One hundred years ago, in August 1923, the Green Bay Packers football club was founded in a public stock sale.
The Packers sold 1,000 shares for $5 each, raising $5,000 (about $90,000 today, adjusted for inflation). The team has held five stock sales since then, in 1935, 1950, 1997, 2011 and 2021, but despite raising tens of millions of dollars, the Packers’ unusual structure has a big asterisk: the team is a nonprofit in owned by the government, and the stock? It cannot be resold, exchanged or returned to the team.
While the Packers paved the way for the public to own part of a sports team (even if they can’t do much with it), sports have remained primarily an investment for the ultra-wealthy in recent decades. With most major sports teams worth billions of dollars, few entire leagues left for sale, and the value of media rights deals exploding, there’s a lot of money at stake.
In fact, it’s exactly that field, the incredible power of live sports, that is at the heart of TKO Group Holdings – founded on September 12 when the WWE merged with Endeavor’s UFC – led by CEO Ari Emanuel and president and COO Mark Shapiro. The WWE certainly isn’t a “sports league” per se – it’s an entertainment product – but the UFC certainly is (while the WWE is scripted, the UFC’s mixed martial arts fights are completely legitimate, just like any other professional sporting events). And the live programs they produce are in high demand.
In an interview with The Hollywood ReporterShapiro touts TKO as a pure sports company. “Let’s not forget the financial profile for investors, right?” he says of the new company. “We will have a very healthy balance sheet, under three times leverage with significant free cash flow conversion, highly profitable, scalable and at the epicenter of live sports and entertainment, which is what matters most today.”
Wall Street seems to agree.
“As the media industry becomes increasingly fragmented, there is clear scarcity value for premium IP companies,” Bank of America’s Jessica Reif Ehrlich wrote on August 28. “We believe TKO reflects an opportunity to own a quasi-sports league with robust programming and an attractive financial profile that delivers significant revenue/cost savings.”
But there are also signs that the exclusivity of sports investing is beginning to crack, as teams, leagues and owners look to the public markets or other types of investors to pursue growth – or an exit from expensive investments.
Most recently, John Malone-controlled Liberty Media spun off the Atlanta Braves, a perennial MLB contender, into its own stock. Previously, investors could purchase Liberty Media shares (which also included ownership of the Braves), but the spinout gives investors the chance to directly own a share of the team, which will win a division title and playoffs on September 14 captured a berth.
Liberty, which also has major stakes in SiriusXM, Live Nation and other companies, has been aggressive in the sports world — and in making those sports easily accessible to investors. Liberty also launched a tracking share for its Formula 1 racing activities, giving investors a stake in the future success of the increasingly popular sport.
To be fair, some sports teams have been accessible on the public market for a while (Manchester United has been traded on the New York Stock Exchange since 2012, and the James Dolan-controlled New York Knicks NBA team and the New York Rangers NHL team that was spun off from the Madison Square Garden company in 2020 and spun off into a standalone company, MSG Sports), but the flurry of recent deals suggests a desire by team and league owners to navigate the waters of the markets test, where die-hard fans may feel compelled to own a piece of their favorite team (and share in the windfall of a championship or a TV deal).
Of course, strong ownership is still important. In an August 21 note, Morgan Stanley’s Ben Swinburne noted that the market value of MSG Sports (the Knicks and Rangers) appeared low compared to the Braves, although the success of those New York teams is likely a factor.
“This likely reflects the market’s relatively greater confidence in Liberty’s management team maximizing the value of the Braves versus the management of MSG and the Knicks and Rangers,” Swinburne wrote. “One way to potentially unlock value is to sell a minority stake in one or both teams, which is allowed under NBA and NHL rules. While management indicated it was ‘open’ to a minority sale, we have no visibility on the possibility of this happening or on a timeline.”
The desire to own a piece of live sports is also spreading to the institutional private markets, where the merely wealthy (as opposed to the ultra-rich) invest their money.
This month, the NFL is launching an ownership committee that will review the full range of ownership policies, including “expanding opportunities for more diverse ownership,” according to NFL Commissioner Roger Goodell.
Changes could include allowing private equity firms, pension funds and public companies to make up a larger share of potential NFL ownership groups and give their investors and shareholders a piece of the NFL pie.
And Goldman Sachs opened a “sports franchise” division in September, aimed at giving its asset management clients the ability to invest in terms, leagues, stadiums and other sports opportunities.
Goldman Sachs’ clients may not be big retail investors, but neither are they billionaires who can buy a team on their own. For team owners like MSG, they can be a good source of money looking for a piece of the action.
Take Vince McMahon, the executive chairman of TKO who built the WWE. On September 15, TKO filed an S-1 with the SEC, registering McMahon’s stock worth approximately $2.8 billion for sale.
McMahon may not sell immediately or at all, but he has the right to do so now. And maybe there are millions of wrestling or MMA fans eager to buy.
This story first appeared in the September 20 issue of The Hollywood Reporter magazine. Click here to subscribe.