but now has its first firm dedicated to buying into teams.

Driving the news: Arctos Sports Partners has been launched by David "Doc" O'Connor, former president of Madison Square Garden Co., and Ian Charles, a longtime private equity secondaries investor.

Axios has learned from multiple sources that Arctos is raising between $1 billion and $1.5 billion for its debut fund, with $500 million already committed from backers like the Petershill unit of Goldman Sachs. The firm declined to comment, citing SEC marketing restrictions.

  • Its plan is to invest between $20 million and $300 million for passive, minority stakes in North American pro sports teams and select European soccer clubs.
  • Some of this could be via buying out minority owners, or by providing preferred equity or structured financing to control owners who are seeking some liquidity.
  • The firm quietly launched late last year, well ahead of the coronavirus pandemic, but may now benefit from price constriction and certain owners in need of financial flexibility.

O'Connor and Charles are said to have been first connected by a front office executive for the Boston Red Sox, who knew O'Connor from his time helping to launch the sports representation group at CAA and Charles via a common business partner.

The state of play: MLB late last year changed its ownership rules to permit funds to be part of team ownership groups, leaving the NFL as America’s only major sports league to still prohibit them.

  • Skyrocketing team valuations have made it increasingly difficult for part-owners to find buyers for their stakes. By permitting funds, leagues expand the potential buyer pool.

Roster: In addition to O'Connor and Charles, the Arctos team includes Joseph Nasr (ex-Stellus Capital Management, Jordan Solomon (ex-MSG), and veterans of Warburg Pincus, Fenway Sports Group, and TPG.

What to watch: Baseball is likely to be Arctos' top target, just due to its glut of small limited partners, but also expect the fund to buy into NHL and MLS teams where its fund size could make a more significant impact.

  • NBA teams and European soccer clubs are also within the fund mandate, while NFL team stakes are technically possible but would require a special league dispensation that's unlikely to be granted.
  • Don't expect to hear about the firm's deals, as it's expected to operate quietly — like a private equity secondaries investor.

Go deeper

Aug 2, 2020 - Sports

More athletes opt out as U.S. struggles with coronavirus

The Los Angeles Dodgers play against the Arizona Diamondbacks at Chase Field on July 31 in Phoenix. Photo: Christian Petersen/Getty Images

A growing number of pro athletes in the U.S. are opting out of the 2020 season, or league restarts, citing concerns related to the coronavirus pandemic.

Why it matters: The pandemic continues to disrupt the world of sports, despite many fans hoping that a return for the major leagues would spell some semblance of normalcy for other aspects of life.

Updated 1 hour ago - Sports

Experts predict major boom for North American sports stadiums

Rendering of the $375 million Moody Center on the UT-Austin campus. Photo courtesy of Moody Center

Stadium and arena construction in North America will total a relatively tame $5.8 billion this year, a 12% decrease from 2021.

The big picture: What the industry lacks in construction it expects to make up for in design, with experts predicting a sports venue boom over the next half-decade, SBJ reports.

Updated 1 hour ago - World

UK government: Kremlin has plan "to install pro-Russian leadership" in Ukraine

British Foreign Secretary Elizabeth Truss. Photo: Gints Ivuskans / AFP via Getty Images

The United Kingdom's Foreign Secretary on Saturday night said the government has "information that indicates the Russian Government is looking to install a pro-Russian leader in Kyiv as it considers whether to invade and occupy Ukraine."

The latest: “I can’t comment on specific pieces of intelligence. But we’ve been warning about just this kind of tactic for weeks and we’ve spoken to that publicly," Secretary of State Antony Blinken said Sunday. The Biden administration has said Russia is actively manufacturing a pretext for invasion and warned that Putin could use joint military exercises in Belarus as cover to invade from the north.