Page 49 - FON Spring Issue

FON MEMBER FEATURE
Why is sports an asset class for family office investors?
Sports is an attractive alternative asset class for investors for a several reasons. Typically, professional sports teams are uncorrelated with the broader market. The current pandemic aside, professional sports teams have weathered recessions better than most asset classes and if you research back the last 30 years, team valuations have steadily outpaced the returns of the broader Dow & S&P over that period. From 2008 to 2010, sports teams grew in value despite the broader market downturn. Secondly, in addition to financial benefits, professional sports teams are trophy assets that are in limited supply. Consequently, there is a prestige that comes with owning a team that is difficult to compare to any other industry. Third, professional sports can be an incredibly
unique platform to better the broader community. While privately owned, professional teams are still community assets and can make a remarkable charitable impact and can serve an investor’s philanthropic interests. Lastly, there are the ownership perks, which can be vast.
What’s the meaning behind the phrase Ownership Perks or Accoutrements?
At the end of the day, a driving force behind many investors’ desire to own a professional sports team is that they want to have fun. At times, it can be an emotional purchase. Sports ownership affords the investor the ability to enjoy the asset with their family, friends and business partners. As a part of almost every limited partner (“LP”) or minority transaction I’ve personally worked on, a key piece of the negotiation comes around what the new minority investor is entitled to in ‘non-financial’ benefits.
FON MAGAZINE / SPRING ISSUE 2021 / FONMagazine.com 49