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"David Rubenstein, the co-founder of Carlyle, recently said in an interview for a CNBC podcast that 'it's very difficult to buy a sports team and lose money.' Historically, the potential to make money on this type of venture has only been held by the wealthiest individuals. However, recently, many major U.S. sport leagues such as Major League Baseball, NBA, MLS, and NHL have started to allow private-equity firms to hold minority stakes. Pitchbook reports that since 2019, more than $120 billion in private-equity and venture capital funds has been invested in the sports industry. A major investor in this sector is Sixth Street Partners, a $74 billion company that is known for its direct lending and growth. The firm has been investing in sports in recent years. For example, they co-founded Bay FC in the National Women's Soccer League with Sheryl Sandberg and retired players, invested in FC Barcelona's LaLiga TV broadcasting rights, and provided a majority investment in Legends, a sports and entertainment experiences company. In June of 2021, Sixth Street led a strategic investment with Michael Dell in the San Antonio Spurs basketball team and last year they invested in the legendary Spanish soccer club Real Madrid.
Alan Waxman, the CEO and co-founder of Sixth Street, spoke exclusively in his first-ever TV interview for the Delivering Alpha Newsletter about the firm’s vision for the crowded sports sector. He discussed how streaming technology and social media are changing the team-fan dynamic and said that in 10 years fans will be able to put on a headset and be virtually transported to a game across the world."
Historically, investing in the sports realm has been particularly lucrative. Data from PitchBook showed that investments in NFL, MLB and NBA teams outperformed the S&P 500 between 2002 and 2021, with the NHL's performance coming in just below. However, PitchBook also noted that these encouraging returns could not be expected to continue over the coming decades, owing to increased competition driving up the prices of minority stakes. When asked about the possibility of losing money in the sports space, Melinda Waxman of Sixth Street asserted that while investors ought to protect themselves from even the most remote of scenarios – such as, for example, the outbreak of a pandemic – Sixth Street aims to set up deals that create mutually beneficial opportunities for sports teams, while also protecting their investors' capital.
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