NFL Owners Are Salivating Over This Private Equity Tidal Wave
Four stocks to get you out front ...
Long before Douglas MacArthur became “Dugout Doug” … long before he said “I shall return” (and did) … he was a lieutenant and a military aide to U.S. President Theodore Roosevelt, the Rough Rider, Hero of San Juan Hill and the youngest man to occupy the White House. As the story goes, that young Lt. MacArthur one day asked his Boss “to what he attributed his popularity.”
Roosevelt’s alleged (possibly apocryphal and definitely NSFW) response: “If you’ve got them by the balls, their hearts and minds will follow.”
That was 1906 …
This is 2024 …
The Teddy R. “hearts-and-minds” speech was about politics.
But here today, our hearts and minds are dominated by sports.
I’m talking about sports … at all levels … of all types. The sports we play … watch … analyze … and get energized by. From baseball to football to hockey to basketball to auto racing.
The lever-puller leaders in the $8.2 trillion private-equity (PE) business are “big-footing” just about everything these days. Earlier this week, for instance, Bloomberg reported that PE firms are “muscling into the world of life insurance and retirement savings and shaking up the business.” PE is also flooding into the artificial-intelligence market — signaling the vast profit potential there, too.
But the sports, teams and leagues we follow — controlling our “hearts and minds” as they do — stand as an even bigger profit play for private equity.
Private-equity investors see that massive moneymaking opportunity. But thanks to that “hearts-and-minds” effect, the PE billionaires also see their chance to control a market from bottom to top … in a way that no other sector offers.
That’s why we’ll soon see a tidal wave of private-equity cash wash through American sports of all types, at all levels.
The billionaire PE specialists and private-equity funds will start with local little-league-type travel tournaments … and will also baseball and football at the big-league level. And they won’t overlook anything in between.
In Part I of this report, I told you that the days of coaching your kid’s rec baseball or football team will be coming to an end. For instance, just in baseball, local youth baseball leagues are slowly surrendering to “travel” leagues, specialty camps and tournaments. Private equity is already targeting the $50 billion youth-sports industry.
Just look at David Blitzer and Josh Harris, private-equity guys with stakes in the NBA Philadelphia 76ers, the NHL New Jersey Blue Devils, the MLB Cleveland Guardians and the NFL Washington Commanders — and other pro teams or pro leagues. A few years back, this duo went on a buying spree that netted them more than a dozen companies with ties to baseball, softball, flag football and basketball. Just one of these companies — a baseball-tournament operator near Cooperstown — cost them $116 million for an 80% stake.
What at first seems incongruous — two big-time pros who own major-league baseball and football teams snapping up youth sports businesses — is actually downright brilliant. In fact, it pretty much parallels Teddy R’s worldview (only cleaner).
In short, if you get those kids early — and show them how and where to play and link them to the brands you want them to own — you’ll control their hearts and minds: Then, as they grow up — and graduate from Little League to Major League — you’ll transform them into fans for the pro sports leagues you also control.
I’m oversimplifying this, to be sure.
But I also see that the top leagues keep making it easier …
Just a few weeks ago, in fact, the National Football League revised its rules so that PE firms can buy stakes as high as 10% in NFL teams. It follows similar moves made by the MLB and NBA.
Obviously, folks, we’re done all this research and I’m sharing this with you for a reason. Private equity’s power move into sports — all sports — will supercharge the rise in franchise valuations, new revenue streams and new ways to enjoy our teams.
It’s also going to create interesting new ways for us to profit.
And, after all, why should private equity make all the money? You deserve a profit shot of your own.
In today’s Stock Picker’s Corner (SPC) issue, we’re doing just that: We’ve identified four beneficiaries of our own — all quality companies with a lot of possible upside for Wealth Builders like you and me. Some of them our early SPC Premium Family have heard about — with different “investment cases.”
But each one has earned a new and closer look.