Last week, it was reported that the New York Yankees are in discussions with Apollo for $2-$3 billion of debt and equity financing.
The potential investment is the latest example of private equity’s push into professional sports.
For decades, sports teams were trophy assets held by billionaires. Now, they’re becoming an institutional asset class.
Why private equity is turning to sports:
Ownership rules have loosened
Team valuations are soaring
Attractive investment fundamentals
Read the full breakdown below.
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New Ownership
According to Bloomberg, the Yankees and Apollo are exploring nearly $3 billion of financing comprised of “mostly debt and also some equity.” The proceeds would be used to refinance debt and fund growth opportunities.
Apollo’s potential investment is the latest in a wave of PE deals across professional sports.
Beginning in 2019, US leagues started modifying ownership rules to allow institutional investors to acquire minority stakes in teams. Today, every major US league allows minority investments from PE firms.
The growing partnership between private equity and professional sports is mutually beneficial. Private equity gets exposure to scarce assets with a strong track record of appreciation. Sports teams get a new source of capital and greater liquidity.
Growing Valuations
The main catalyst behind the investment wave is surging team valuations.