Stay up to date with free updates
Simply sign up for the Private Equity myFT Digest – straight to your inbox.
Arctos Sports Partners plans to focus on finding more deals in its U.S. home market due to the financial unpredictability of European soccer, says the co-founder and managing partner of the new Paris Saint-Germain shareholder.
Ian Charles said that while Arctos was open to working with more teams in Europe, the company would be far more likely to invest in the US, where there was “no shortage of opportunities” to generate reliable income from the sport.
“We want to invest in global brands that have the predictability, durability, resilience and dynamism common to North American sports properties,” he added. “It’s difficult to find those outside of North America.”
The sports-focused firm, which typically targets investments in individual teams rather than leagues, recently closed its second dedicated sports fund after raising $4.1 billion, meeting its $2.5 billion target -dollar exceeded. About a third of the new fund's capital has been allocated.
Arctos has recently entered Europe, completing a deal to buy up to 12.5 percent of Qatari soccer club PSG in December. The agreement valued the French champions at more than 4 billion euros.
The company also invested in UK-based motorsport team Aston Martin F1 at the end of last year in a deal valued at £1bn and has an indirect stake in Liverpool FC and a small stake in Italian club Atalanta.
Charles said that while it would be “fantastic” if Arctos could find more opportunities outside the US with a similar profile to the PSG and Aston Martin deals, it would be a “surprise” if the company made another major European investment in the US It will take 18 to 24 months, unless it involves helping an existing partner expand into the region.
“The data advantage, the brand advantage and the operational advantage of our company. . . is in North America,” he said. “And private equity firms often get into trouble when they move outside their area of expertise.”
European soccer has become increasingly popular with U.S. investors in recent years, and Americans now own shares in dozens of clubs. However, Charles said the European sports model – with promotion and relegation, broadcast money distributed based on league placing and a small group of dominant teams in each country – made it a less attractive investment opportunity.
“Every owner in North America receives the same amount of money from their league whether they finish first or last,” he said, making it “more predictable than pretty much anything else you can invest in private markets.”
Through direct and indirect investments, the company already has interests in several baseball teams, including the Boston Red Sox and the Los Angeles Dodgers, as well as a number of basketball franchises, such as the Golden State Warriors, the champions of the National Basketball Association 2022 Utah Jazz and the Sacramento Kings.
Dallas-based Arctos is among a small group of professional investors who have poured money into sports in recent years. Other companies include private equity firms RedBird Capital Partners, Ares Management, Silver Lake, Sixth Street and CVC Capital Partners.
While private equity investors are banned from owning teams in the National Football League, the world's richest sports league, several groups are preparing for a possible rule change.
Last year set a new record for sports investing thanks to a handful of major deals, including the $6 billion sale of the Washington Commanders NFL franchise to Apollo co-founder Josh Harris and the deal, World Wrestling Entertainment and the Ultimate Fighting Championship to combine.
Charles said the company's recent fundraising was a sign of a strong desire from institutional investors, including insurers, pension funds and family offices, to put money into the sector.
Comments are closed.