The Largest Holding Companies In Professional Sports

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Hey Friends,

We have seen an acceleration in the growth of holding companies within professional sports — both within the total quantity and estimated valuation.

The general idea is that a holding company purchases multiple professional sports franchises, independent of whether they are geographically located near each other or not, and realizes efficiencies through an expanded business that can scale fast.

One example would be Fenway Sports Group, the owners of Liverpool FC, the Boston Red Sox, the Pittsburgh Penguins, and more. Another example would be Kroenke Sports & Entertainment, the owners of Arsenal FC, the Los Angeles Rams, the Denver Nuggets, and others.

And according to Forbes, the top 20 largest holding companies in sports grew by an estimated 22% last year, from $102 billion in 2021 to $124 billion today.

Here are the Top 10:

1. Liberty MediaValue: $17.20 billionProperties: Atlanta Braves, Formula 1, Drone Racing League, Kroenke Arena Company, Meyer Shank Racing

2. Kroenke Sports & EntertainmentValue: $10.54 billionProperties: Los Angeles Rams, Colorado Avalanche, Denver Nuggets, Arsenal FC, esports investments, Colorado Rapids, Colorado Mammoth, Altitude Sports and Entertainment, Kroenke Arena Company

3. Fenway Sports GroupValue: $9.81 billionProperties: Boston Red Sox, Liverpool FC, Roush Fenway Keselowski Racing, NESN, Fenway Sports Management, Pittsburgh Penguins, real estate

4. Jerry JonesValue: $8.85 billionProperties: Dallas Cowboys, Legends Hospitality, The Star, Complexity Gaming

5. Madison Square Garden SportsValue: $7.84 billionProperties: New York Knicks, New York Rangers, Counter Logic Gaming, Hartford Wolf Pack

6. Yankee Global EnterprisesValue: $6.81 billionProperties: New York Yankees, Legends Hospitality, YES Network, New York City FC, minor league baseball teams

7. Kraft FamilyValue: $5.88 billionProperties: New England Patriots, New England Revolution, UFC, Kraft Analytics Group, DraftKings, Skillz, Boston Uprising

8. Glazer FamilyValue: $5.84 billionProperties: Manchester United, Tampa Bay Buccaneers

9. Paul G. Allen TrustValue: $5.69 billionProperties: Seattle Seahawks, Portland Trail Blazers, Seattle Sounders*

10. City Football GroupValue: $5.00 billionProperties: Manchester City, New York City FC, Melbourne City FC

The underlying mechanics driving the valuation of these holding companies higher is probably pretty obvious — virtually every major professional sports league in the United States saw a significant increase in team valuations last year.

The NFL and NHL announced new media deals and saw their average team valuation increase 14% and 30% respectively. The NBA was up 13% in 2021. The average MLS team is now worth over half a billion dollars, and even the MLB saw a 3% increase last year, despite losing a significant amount of revenue due to COVID-19.

Across sports leagues globally, the top 50 most valuable teams saw a 10% increase in valuation year-over-year — here’s a good visual from Sportico on US valuations.

We have talked about this a lot over the last year or so, but I think the growth of holding companies, or roll-ups, as some might call them, is only going to continue.

Similar to companies like Berkshire Hathaway, Johnson & Johnson, Unilever, SoftBank, Kraft Heinz, and others, the synergies that are created by acquiring & combining multiple sports assets into one portfolio can be substantial.

An increase in revenue is great, of course. But the ability to distribute talent across multiple assets is nearly invaluable, and capital becomes much more efficient at scale.

The increase in interest from private equity firms also adds a unique layer.

These firms have billions of dollars in dry powder to deploy, and sports assets are desirable to them — they have a long history of price appreciation; they are uncorrelated to traditional financial markets; they are relatively illiquid so management fees become locked in, and there are tailwinds like sports betting & streaming that are expected to propel team valuations even higher.

My guess is that we will see more holding companies go public in the next few years.

The truth is that these businesses become much harder to sell once they are combined. Sure, maybe you find a minority investor looking for access, but there are very few people that can afford a $5 billion to $20 billion illiquid asset, not to mention that they have to be interested in owning & operating a sports conglomerate also.

That shift to liquid, publicly-traded sports assets will be interesting to watch. The current publicly traded vehicles in sports haven’t performed all that well recently—Liberty Media is up 30% over the last five years compared to the S&P 500 at 112%—but I imagine an increase in quantity will help change that given how private valuations have trended over the last 5-10 years.

Regardless, the trend is clear — sports assets are being grouped together in holding companies, asset prices continue to trend higher, and private equity firms are calling.

Have a great day, and we’ll talk tomorrow.

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