Multiple Expansion Without Control

Professional sports has become an institutional asset class faster than almost anyone expected. Private equity firms have moved from being outsiders to holding stakes across major leagues, franchise valuations have reached levels that make traditional ownership structures increasingly difficult to sustain, and the leagues themselves have gradually rewritten their rules to accommodate institutional capital. But there is a catch. The funds have been invited into the asset class largely on terms that prevent them from doing what private equity traditionally does best: taking control, changing the business and engineering the exit.

That makes sports an unusual investment proposition. The value of the underlying asset is rising rapidly, but much of that appreciation comes from factors that a minority investor cannot manufacture. Media rights are expanding, sponsorship and betting are creating new revenue pools, and the supply of major-league franchises remains effectively fixed. Those dynamics can push valuations higher without requiring an investor to improve the underlying business. In other words, sports increasingly looks like a market where multiple expansion matters more than operational value creation — precisely the kind of return private equity has spent the past decade trying to move away from.

The clearest illustration is the Los Angeles Lakers. Mark Walter acquired control of the franchise at a $10 billion valuation in October 2025. Fourteen months later, the Lakers changed hands again, this time at $12.5 billion, creating roughly $2.5 billion of value in less than a year. Nothing operational changed enough to explain the increase: the roster, arena, media contracts and front office remained substantially the same. The price moved because the price could move. The Lakers are a scarce asset in a global city, and scarce assets tend to trade on what the next buyer is willing to pay rather than simply on the cash they currently generate.

That distinction matters because neither side of those transactions was a traditional buyout fund. Walter runs Guggenheim and owns the Dodgers; Josh Kushner runs Thrive Capital; Bob Iger is a media executive. Individuals and family offices captured the appreciation. Private equity, despite increasingly being allowed to participate in sports, captured none of it. Jerry Buss originally bought the Lakers for $67.5 million in 1979. Forty-seven years later, the franchise was worth $12.5 billion. Forbes puts the Lakers at 18.1x revenue, a valuation that reflects brand, history, market position and scarcity as much as — or more than — the franchise’s ability to generate cash.

The Lakers are one transaction, but the broader structure is increasingly difficult to ignore. The returns available in professional sports accrue disproportionately to whoever owns the scarce asset and has the patience to wait for the next buyer. That owner is still more likely to be an individual or family office than a fund.

The Sports Economy Is Getting Bigger — and More Diversified

The underlying economics explain why institutional investors want in. Sports is no longer simply a media-rights business. PwC’s latest survey of more than 500 senior sports executives shows that expected growth is spread across the commercial ecosystem, with team and franchise valuations expected to grow 7.9% annually in 2025, followed by betting-related revenue at 7.7% and commercial and sponsorship revenue at 6.5%. Ticketing and hospitality and merchandise and consumer revenues are both expected to grow 6.2%. Media rights, by contrast, are expected to grow just 5.1%, down from 6.1% in 2023.

The significance is less about any individual number than about the changing composition of the investment case. A franchise today sits at the centre of a much broader monetisation ecosystem: broadcasting, sponsorship, betting, ticketing, merchandise, digital engagement and international audiences all contribute to the economics of the asset. The global sports market is estimated at roughly $417 billion, with gaming and betting alone accounting for around $133 billion and media rights another $61 billion, according to Kearney. A minority investor in a team is therefore not simply buying a claim on ticket sales or local attendance; it is buying exposure to the expansion of an entire commercial ecosystem surrounding a scarce asset.

That is part of what has made sports increasingly attractive to institutional capital. Between 2019 and 2024, private equity firms invested more than $55 billion in sports-related assets, while institutional investors held positions in more than 74 North American professional teams by 2026, according to the CFA Institute. Global sports transactions also roughly doubled from 96 in 2023 to 190 in 2024, although that broader figure includes media platforms, data businesses, stadiums and other sports assets rather than just franchise ownership. The narrower franchise market tells the same story: PitchBook’s tally shows that private equity activity across major-league teams reached a record in 2025.

The leagues have noticed. And they have responded.

The Leagues Opened the Door — on Their Terms

Professional sports was historically a difficult market for institutional investors because league rules were designed around individual ownership, not pooled capital. That began to change with MLB in 2019, followed by the NBA in 2021 and, most significantly, the NFL in August 2024. By then, the question was no longer whether private equity would enter sports. It was how much of the asset the leagues were willing to let it own.

The answer has been remarkably consistent: enough to provide liquidity, not enough to provide control.

The logic behind that decision is straightforward. Franchise valuations have reached levels where even extremely wealthy individuals can struggle to provide liquidity, finance stadium investments and manage concentration risk alone. At the same time, a generation of long-standing owners is reaching succession points, creating another reason to bring in outside capital. There was also a more immediate fiscal incentive: the estate-tax changes introduced in 2017 were scheduled to sunset at the end of 2025, giving some families an additional reason to restructure ownership. Private equity offered a convenient solution. Owners could monetise part of their position without selling the asset altogether.

The NFL is the clearest example. Under the framework approved in 2024, a single approved fund can own no more than 10% of a franchise, with a minimum 3% stake and a required six-year holding period.

The investment is passive, with no vote, no board seat and no governance rights, and a fund can hold stakes in no more than six teams. The rules passed 31–1 among owners. The other leagues allow somewhat different structures, but the basic architecture is similar: minority ownership, limited governance and a controlling owner sitting above the institutional investor.

That structure is not a technical detail. It is the central feature of the asset class. Private equity has effectively been given access to sports without being given the right to run sports.

A Playbook Without Its Levers

Traditional private equity is built around control. A sponsor buys a business, directs management, improves operations, uses leverage to enhance equity returns and eventually determines when and how to exit. The model varies by strategy, but the principle is consistent: the sponsor owns the levers that determine the return. Sports turns that model upside down.

With a minority stake, a fund generally cannot replace management, restructure the asset, determine capital allocation, add leverage at will or decide when the controlling shareholder sells. Deloitte notes that minority investors can be sidelined on management decisions and exit strategy, while the CFA Institute describes sports investing as a market where private capital typically operates without control or the ability to restructure. The return therefore depends much more heavily on the performance of the asset class itself.

This is where the language becomes important. The industry often calls these investors patient capital. That is accurate, but incomplete. In a traditional buyout, patience is a choice. In sports, it is often part of the contract. A fund is effectively underwriting a control-style asset with a non-control return profile. It has the analytical discipline of a buyout, but fewer of the tools. It can study the franchise, underwrite the media rights, model revenue growth and assess the scarcity premium, but once the investment is made, most of the operating levers belong to someone else. That makes sports a peculiar form of private equity exposure: the sponsor is paying for access to the asset, not for the ability to transform it.

What Does Minority Capital Actually Buy?

If the fund cannot manufacture the return, then the return has to come from the asset itself. In sports, there are two major engines: media-rights growth and structural scarcity.

The media-rights story is relatively straightforward. In 2024, the NBA signed an 11-year, $76 billion national television package that is expected to generate roughly $4 billion more per year for teams than the agreements it replaced. A minority investor therefore owns exposure to a revenue stream that is already being repriced upward under a long-term contractual framework.

Scarcity is even more important. There are only 30 NBA teams and 32 NFL teams, and the leagues have no obvious mechanism for creating dozens of new franchises. The supply is effectively fixed. That makes a franchise fundamentally different from an ordinary company: a competitor cannot simply raise capital, enter the market and create another NFL team.

PwC’s data captures the distinction. When the firm asked more than 500 sports executives where they expected growth to come from, the revenue stream expected to slow was media rights, falling from 6.1% to 5.1%, while the fastest-growing category was team and franchise valuation itself, at 7.9%. The executives running the industry effectively expect the value of the asset to rise faster than the cash generated by the asset.

There is an important caveat: PwC’s survey is global and European-weighted, so it should not be interpreted as a pure forecast for US franchise valuations. But the direction is consistent with the broader market. The most attractive sports sub-segment remains the rights owners themselves — teams and leagues — selected by 38% of respondents. Investors are still trying to buy the scarce asset, even as the price of that asset continues to rise.

And that leads to the central question of the investment case. If the asset appreciates faster than its underlying cash flow, are investors buying growth — or buying the next multiple?

Where Control Still Resides

The answer becomes clearer when looking at who actually owns the controlling stakes. The pattern is striking. Mark Walter bought the Lakers through his own vehicles. Josh Kushner and Bob Iger acquired the franchise personally. When the Boston Celtics changed hands at a North American record valuation in 2025, the buyer was Bill Chisholm, himself a private-equity executive and co-founder of a technology buyout firm. But he did not buy the Celtics through his fund. He bought control personally.

The same distinction appears with Josh Harris, co-founder of a major buyout firm, who controls the Washington Commanders and the Philadelphia 76ers through personal holdings. Where funds do appear at the ownership table, they are generally minority passengers. Sixth Street, for example, sits within the ownership groups of both the San Antonio Spurs and the New England Patriots, including a 3% stake in the latter. The important distinction, then, is not really between private-equity professionals and everyone else. Many of the individuals controlling sports franchises have made their fortunes in private equity. The distinction is between the fund and the person. The person can own control. The fund, by rule, generally cannot.

That difference matters because control is particularly valuable when the underlying asset is scarce and has no natural expiry date. A person can hold a franchise for decades, pass it to the next generation or simply wait for the right buyer. A private-equity fund has LPs, a fund life and an eventual requirement to return capital. That makes the individual better suited to capture the exact type of appreciation that sports has increasingly delivered.

The Multiple Is the Story

The valuation data makes the argument harder to dismiss. Across the NBA, franchise revenue multiples increased from 7.3x in 2019–20 to 11.7x in 2024 and 12.9x in 2025. The Lakers are at 18.1x revenue. These are not small changes in valuation methodology. They represent a substantial repricing of what investors are willing to pay for each dollar of franchise revenue.

The average NBA franchise was worth roughly $2.5 billion four seasons ago. It is now worth approximately $5.4 billion, while the league’s 30 teams are collectively valued at around $160 billion. The increase cannot be explained simply by a doubling of operating performance. It reflects the market’s willingness to assign a higher value to the same scarce underlying asset.

That is where the PE debate becomes interesting. The private-equity industry has spent years arguing that multiple expansion alone is not enough. Higher entry prices have pushed sponsors toward operational improvement, margin expansion, technology investments and more sophisticated value-creation plans. The first report in this series made exactly that point: modern PE returns increasingly need to be manufactured rather than simply bought.

Professional sports is almost the inverse. The return cannot easily be manufactured because the rules prevent the investor from pulling the levers. It must be bought by paying today’s price and waiting for tomorrow’s buyer to pay more. That does not necessarily make sports a bad investment. It makes it a different investment.

Bubble or New Normal?

The bear case is easy to articulate. Paying $12.5 billion for an asset that generates only a few hundred million dollars in operating income assumes that the next buyer will accept an even higher multiple. That can work for a long time when demand for the asset is deep and supply is fixed. It becomes much less comfortable when rates remain high, revenue growth slows and the scarcity premium begins to compress. There is also no immediate guarantee of another media-rights step-change on the scale of the NBA’s $76 billion package. The most powerful recent catalyst has already been incorporated into many valuations. If the next round of rights growth is more modest, investors will have to rely increasingly on continued multiple expansion.

The bull case is scarcity itself. There are very few assets in the world that combine global brands, permanent market position, enormous audiences and effectively fixed supply. A franchise in a major sports league cannot be replicated by a competitor. The list of potential buyers is long, and the number of available assets is tiny. That creates a structural scarcity premium that could remain elevated even if revenue growth normalises.

There is one divergence worth watching closely. 55% of sports executives expect capital to move toward emerging and breakaway sports models, while 63% of fans still prefer established leagues and traditional structures. The capital is looking for the next growth opportunity, while the consumer remains disproportionately attached to the incumbents.

For PE investors, that distinction matters. Emerging sports may offer more room for operational value creation and lower entry valuations, but they lack the scarcity and institutional depth of the established leagues. The major franchises offer the opposite trade: extraordinary scarcity and proven demand, but increasingly limited room for a minority investor to manufacture additional value.

Conclusion

Private equity has entered professional sports. But the more interesting question is whether professional sports has actually entered private equity. The asset class offers almost everything institutional investors want: growing revenues, global audiences, strong brands, recurring media income and a supply of franchises that cannot easily expand. The leagues are becoming more comfortable with institutional capital, and the number of transactions continues to rise.

But the structure of ownership creates a fundamental contradiction. Private equity is built around the ability to control an asset and manufacture a return through operations, leverage and an eventual exit. Sports increasingly offers returns through something else: scarcity, long-duration ownership and multiple expansion. That distinction explains why the biggest gains have accrued not to the funds, but to the individuals who control the franchises.

The leagues get liquidity without surrendering control. The funds get exposure to some of the most coveted assets in the world without the ability to reshape them. And the individual owner gets to hold the scarce, appreciating trophy and decide when — or whether — to sell. That is why the sports-PE relationship is so unusual. Private equity has finally been invited to the table, but the person sitting at the head of it still owns the asset.

Sources

CFA Institute — "Private Equity and Sports: A Natural Partnership" — https://www.cfainstitute.org/insights/articles/sports-investment-private-equity

PwC — "Sports Industry: Blazing a New Trail (Global Sports Survey, 9th Edition)" — https://www.pwc.ch/en/publications/2026/ch-pwc-global-sports-survey-2026.pdf

PitchBook — "Private equity in US sports: Every PE connection to the major leagues" — https://pitchbook.com/news/articles/private-equity-sports-investment-dashboard

Forbes — "The Most Valuable NBA Teams 2025" — https://www.forbes.com/sites/justinteitelbaum/2025/10/23/the-most-valuable-nba-teams-2025/

ESPN — "NFL owners approve private equity investment" — https://www.espn.com/nfl/story/_/id/41013650/nfl-owners-approve-private-equity-investment

Deloitte — "Private Equity in Sports" — https://www.deloitte.com/global/en/services/deloitte-private/perspectives/private-equity-in-sports.html

Deloitte / Oaklins — "Spot On, Sports" (deal-count data, Feb 2026) — https://www.deloitte.com/ca/en/Industries/telecom-media-entertainment/perspectives/2026-global-sports-industry-outlook.html

Reuters — "More, more, more: Lakers deal is latest sports gold rush" — https://www.reuters.com/legal/transactional/more-more-more-lakers-deal-is-latest-sports-gold-rush-2026-08-14/