Hot Topics in Sports Investing: Private Equity, NIL, and Emerging Opportunities

In coordination with the Sports Lawyers Association, on Tuesday, March 3rd, Ropes & Gray partners Erica Han and PJ Sullivan joined Tamika Tremaglio, Managing Director at Secretariat Advisors and former Executive Director of the National Basketball Players Association, and Iciar Garcia, Vice President and Assistant General Counsel at Fenway Sports Group, to discuss “Hot Topics in Sports Investing.” Their conversation covered the evolving landscape of sports investments, from private equity’s expanding role in team ownership to emerging opportunities in NIL monetization, women’s sports, and sports-adjacent businesses.

Key Messages for Sports Investors:

• Understand the structural, legal, and practical complexities of private equity investment in sports teams, including investor rights and alignment with operational teams.
• Stay current on NIL developments, in particular for college and youth athletes, including federal regulatory prospects and nuances of valuation.
• Monitor emerging investment opportunities in women’s sports, youth sports, and sports-adjacent businesses.

Private Equity’s Expanding Role in Team Ownership

Private equity continues to reshape the sports investment landscape, with traditional sponsors increasingly pursuing teams and leagues as a distinct asset class. Leagues and teams are taking deliberate action to facilitate new types of investments—most notably through recent CBA negotiations that now permit players to invest in leagues and teams. Investors entering this space should carefully consider the structural, legal, and practical issues unique to sports team investments, including the rights and terms most critical to negotiations, as well as potential misalignment between outside institutional investors and operational teams. Legal and business strategies are essential to mitigate these tensions and ensure sustainable partnerships.

Sports-Focused Funds and Valuation Considerations

The rise of dedicated sports-focused funds has brought increased sophistication to sports investments. Key considerations around value require careful attention, and investors are employing a range of valuation methodologies when assessing opportunities in teams, leagues, and athlete-related assets. Understanding how funds approach valuation—including in the context of NIL monetization strategies—is critical for both sponsors and teams seeking capital.

NIL Monetization: Navigating a Complex and Evolving Landscape

NIL monetization has transformed opportunities for athletes at all levels, from professional to college to youth. The regulatory landscape remains in flux: the viability of a federal NIL law is uncertain, and the House settlement has imposed additional restrictions on NIL deals with associated entities such as booster collectives. Investors and institutions alike must understand key valuation factors, evolving contractual provisions, and the distinction between genuine publicity rights deals and deals that resemble pay-to-play arrangements. Athletes, parents, colleges (or teams/leagues), and sponsors should each be mindful of the key risks and pitfalls when negotiating NIL agreements.

Emerging Growth Areas: Women’s Sports, Youth Sports, and Beyond

Private equity and other investors are showing heightened interest in women’s sports, youth sports, and emerging leagues. Investment in women’s sports and alternative leagues offers unique growth opportunities distinct from mainstream professional men’s sports. Youth sports operations also present attractive investment opportunities but involve heightened regulatory risks and compliance obligations that require robust diligence and risk mitigation. Sports-adjacent businesses—including entertainment venues, real estate, and data analytics—are also attracting significant attention, as traditional sports properties expand their brands to compete in an evolving marketplace.