Sports teams performed very well in a year when investors were looking for safe bets and good returns.
- The constant state of the stock market over the past year, with several crashes and bear markets, has forced investors to choose defensive stocks to protect their portfolios—which provide consistent but low returns, as a bulwark against volatility and uncertainty.
- Sports leagues haven’t reflected in the downturn, with leagues like the NFL and NBA doing strong business in the past year.
- Billionaires are eager to purchase entire teams to take advantage of the high profits.
- The valuation of teams is increasing, with a notable 135% increase in value for the Phoenix Suns since October 2021, Forbes reports.
Why it’s News
As we previously reported, venture capital has been moving in the direction of sports. RedBird Capital Partners, a New York-based capital firm, purchased a Milan-based Italian football club for the price of $1.2 billion in September 2022. This is a notable increase from its previous sale in 2018 when the team had negative equity of $37 million.
This is true for American sports as well. As Forbes notes, the average NFL team has seen a 28% increase in value over the past year. Major baseball clubs saw a 9% average increase. The New York Knicks could see a valuation of $6 billion in the near future as valuation increases.
“Sports teams were one of the best-performing asset classes this year, appreciating nearly across the board. These top 11, led by AC Milan, all jumped by 40% or more,” says Forbes.
Multiple sports teams are set to go onto the market in the near future, including the Washington Commanders in the U.S., the Ottawa Senators in Canada, and the British football clubs Manchester United and Liverpool FC. Their sales will create new opportunities for aspiring billionaires eager to take advantage of the success, and the demand will likely raise valuations even further.
“If there is a lesson to be learned from the Ishbia brothers agreeing to buy the Phoenix Suns for $4 billion recently or Rob Walton and his syndicate plunking down $4.65 billion for the Denver Broncos in June, it’s that sports teams are worth as much as a billionaire, or two, is willing to pay,” says Forbes.