We all grew up watching our favorite sports teams and noticing familiar faces in the VIP sections or courtside seats. These were wealthy fans who loved the game and had the cash to show it. Over time, some of them became more than just fans – they became team owners. Now, private equity owns a big chunk of the sports world, thanks to rising costs and financial pressures. So how did this happen?
The Beginning of the Takeover
The shortest answer is growing costs, rising standards, and inflation. While it might seem simple, the story goes deeper. This trend dates back to the early 2000s, when the Glazer family bought Manchester United. However, the real momentum picked up in the next decade, particularly with the 2008 acquisition of Manchester City by the Abu Dhabi United Group. Although not fully privately owned, a majority of City’s ownership came from private wealth, signaling a shift.
By the 2010s, it became clear that traditional revenue streams like broadcast rights, ticket sales, and merchandise couldn’t keep up with the skyrocketing costs needed to stay competitive. Teams started looking for constant, massive investments, which could only come from wealthy investors. This became especially evident after the COVID-19 pandemic, which cut off key \financial sources like live attendance and related revenue. For many teams, private equity became essential for survival.
A Slow and Steady Shift
This shift to private equity didn’t happen overnight. Even though events like the Glazers’ and Abu Dhabi United’s takeovers were high-profile, this was a slow-building trend. Early pioneers like CVC Capital Partners, who bought Formula 1 in 2005, and others helped set the stage. Over time, spending norms in sports transformed dramatically. By the mid-2010s, spending $100 million or more per season on player transfers became a necessity for achieving top results on a global scale.
Private Equity’s Expanding Role
Private equity doesn’t always mean full ownership. In leagues like the NBA, MLB, MLS, and NHL, there’s more than $200 billion invested by private firms. In the NBA alone, private equity accounts for 75% of all financial backing. A popular approach is buying stakes in sports groups or conglomerates. Fenway Sports Group (FSG), which owns Liverpool FC, is one example. Minority stakeholders in FSG include celebrities like LeBron James.
This hybrid ownership model is gaining traction with other big names such as Serena Williams (Miami Dolphins), Will Smith (Philadelphia 76ers), and David Beckham (Inter Miami). Some celebrities have moved beyond minority stakes to take majority control. For instance, Ronaldo Nazario owns Valladolid FC, while former players like Gary Neville and Ryan Giggs co-own Salford City FC.
What’s the Impact?
Private equity brings both opportunities and challenges. On the plus side, it provides stability and the funds needed to attract top talent. On the downside, smaller teams often can’t compete with the financial powerhouses, which could widen the gap between rich and poor clubs. There’s also the question of how this affects fans. When money takes center stage, traditional values and community connections may suffer. Still, for better or worse, sports is becoming a business where deep pockets often determine success.
What’s Next?
As inflation and financial demands keep rising, private equity’s influence in sports is only expected to grow. Whether this benefits or harms competition is a hot debate. One thing’s for sure: the era of wealthy fans turning into team owners isn’t going away anytime soon. What do you think? Is this shift just part of sports evolving, or does it risk hurting the game in the long run?
