From Player to Investor: Why Professional Sports Is Becoming an Asset Class

Professional athletes understand the business of sports from a perspective few investors ever will. They see the demand firsthand. They understand the value of media rights, sponsorships, live audiences, and fan loyalty. And increasingly, the financial world is recognizing something athletes have known for years: professional sports are more than entertainment. They are also a valuable and growing business sector.

That shift is creating an interesting question for athletes: Should the people who create so much of the value in sports also consider owning some of the economics surrounding it?

 

The Extraordinary Rise in Franchise Values

Consider the Los Angeles Lakers. Jerry Buss purchased the Lakers, along with other assets, in 1979 for $67.5 million. Decades later, the franchise reached a valuation measured in the billions. Stories like that naturally attract investors.

But the more important lesson isn’t that everyone should try to buy the next Lakers. It’s that the economics surrounding professional sports have changed dramatically. What were once comparatively small, locally owned businesses have evolved into scarce global assets attracting wealthy families, institutional investors, private-equity firms, and other sophisticated pools of capital. For today’s athlete, that’s worth paying attention to.

Why Sports Can Be Different from a Conventional Business

A professional sports franchise has characteristics that are difficult to replicate. There are only so many teams. Fan loyalty can persist for generations. Major sporting events remain some of the rare programming that large audiences want to watch live. In many North American leagues, there are additional structural characteristics that make franchises particularly interesting businesses: shared media economics, territorial protections, and various mechanisms that can create greater financial stability than you’d find in many conventional businesses.

Scarcity matters. You can build another hotel, restaurant, software company, or apartment building. Creating another NHL, NBA, NFL, or MLB franchise is considerably more complicated. That doesn’t make sports investments immune to risk. It does help explain why investors have become increasingly interested in them.

You Don’t Have to Own a Team to Invest in Sports

This may be the most relevant development for athletes. For years, when someone talked about “investing in sports,” the obvious image was a billionaire buying a team. That’s no longer the whole story. Investment opportunities can potentially exist throughout the sports ecosystem, including:

• Minority interests in teams
• Sports-related private equity
• Private credit and lending
• Stadium and surrounding real estate
• Media and broadcasting rights
• Emerging sports and leagues
• College athletics and related businesses
• Technology, analytics, and infrastructure serving teams and leagues

That broader opportunity set matters because purchasing control of a major franchise is simply unrealistic for all but an extraordinarily small group of investors. Participating in the economics surrounding sports may be much more attainable.

Access to these opportunities varies, and some investments may be subject to investor eligibility requirements, league-specific restrictions, or other regulatory considerations.

Athletes May Have an Unusual Perspective

Professional athletes potentially bring something to sports investing that the average investor doesn’t: domain expertise. If you spent a decade inside a particular sport, you probably understand aspects of its ecosystem that aren’t obvious from a spreadsheet. You may have firsthand experience with sponsors, equipment companies, media businesses, training technologies, and other businesses surrounding the game. But there’s an important distinction between having useful insight and having a good investment.

Athletes can sometimes be offered investments precisely because they’re athletes. Their name, network, or promotional value may be as important to the person offering the deal as their capital. That makes disciplined due diligence particularly important. Whenever celebrity, access, and investing overlap, the fundamental question should remain: Would I still consider this an attractive investment if my name weren’t attached to it?

Great Asset. Bad Price?

There’s another important lesson hidden inside the enormous appreciation of sports franchises. A fantastic historical investment isn’t automatically a fantastic investment today. An asset that has increased tremendously in value can continue appreciating, but a new investor is purchasing at today’s valuation, not the price an owner paid decades ago. That’s why we believe athletes should approach sports investments with the same discipline they would apply to any other private investment.

Questions should include:

• What’s my entry valuation? Understand what you’re actually paying relative to the business’s revenues, earnings, and realistic growth prospects.
• Where will my return come from? Is the investment expected to generate cash, or does the thesis depend principally on someone paying a higher valuation later?
• How liquid is it? A private investment that looks valuable on paper isn’t the same thing as cash you can access.
• What rights do I receive? A small minority interest can have very different governance and economic rights from controlling ownership.
• How do I eventually exit? Understand transfer restrictions, potential buyers, and possible liquidity events before investing.
• How does it fit with everything else I own? An athlete whose career, compensation, and endorsement income already depend heavily on sports may want to think carefully before concentrating even more wealth in the same industry.

That last issue is particularly important. Your career is already an investment in sports. Professional athletes have a financial characteristic most traditional investors don’t: a substantial part of their human capital is already concentrated in one industry. Your salary comes from sports. Your bonuses may come from sports. Your endorsements may depend on sports. Your future broadcasting, coaching, or business opportunities could also remain connected to sports.

If you then put a significant portion of your investment portfolio into sports-related assets, that concentration can become even greater. That’s not necessarily a reason to avoid sports investments. It’s a reason to evaluate them as part of an overall financial plan rather than as isolated opportunities.

Ultimately, the question is whether a sports investment makes sense for you, given everything else you own and the financial security you’re working to build.

From Earning in Sports to Owning

For generations, the financial relationship between athletes and professional sports was relatively straightforward. Athletes played. Owners owned. That line is becoming considerably less clear.

As investment capital moves further into franchises and the businesses surrounding them, current and former players may have more opportunities to participate as owners and investors rather than only employees or endorsers. For the right athlete, at the right valuation, and within a diversified financial plan, that could be compelling. But the glamour of owning part of a team, league, or sports business shouldn’t replace investment discipline.

The goal is to build lasting wealth that supports your financial future long after the game is over.

At Cardinal Point Athlete Advisors, we help athletes evaluate investment opportunities within the context of their overall financial plans, including portfolio diversification, liquidity needs, and long-term wealth management goals.