Arktos, an upstart private equity firm set up to buy in pro sports teams, has secured more than $3 billion in investor commitments, Nerdshala has learned. The firm had originally planned to raise between $1 billion and $1.5 billion.
why it matters: From American basketball to European football to New Zealand rugby, private equity has become obsessed with pro sports. And Arctos took advantage of this enthusiasm on the fundraising circuit.
description: Arctos raised approximately $2.1 billion for its debut fund, as well as another $1 billion in co-investments and separately managed account commitments.
- Word is that nearly half of that money is already committed to minority stakes in teams like the Sacramento Kings, Golden State Warriors and Boston Red Sox.
- Arctos declined to comment.
Flashback: Eighteen months ago we reported that a group of investment and sports industry veterinarians were forming the first private equity firm dedicated to buying stakes in professional sports teams. It felt novel and niche, a one-of-a-kind bar that could raise capital from entrepreneurial special-seated portfolio managers who secretly anticipated some front-row tickets.
big picture: Investment strategies around pro sports are moving beyond the original thesis set forth by Arctos and Dial Capital’s NBA-specific fund, which was to provide liquidity to passive minority owners (i.e., mirroring private equity secondary).
- Some deals, both outright and in-market, are more about growth equity than exit.
- A lot of this includes media and marketing initiatives, but eventually it should extend to real estate.
- We’re also seeing pro sports deals from generalist private equity funds like the Sixth Street buyout in the San Antonio Spurs.
Bottom-line: Private equity has taken over the field and plans to stay there.