When the major U.S. sports leagues began opening up their franchises to private equity investment about five years ago, the move heralded a way for the world’s richest investors—pension funds, endowments and sovereign wealth funds—to bolster team values and find a new place to park some of their trillion of dollars.
Now, a new, not-so-deep-pocketed investor is finding their way into owning a slice of a pro team: Mom and Pop.
“The amount of interest is overwhelming,” Shana Orczyk Sissel, founder and CEO of Banríon Capital Management, said on a video call. “In general, the idea of having any sort of ownership interest, however small, in a team is compelling to someone on a personal level.”
Sissel’s Illinois-based firm specializes in offerings that help financial advisors’ business, from technology services to crafting investment options for advisors to offer their clients. In recent years those investing options have included offering advisors the chance to invest some of their clients’ money with the private equity funds that buy into teams. The funds contact her firm as part of their process of gathering up limited partner investors to fill out fundraising. Banríon passes along the option to its financial advisor clients.
“It’s the email I always get a response to,” she said. “I have a list of people waiting for the next sports rights fund.”
Unlike institutional funds and billionaire family offices, most financial advisors manage money for people with far less resources—think well-off middle class: people with assets of $1 million to $10 million typically (the average American household is worth $1.1 million while the median has a net worth of $193,000, according to the Federal Reserve). Such advisors have to do the equivalent of going door-to-door to get business—signing up many clients, each of whom generate modest fees. Their biggest competition is index funds, in which a person can create a diversified portfolio with Vanguard or Fidelity and see pretty great growth while paying next to nothing in fees. The chance to offer clients a unique investment, such as a sliver of a PE fund’s minority slice of a pro team, keeps the robo-advisors at bay.
“It’s a business development tool, to be frank,” Sissel said. “Because now advisors have a reason to proactively talk to a client about a potential investment. In any other situation, they may have balked at it—because it’s illiquid and there are complex documents and you have to meet certain hurdles. But because it’s sports, they listen.”
These days, Sissel says her firm has been working mainly with Caz Investments, a thematic investment firm that has sports and esports investing funds. Caz in turn doesn’t invest directly in franchises, but instead puts its Professional Sports Ownership Fund into Arctos Partners’ sports fund, according to paperwork Caz files with regulators. The Arctos fund invests primarily in minority stakes of pro franchises, including the Utah Jazz and the parent of hockey’s Devils and basketball’s 76ers. Sissel says she is currently evaluating Marc Lasry’s Avenue Sports Opportunities Fund, which is still raising capital after disclosing $445 million in assets recently.
That a portfolio holds a piece of a person’s hometown club is a huge marketing advantage. “The retail investor is much more concerned about it being their favorite team and not the next big thing,” such as women’s sports or European soccer, according to Sissel. “A client is much more willing to put up with a higher fee and less liquidity if they can brag about it to their friends,” Sissel said.
Of course, investors already have the option to buy into a few pro teams without an advisor’s help. The Green Bay Packers are famously owned by fans, while teams including the Braves, Manchester United and, indirectly, the Blue Jays are available to own through the stock market. However, private equity funds are more exclusive and own stakes in more teams—there are at least 16 teams in the three largest leagues in which PE owns stakes in North America, according to Sportico data.
For advisors, the ease with which sports gets clients comfortable with illiquidity, complexity and non-traditional investing also makes it easier to pitch other “alternative” investments later on that don’t have the immediate appeal of sports. That’s important for the industry because advisors have lagged their larger Wall Street money management counterparts in dedicating client assets into non-traditional investments like private equity, private credit and real estate, according to a 2023 study by CAIS-Mercer, another firm that looks to offer financial advisors sophisticated investment options.
Still, there’s little chance smaller investors will overload on sports in their portfolios—alternative investments are almost always marketed as ways to diversify the traditional stock and bond portfolio. Banríon generally says alternatives should be 20% of a portfolio, and within that perhaps sports could be 5%, because it tends to be less correlated with the economy, which is helpful if people need to sell to raise money in downtimes.
Not that this type of investor has an expectation that they will sell.
“As long as your favorite team is in there, you can brag to your buddies that you own part of the Boston Celtics,” Sissel said. “You never want to sell that … it’s ego investing.”
