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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.

Cold December as safety nets expire

Illustration: Sarah Grillo/Axios

Safety nets are likely to be yanked from underneath millions of vulnerable Americans in December, as the coronavirus surges.

Why it matters: Those most at risk are depending on one or more relief programs that are set to expire, right as the economic recovery becomes more fragile than it's been in months.

15 hours ago - Health

Food banks feel the strain without holiday volunteers

People wait in line at Food Bank Community Kitchen on Nov. 25 in New York City. Photo: Michael Loccisano/Getty Images for Food Bank For New York City

America's food banks are sounding the alarm during this unprecedented holiday season.

The big picture: Soup kitchens and charities, usually brimming with holiday volunteers, are getting far less help.