Sports Opportunities
December 2024
- Sports as a business and investable asset class offers some compelling characteristics
- We believe that growing, multi-faceted fan engagement presents substantial potential monetisation opportunities
- Strong fundamentals should continue to present compelling entry points for investors moving forward
1. What do you think could be the biggest challenge or opportunity for clients in 2025?
Clients are always seeking uncorrelated, attractive risk/reward ratios on investments. Sports as a business and asset class offers some compelling characteristics. The globalisation and institutionalisation of sports as an investable asset class should continue to provide fertile ground for differentiated capital growth opportunities.
Avenue Sports offers investors exposure to a growing asset class to which they would not otherwise have access. Fan engagement through live viewership typically drives media revenue and creates premium advertising opportunities, making sports investments attractive. Additionally, sports investments have the potential to benefit from secular growth trends, low correlation with traditional markets and a deep fan connection, leading to numerous possible monetisable opportunities.
2. What do you see as the one major investment opportunity for you in 2025 and how can you capitalise on it?
At a time when traditional media is struggling to attract and maintain viewers, live sports draw consistently massive audiences. Growing, multi-faceted fan engagement presents substantial potential monetisation opportunities and provides a compelling case for investment. Over the past 10 years (to 30 September 2024) the average team value within the four major North American sports leagues has appreciated at an average annual growth rate of over 15%, which is approximately a 50% higher return than the S&P 500 index’s annualised return over that same period*. We see this trend continuing in the coming years.
There are high entry barriers to sports investment and relationships play a key role in sourcing and winning deals. Avenue leverages an exclusive team of athletes to source deals and offer insights obtained from their careers in sports, a unique aspect of our strategy. We invest in a range of sports, including established and emerging leagues and women’s sports as well as sports-adjacent businesses. While globally focused, we lean toward opportunities in North America due to the market’s size and higher franchise values. Nevertheless, we have found interesting opportunities in Europe and will continue to explore other regions as well.
3. What is the biggest risk to your asset class next year and how can you mitigate that risk, or even turn it into an advantage?
Despite sports franchise valuations increasing significantly over the last decade, we believe strong fundamentals, the enduring scarcity value and barriers to entry should continue to present compelling entry points moving forward. We have key governance controls in place including, but not limited to, board seats, comprehensive consent rights, expansive transfer rights and information rights - all of which should help us mitigate risk across the portfolio.
Avenue is primarily focused on specialty lending, opportunistic credit and other special situations investments in the US, Europe and Asia. This focus and extensive experience allow us to invest strategically in both debt and equity with the aim of optimising risk-reward opportunities. We focus on high-yield debt with low loan-to-value ratios for teams and leagues underserved by traditional lenders and invest in emerging leagues and teams with significant growth potential. Avenue prefers investments where we have control rights, allowing us to manage exits effectively.
GAM Investments partners with Avenue Capital to offer the Avenue Sports Opportunities strategy, led by Marc Lasry, former owner of the Milwaukee Bucks.
*Source: Forbes and S&P Capital IQ as of September 30, 2024
Important disclosures and information
The information contained herein is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained herein may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information contained herein. Past performance is no indicator of current or future trends. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice or an invitation to invest in any GAM product or strategy. Reference to a security is not a recommendation to buy or sell that security. The securities listed were selected from the universe of securities covered by the portfolio managers to assist the reader in better understanding the themes presented. The securities included are not necessarily held by any portfolio nor represent any recommendations by the portfolio managers nor a guarantee that objectives will be realized.
This material contains forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of GAM or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made.
The information contained herein is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained herein may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information contained herein. Past performance is no indicator of current or future trends. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice or an invitation to invest in any GAM product or strategy. Reference to a security is not a recommendation to buy or sell that security. The securities listed were selected from the universe of securities covered by the portfolio managers to assist the reader in better understanding the themes presented. The securities included are not necessarily held by any portfolio nor represent any recommendations by the portfolio managers nor a guarantee that objectives will be realized.
This material contains forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of GAM or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made.