One hundred years ago, in August 1923, the Green Bay Packers football club was formed in a public stock sale.
The Packers sold 1,000 shares at $5 apiece, raising $5,000 (about $90,000 today, adjusted for inflation). The team has held five stock sales since then, in 1935, 1950, 1997, 2011 and 2021, but despite raising tens of millions of dollars, the Packers’ unusual structure has a big asterisk: The team is a publicly owned nonprofit corporation, and the stock? It cannot be resold, traded or returned to the team.
While the Packers paved the way for the public to own a piece of a sports team (even if there isn’t much they can do with that ownership), in recent decades sports has mostly remained an investment for the ultrarich. With most major sports teams now worth billions of dollars, very few entire leagues for sale, and the value of media rights deals exploding, there is big money at stake.
In fact, it is that exact pitch, the incredible power of live sports, that is at the heart of TKO Group Holdings — created Sept. 12 when the WWE merged with Endeavor’s UFC — led by CEO Ari Emanuel and president and COO Mark Shapiro. The WWE is decidedly not a “sports league,” per se — it is an entertainment product — but the UFC certainly is (while the WWE is scripted, the UFC’s mixed martial arts fights are entirely legitimate, just as all other professional sporting events). And the live programs they produce are in high demand.
In an interview with The Hollywood Reporter, Shapiro touts TKO as a pure-play sports company. “Let’s not forget the financial profile for investors, right?” he says of the new company. “We’ll have a very healthy balance sheet, less than three times leveraged with significant free-cash-flow conversion, highly profitable, scalable and sitting at the epicenter of live sports and entertainment, which is what matters most these days.”
Wall Street seems to agree.
“With the media industry increasingly fragmenting, there is clearly scarcity value for premium IP companies,” wrote Bank of America’s Jessica Reif Ehrlich on Aug. 28. “We believe TKO reflects an opportunity to own a quasi-sports league with robust year-round programming and an attractive financial profile that offers sizable revenue/cost savings.”
But there are also signs that the exclusivity of investing in sports is beginning to crack, as teams, leagues and owners seek cash from the public markets or other types of investors to pursue growth — or an exit from expensive investments.
Most recently, the John Malone-controlled Liberty Media spun out the Atlanta Braves, a perennial MLB contender, into its own stock. Before, investors could buy Liberty Media stock (which included its ownership of the Braves), but the spinout gives investors a chance to own a direct piece of the team, which clinched a division title and playoff berth Sept. 14.
Liberty, which also owns large stakes in SiriusXM, Live Nation and other companies, has been aggressive in the sports space — and with making those sports easily accessible to investors. Liberty also launched a tracking stock for its Formula 1 racing business, giving investors a stake in the future success of the increasingly popular sport.
To be certain, some sports teams have been accessible on the public markets for some time (Manchester United has been traded on the New York Stock Exchange since 2012, and the James Dolan-controlled New York Knicks NBA team and New York Rangers NHL team were spun out of the Madison Square Garden company in 2020 and into a stand-alone company, MSG Sports), but the spate of recent deals suggests a desire from team and league owners to test the waters of the markets, where die-hard fans may feel compelled to own a piece of their favorite team (and to share in the windfall of a championship or a TV deal).
Of course, strong ownership still matters. In an Aug. 21 note, Morgan Stanley’s Ben Swinburne noted that the market value of MSG Sports (the Knicks and Rangers) seemed low compared with the Braves, though the success of those New York teams are likely a factor.
“This likely reflects the market’s relatively higher confidence in Liberty’s management team maximizing the value of the Braves relative to MSG’s management and the Knicks and Rangers,” Swinburne wrote. “One way to potentially unlock value is to sell a minority stake in one or both teams, allowed under NBA and NHL rules. While management indicated it was ‘open’ to a minority sale, we have no visibility into the potential for this to occur or any timeline.”
The desire to own a piece of live sports is also spreading to the institutional private markets, where the merely rich (as opposed to the ultrarich) are investing their money.
This month, the NFL is launching an ownership committee that’ll look at the full range of ownership policies, including “expanding opportunities for more diverse ownership,” according to NFL commissioner Roger Goodell.
Changes could include allowing private equity firms, pension funds and public companies to be a bigger part of potential NFL ownership groups and giving their investors and shareholders a piece of the NFL pie.
And Goldman Sachs in September opened a “sports franchise” division, meant to give its wealth management clients the ability to invest in terms, leagues, stadiums and other sports opportunities.
Goldman Sachs clients may not be mom-and-pop retail investors, but they also might not be billionaires able to buy a team in their own right. For team owners like MSG, they could be a ripe source of cash looking for a piece of the action.
Consider Vince McMahon, the executive chairman of TKO who built the WWE. On Sept. 15, TKO filed an S-1 with the SEC, registering McMahon’s $2.8 billion or so worth of stock for sale.
McMahon may not sell, immediately or at all, but he now has the right to do so. And there may be millions of wrestling or MMA fans eager and ready to buy.
This story first appeared in the Sept. 20 issue of The Hollywood Reporter magazine. Click here to subscribe.
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