As private equity reshapes the very fabric of sports ownership, the game plan for owners and investors is clear: Understanding the business world of sports can be a necessity for those seeking to capture value off the field. Deloitte’s private equity in sports playbook lays out some key considerations for making an informed decision before striking a deal.
Private equity’s playbook: The power of the pre-deal analysis
Before diving into the high-stakes world of sports team investments, private equity firms may benefit from assessing the playing field. Understanding the complexities and risks of owning a franchise or asset is important to making informed decisions. Firms may dive deeper into the areas of asset valuation, risk assessment, cash-flow dynamics, and tax structure in the lead up to a sports private equity deal.
Playbook for owners: Evaluating private equity’s fit
The decision to bring in outside investors is as varied as the game itself, with owners driven by their own unique visions and motivations. With valuations soaring in today’s market, owners may opt to sell a portion of their stake to capitalize on the top-dollar bids private equity firms are known for. And while private equity firms typically seek controlling stakes, noncontrolling interests are more common. For owners, finding the appropriate balance between financial gain and maintaining autonomy is a critical step in navigating the introduction of private equity investment to their team.
Understanding the business world of the sports industry
In the dynamic world of sports private equity, the game extends far beyond the field. Today’s business is no longer just about game day profits; it’s about understanding the business elements of sports that drives success in this arena. A multidisciplinary approach to sports investing that combines leading experts in sports with seasoned business advisors can change the game when it comes to establishing a holistic view of the industry, giving owners and investors alike an unparalleled edge for unlocking new revenue, identifying emerging trends, mitigating risks, and more.
As private equity continues to redefine sports ownership, those who adapt and embrace a strategic approach to investment are often well-positioned to succeed in this dynamic and lucrative industry. Download Deloitte’s complete private equity in sports playbook to read more about private equity in sports—and navigate your investments with confidence.
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