Top executives back sport clubs and tech as attractive investments
Over two thirds of business executives see clubs and franchises as the most attractive investment opportunity over the next half-decade, new research has revealed.
Over a quarter of executives asked instead said leagues and federations were preferred while nearly one fifth favoured participation events, according to Altman Solon’s Global Sports Survey.
It is a tonic for clubs and franchises that have recently seen huge multipliers placed upon their valuations, including the likes of Dallas Cowboys – who are nearing a $10bn valuation – and Manchester United – who have a $6bn mark. US franchises can have enterprise values of 10-fold of their revenue, the report states.
But technology solution providers have drawn the eye of 62 per cent of executives, who were asked to pick two preferable options each, in a move that could see private equity firms who own clubs look to expand into tech to consolidate.
Investments drawing executives
“Much like in the music industry,” Christian Muller, managing director of Partners for Sports said. “I expect power to gradually shift back to the “content creators” whether they are clubs, leagues, events, or athletes.”
Altman Solon partner David Dellea added: “Premier sports franchises will never lose their attractiveness, given the power and longevity of their IP. Yet, private equity and other investors are turning to new technologies providers, particularly those that are revolutionising media workflows and fan experiences.
“To boost returns, sports investors can build a spectrum of strategic assets and capabilities across their portfolios.”
European clubs don’t often match the 10x revenue-to-valuation ratio seen at some US franchises but 5-fold multiples are more common.
“Investors must focus on organisations willing to diversify their revenue sources beyond ticket sales and merchandise, such as esports, focused sponsorship deals, and digital content monetisation,” Jamie Corr, managing director sports at Burson said.
The statistics come as Everton, Inter Milan and Sauber F1 have seen new ownership from The Friedkin Group, Oaktree and the Qatar Investment Authority respectively.