April 25, 2024

Arctos Closes Second Sports Team Investment Fund with $4.1B Assets

Arctos Partners said its second sports team investment fund has amassed more than $4.1 billion, as the private equity group announced the closing of the capital raising for the vehicle Tuesday.

“Our vision when we founded Arctos was to build a firm that was the partner of choice for the most sophisticated ownership groups in the world who had a big ambition to grow their platform and serve their fans,” Arctos co-founder Ian Charles said in a phone call. “We also want to be the partner of choice for institutional investors who want to invest into the very unique asset class. And this fundraise is an important milestone for us because it validates that we have done that for both.”

Arctos opened its second sports fund about two years ago, quickly raising an initial billion dollars with investment from half of the first sports funds’ investors, Sportico reported at the time. Today, about 30% of the second fund’s assets have been invested, including in the Utah Jazz, an upsized stake in Harris Blitzer Sports Entertainment, the owner of New Jersey Devils and Philadelphia 76ers, Paris Saint-Germain F.C., and the Aston Martin Aramco Formula 1 Team.

The company said the second fund includes money from pension funds, retirement systems, endowments, insurance companies and global family and wealth investing offices. “The amount of attention and focus on the space has allowed us to broaden out, from an international perspective,” Charles said. “There’s a lot more interest in North American sport today than maybe two or three years ago.”

Coupled with the original sports fund, Arctos has about $7 billion in assets under management for sports teams. The company’s strategy is to buy minority stakes in pro teams and related sports business.

It is only in recent years most pro leagues have started allowing institutional investors to buy ownership stakes in their franchises, in part given the rapid rise in franchise values. The NBA, MLB, NHL and MLS allow various levels of fund ownership (the NFL does not.)

Across the two funds, Arctos is believed to have investments in 23 sports and esports teams, along with stakes in another seven sports-related businesses, including Elevate Ventures and the Golden State Warriors.

“We’re very proud to have been the first club to partner with Arctos in the NBA,” Warriors owner Joe Lacob said in a statement provided to Sportico. “They’ve been an incredible partner to me, the Golden State Warriors, and the league. With this new fund and greater resources, we and others can look forward to growing through their partnership.” Arctos owns about 13% of the NBA franchise.

Charles said while the fund has drawn more international investors and may invest in some global sports brands outside the U.S., like with PSG, Arctos will remain focused on the North American market. “A big part of our effort has been educating the institutional investor community about the very unique attributes of North American sports,” he said. “These are these are IP businesses, they are royalty businesses with a global customer base, long-term revenue streams and really attractive business fundamentals that are not easy for institutional investors to access.”

Arctos isn’t solely sports focused: Last year the business rolled out a similar model of buying limited partner stakes in the private equity industry called Arctos Keystone. 

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