Private Equity's Game-Changing Plays in Sports

Explore how private equity is transforming college athletics and creating new opportunities for athlete empowerment, and learn about innovative investment models and their potential impact on the sports landscape

Inside BLA’s 2024 MLB All-Star Game Experience

Via Athletiverse

All-Star Highlights: Our Players Shine on the Big Stage

Elly De La Cruz, Christopher Sanchez, Deyvison De Los Santos, Moises Ballesteros (pictured left to right)

All-Star Game Participants

We're thrilled to celebrate the outstanding achievements of our clients at this year's All-Star festivities.

Reds' Elly De La Cruz and Phillies' Christopher Sanchez each earned their first career nods to the All-Star Game. Meanwhile, Marlins’ prospect Deyvison De Los Santos and Cubs' prospect Moises Ballesteros received well-deserved selections to the Futures Game.

Since his 2023 callup, an all-star selection has been highly anticipated for De La Cruz, and he has rightfully earned it after tallying 18 HRs, 55 SB, and a .842 OPS through 98 games this season. For Sanchez, he has broken out in mesmerizing fashion in 2024, with a 3.05 ERA and 91 strikeouts over 115.0 innings. 

Being called to the Futures Games should come as no surprise for De Los Santos and Ballesteros, as they have lit up the minor leagues this year. De Los Santos is one of the league’s premier power hitters, batting .326 with 29 HRs and a 1.015 OPS across AA and AAA. The 20-year-old Ballesteros has crushed the ball as well this season, hitting 14 HRs and driving in 58 RBIs.

BLA at the All-Star Experience

We take pride in supporting our players and staying at the forefront of industry developments. Our team partook in some of the following festivities:

• The Players Party 2024 Hosted by MLBPA, LIDS & Topps

• The Player’s Alliance event

• MLB Panel discussions

• Marketing and branding workshops

These events provide invaluable opportunities to network with players, agents, team executives, and former players. By engaging with key stakeholders, we continue to educate ourselves on how to best serve our clients in this ever-evolving industry.

We're proud of our players' accomplishments and remain committed to helping them reach new heights in their careers.

Here's to more success in the second half of the season!

Private Equity's Game-Changing Play in College Athletics

ILLUSTRATION BY LORENZO GORDON. PHOTO BY GETTY IMAGES

The New Playmakers: Private Equity's Bold Entry into College Athletics

In a recent story from Sportico, it became clear the landscape of college sports is undergoing a seismic shift, with private equity firms now eyeing significant investment opportunities in athletic departments. This trend, exemplified by the recent moves of Collegiate Athletic Solutions (CAS), marks a new era in the financing and management college sports.

CAS, a joint venture between RedBird Capital and Weatherford Capital, is leading the charge in college sports financing with plans to invest $50 million to $200 million in five to ten top-tier college athletic departments. Their strategy addresses the increasing costs of staying competitive in college sports by offering a less complex alternative to traditional funding methods like municipal bonds, donations, or student fees. CAS's approach involves creating a university-controlled special purpose vehicle, or "NewCo," which serves as a centralized entity for all athletic department income.

This includes CAS investments, institutional support, and revenue from various sources such as donations, ticket sales, and media rights. The NewCo structure allows CAS to participate in future revenue sharing without residing on the university's balance sheet or having board control. This model offers athletic departments more flexibility in capital use and leverages CAS's expertise in sports operations, positioning it as an attractive option for schools seeking additional funding in a rapidly changing college sports landscape.

The financial model proposed by CAS is both innovative and potentially lucrative. In a case study presented to investors, CAS outlined a scenario where a $150 million investment in a large public university's athletic department could yield a 201% return over 15 years. This projection is based on a revenue-sharing model that prioritizes CAS's investment recovery in the early years. To view each schools specific financial data and earnings click here.

Key aspects of the CAS model include:

1. Management Fees: CAS plans to charge slightly less than the standard "two and twenty" private capital structure, making their offer more attractive to universities.

2. Deal Structure: CAS positions itself as a less complex alternative to traditional financing methods, offering fewer restrictions on capital use and additional sports operations expertise.

3. Revenue Waterfall: The investment structure includes multiple "waterfalls" where CAS's revenue share decreases as it recovers its initial investment and reaches certain return thresholds.

4. Loan-to-Value Ratio: CAS uses a 4x revenue multiple to value college athletic departments, resulting in a 25% LTV for a $150 million investment in a department generating $150 million in annual revenue.

This approach to college sports financing is backed with precedent in professional sports. The Ares Management debt fund, which lends to pro sports teams, employs a similar fee structure, albeit with slight variations based on investment size.

The entry of private equity into college sports reflects the increasing financial pressures faced by athletic departments and the need for new capital sources to remain competitive. It also signals a shift towards a more professionalized, business-oriented approach to college athletics management.

The potential impact of private equity in college athletics can be better understood by examining its influence in professional sports. In recent years, private equity firms have made significant inroads into professional leagues, driving innovation and financial growth.

Sports-Focused Private Equity Firms

For example, firms like Arctos Sports Partners have invested in teams across the NBA, MLB, and NHL, while RedBird Capital has stakes in prominent franchises like AC Milan and the Boston Red Sox. These investments have led to improved operational efficiencies, enhanced fan experiences, and innovative revenue streams.

The success of private equity in professional sports suggests that similar strategies could be transformative for college athletics, potentially leading to more sustainable financial models and improved facilities and programs for student-athletes. However, it also raises questions about maintaining the balance between the educational mission of colleges and the increasing commercialization of their athletic programs.

As private equity firms become more involved, there may be increased pressure to maximize revenue and returns. While this offers new opportunities for growth and development, it also introduces complex financial structures and potential shifts in priorities that could reshape the traditional landscape of college athletics in the years to come. The influence of private equity represents a significant evolution in the financing and management of athletic departments, with far-reaching implications for the sport's future.

Private Equity's New Playbook: Investing in Athlete Empowerment and Protection

AP/GENE J. PUSKAR

Sports Venture Industry Update

As private equity firms continue to recognize the immense potential in sports investments, a new trend is emerging that aligns closely with BLA's commitment to empowering athletes.

Via SportsTeam Pro, OneTeam Partners, a commercial venture created by the NFLPA and MLBPA, is exploring the launch of a $75 million venture fund specifically aimed at investing in early-stage businesses that support athletes.

This development represents a significant shift in the sports investment landscape, where protecting and maximizing athlete value is becoming a central focus.

OneTeam's proposed fund, tentatively named OneTeam Ventures, aims to leverage its expertise, access to deal flow, and connections to grow businesses that align with its mission of helping athletes maximize the value of their intellectual property.

The fund plans to target a portfolio of about 12 companies, with an average investment of $5 million each. This approach not only provides critical financial resources to emerging sports-related businesses but also creates a framework for sustainable athlete empowerment.

OneTeam's existing investments, including equity-in-kind deals with companies like Fanatics and Bally's, have already demonstrated the potential of this model. With a current value of over $100 million in equity-in-kind deals alone, the strategy shows promise for both athletes and investors.

One Team recently led the player opt-in program for the new NCAA 25 CFB game

As we continue to navigate the evolving landscape of sports finance, the emergence of athlete-centric investment funds represents an exciting opportunity.

These initiatives have the potential to drive innovation in athlete support services, enhance player’s stock, and create new avenues for athlete empowerment – all while offering the potential for attractive returns for investors.

At BLA, we've long recognized the importance of athlete empowerment and protection, and our approach aligns closely with this emerging trend. We provide capital to athletes with no requirement of return unless they make it to the top levels of their sport, alleviating financial concerns and allowing them to focus on their passion.

This unique model offers athletes the flexibility to invest in their future, whether that's toward their career, starting a business or exploring a second career. Beyond financial support, we give our athletes access to an elite network of business investors, providing invaluable connections and mentorship opportunities.

Additionally, we leverage our expert data team to be an additional level of support if a player is interested in using our own metrics and analytics for his game. This comprehensive approach to athlete empowerment not only protects their interests but also sets the stage for long-term success both in and beyond their athletic careers. As the sports investment landscape evolves, BLA's model serves as a testament to the potential of athlete-centric investment strategies.

The content herein is provided for informational purposes only and is not intended to serve as an offer to sell, or solicitation of an offer to buy, any security, other investment product or investment advisory service.

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