Friday, June 7, 2024

SPEURTS is All the Rage

Private equity underwriters (PEU) are now investing in sports.  What can a 60 something year old billionaire not do?  Take Carlyle Group co-founder David Rubenstein.

He can rap.

Carlyle owned music rights for the most popular singer on the planet.

He is the new majority owner for the Baltimore Orioles.

Carlyle has a stake in the Seattle Reign (women's professional soccer).

The NFL just postponed a vote allowing private equity investments in professional football teams.  

It's coming.   

Since 2019, there have been at least 20 private equity investments in major league sports teams, according to Kyle Walters, associate analyst, private equity at PitchBook. Sixty-two major North American sports teams, valued at $179.7 billion, have “connections” to PE.
The NFL has experience with owners having a greed and leverage background.
Carolina Panters owner and billionaire David Tepper threw a drink on a Jaguars football fan. The NFL is aware of the video.
The English Premier league has a number of storied teams under PEU ownership.  A Chelsea soccer fan lamented private equity's impact on his beloved team and the departure of an experienced coach.

..when Private Equity Demons force reasonable people out of their jobs, the wheels start to fall off. Or get stripped off. 
If it’s possible to mathematically win just enough games that the team is a return on investment, or to buy enough success that everyone shuts up about the brutal backroom dealings that squeeze beloved players out, they’re going to do it. And in the meantime, they’re all so convinced that they’re the only rich smart ones in the room that they’ll blame every failure on someone down the chain. You’ve heard this story before. Most of you have lived it. I certainly have, but I wish I didn’t have to be reminded of it every time Chelsea goes down two-nil to fucking Brentford.

777 Partners, an early PEU buyer of professional sports teams, recently "missed a £250,000 payroll at its British basketball team it owns" (Semafor

Minnesota Timberwolves ownership is the latest PEU battle in the NBA.  The Carlyle Group and Blue Owl Homecourt were "lined up" to provide financing for Alex Rodriguez and Marc Lore but neither came through.  The deal is headed to arbitration with Mike Bloomberg joining the ARod/Lore team.  It remains to be seen if any new billionaire owners will push for a new stadium (with massive public subsidies).

The PEU boys ran Toys "R Us, Manor Care, Steward Health. BeautyCounter and Red Lobster into the ground.  Let's see what they can do for professional speurts in their ceaseless pursuit of outsized profits (profitgasm).   

Update 6-9-24:  Barron's ran s PEU sports story.

As did Global Finance.