Smith in ‘PE Hub’ on Private Equity Investment in Sports Franchises

Colorado Springs Partner Steve Smith was quoted extensively Sept. 10 by PE Hub concerning a recent change in bylaws which allows private equity (PE) funds and institutions to invest in sports leagues. Up until last year, these types of investors were barred from buying North American sports franchises (with the exception of the NHL). Smith, co-leader of BCLP’s Sport & Entertainment Practice, said while investing in professional sports teams requires “a significant amount of money,” the industry possesses scarcity value; there are limited viable ownership opportunities to meet demand, he said. This keeps valuations soaring, even amid the pandemic. “If you look at profit [for sports franchises] over [one] year, a lot of them lose money – especially in this covid era – but I expect franchise valuations to go up because there are limited teams,” Smith said.