The NHL Team Being Sold For ~$850 Million

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Hey Friends,

One of the world’s largest sports ownership groups is looking to expand.

Fenway Sports Group sold 10% of their business to RedBird Capital for $750 million earlier this year. As owners of the YES Network, Toulouse FC (French Soccer Club), the XFL, and Wasserman Media Group, RedBird Capital was seen as a strategic addition to their cap table.

But Fenway Sports Group (FSG) was clear that the cash would be used to acquire additional assets within professional sports, and now we have our answer.

Multiple outlets, including The Wall Street Journal, reported yesterday that Fenway Sports Group LLC, the holding company that owns the Boston Red Sox, Liverpool FC, and more, is in advanced talks to buy the NHL’s Pittsburgh Penguins.

The financial terms have not been disclosed, but the Penguins are currently valued at roughly $850 million — a 195% increase from their $288 million valuation in 2012.

That makes them the NHL’s 15th most valuable franchise, according to Sportico.

The story behind Fenway Sports Group is pretty fascinating.

A group of investors, including John Henry, Tom Werner, Les Otten, The New York Times, and others, created the holding company after successfully acquiring the Boston Red Sox for about $700 million in 2001.

The entity was initially named New England Sports Ventures (NESV) and later changed its name to Fenway Sports Group to better reflect its holdings.

But after watching these assets continue to grow in value, Fenway Sports Group has spent much of the last two decades aggressively expanding its sports portfolio.

Fenway Sports Group’s Assets:

  • 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

Again, these assets have performed really well from a price appreciation standpoint.

Boston Red Sox Valuation

2001: $426 million

2019: $3.6 billion

Return: 745%

Liverpool FC Valuation

2011: $552 million

2019: $4.1 billion

Return: 642%

But the structure of Fenway Sports Group has shifted over the last year.

As mentioned, RedBird Capital acquired 10% of the company for $750 million in March, which valued the sports ownership entity at roughly $7.5 billion.

Furthermore, LeBron James & his business partner Maverick Carter converted a 2% ownership stake in Liverpool FC into an equity stake in Fenway Sports Group.

Both LeBron James & Maverick Carter were also named partners at the firm.

As an ownership group that has been looking to acquire more blue-chip assets in professional sports, I think the NHL’s Pittsburgh Penguins make a lot of sense.

Everyone would love to acquire the New York Yankees or Los Angeles Lakers, but major professional sports teams situated within large markets rarely hit the open market. Instead, going after a middle-market team with an extremely strong fanbase makes a lot of sense also.

The Penguins have extremely strong TV ratings, and while other NHL markets have struggled to attract fans consistently, the Penguins just recently ended a 633 game sellout streak that lasted 14 years.

Furthermore, with roughly 1/3rd of their revenue coming from ticket sales, the NHL is much more dependent on arena revenue than every other major professional sports league.

Percent Of Revenue From Ticket Sales

  • NHL: 33%

  • NBA: 19%

  • NFL: 15%

That was bad news during the pandemic, of course, but with most arena’s now packed again, the ability to further monetize television, merchandise, sponsorships, and more presents tremendous upside.

For context, the NFL and NBA numbers also used to be 25 percent-plus but have come down as the leagues have done a better job monetizing their IP.

There is still a lot to unpack here. This news is really just confirmation that a deal is currently being discussed. We still don’t know the purchase price, what assets will be included, the future ownership structure, or the transition timeline.

Still, Fenway Sports Group appears to be focused on building one of the world’s largest sports & entertainment companies. This will be fun to watch.

I hope everyone has a great day, and we’ll talk tomorrow.

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