Sports franchises and entertainment seen as risky by most
Sentiment towards investing in sports and entertainment remains cautious. For over four-fifths of respondents, the risks involved in committing to PE funds focused significantly on sports franchises, music rights or gaming are simply too great. The top-cited risk consideration associated with investing in any of these sectors was high/unproven valuations. LPs also viewed unproven track records or unclear value creation plans as significant risk factors.
Despite this, nearly one in five investors is either already invested in funds focused on sports, music or gaming, or plans on doing so in the near future. Public pension funds, endowments and asset managers displayed greatest appetite towards these areas.
Of the three areas we asked about, sports attracted the most investment interest, with North American LPs exhibiting the strongest inclination towards the sector. Nearly 20% of investors from the region are already invested in sports-focused funds, whilst a further 14% are planning to do so in the next few years.
We also asked LPs for their thoughts on investment in women’s sport specifically and found that 63% see this sector as a significant investment opportunity for the future. In fact, 16% consider it as a viable investment opportunity today. When looking at the opinions of US LPs, this number increases to one in four.
Whilst it might be too early to tell where these sectors are headed, it is evident that exciting investment opportunities may come from anywhere.
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Despite high profile stories around private equity investment in sports, in this Barometer we fou...
Note: Gaming refers specifically to video gaming.
