Fenway Sports Group: The $7 Billion Sports Company

RedBird Capital is reportedly acquiring more than 10% of Fenway Sports Group, but what does this mean for the future of sports assets?

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Friends,

On Friday, Sportico announced that US-based investment firm RedBird Capital is “nearing a deal to acquire more than 10% of Fenway Sports Group for approximately $750 million.”

For those of you who are unfamiliar with Fenway Sports Group, they are the holding company for various amateur & professional sports organizations, including the Boston Red Sox and Liverpool F.C.

Simply put, it’s massive news.

Let’s run through it.

Originally named New England Sports Ventures (NESV), Fenway Sports Group was founded in 2001 when John Henry, Tom Werner, Les Otten, The New York Times, and others successfully acquired the Boston Red Sox for ~$700 million.

Today, after one name change and more than two decades of ownership, John Henry and Fenway Sports Group have expanded into one of the most powerful sports entities in the entire world.

Assets Include:

  • Boston Red Sox

  • Liverpool F.C.

  • Fenway Park

  • Anfield

  • Roush Fenway Racing (50% ownership)

  • Pawtucket Red Sox (10% ownership)

  • Salem Red Sox

  • Fenway Sports Management

  • New England Sports Network (80% ownership)

  • MGM Music Hall at Fenway

  • Fenway Sports Group Real Estate

  • Fenway Music Company

The craziest part?

Through a 2011 deal with LeBron James that saw him take a 2% ownership stake in Liverpool F.C., Fenway Sports Group also owns half of the NBA legend’s marketing and brand rights (Source).

Like I said before, Fenway Sports Group has quietly become one of the most powerful sports entities in the entire world.

As for RedBird Capital, they bring valuable sports experience to the partnership as well. Over the course of the last few years, RedBird Capital has acquired full or partial stakes in multiple sports entities.

RedBird Capital Sports Assets Include:

  • YES Network (Yankees Broadcast Network)

  • Toulouse FC (French Soccer Club)

  • Wasserman Media Group (Agency)

  • XFL (Spring Football League)

With that in mind, the real question becomes, why Fenway Sports Group?

We don’t need to look much further than this.

Boston Red Sox Valuation

2001: $426 million

2019: $3.2 billion

Return: 651%

Liverpool FC Valuation

2011: $552 million

2019: $2.2 billion

Return: 298%

Here’s the way I think about it…

Professional sports teams are premium, scarce assets that have a strong record of value appreciation. They typically provide stable cash flow outside of pandemic-related forces and have a 100-year history of non-correlation to the broader stock market. Investors obviously like that.

On a micro level, sports media rights are expected to double within the next 5-7 years. Increased access to sports betting in the US also presents a unique opportunity for professional franchises to add additional revenue streams.

In a world where investors are consistently searching for non-correlated assets that provide a stable and acceptable return, professional sports franchises have become heavily desired. In the case of Fenway Sports Group, they also offer a unique opportunity to diversify through real estate and media-related assets.

The deal isn’t expected to close for another six weeks or so. Still, it’ll be interesting to see how traditional investment firms' addition into the sports ownership ecosystem impacts everything from valuations to free agency spending.

Don’t forget that private equity funds and other institutional investors are now allowed to purchase equity stakes in multiple NBA franchises.

My guess?

The addition of new capital will only continue to drive valuations even higher.

Have a great day, and we’ll talk tomorrow.

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