Investing in sports is an increasingly popular conversation many financial advisors are having across their client base. While the opportunity to invest in sports isn’t novel, the industry has undergone transformational change over the past five years, and as a result, sports is emerging as one of the most in-demand asset classes for 2025 and beyond.
With a total addressable market size of more than $2 trillion,1 Ares believes sports and sports-related investing is currently one of the most attractive investment opportunities in private markets. It is important to note that in return for accessing this asset class, investors generally give up a level of liquidity and have less track record available. But how can advisors make sense of this asset class in the context of the total portfolio? In this edition of Private Market Insights, Ares’ Financial Advisor Solutions Team shares our view to get you started.
For those that are less familiar, here are five key dynamics driving rising interest in sports assets:
The scarcity value of teams, paired with strong financial characteristics driven by long-term and contracted revenues from media rights deals, has some key professional franchises claiming top-dollar sticker prices.
Many sports teams and leagues have expanded their income sources beyond game-day revenue and ticket sales to include media rights, corporate sponsorships, premium seating and advertising partnerships.
Innovations in how fans engage with their favorite teams over social platforms and the in-person stadium experiences have the potential to boost profitability.
Major North American leagues like MLB, NBA, NHL and NFL started allowing private capital solutions to provide much-needed liquidity within the undercapitalized market.
Historically, sports have provided long-term growth irrespective of broader market conditions, making these assets great tools to consider when seeking ways to dampen overall portfolio volatility and create durable growth.
Performance and risk considerations
Sports investments exhibit distinct characteristics compared to traditional asset classes. The U.S. Sports Equal Weight Median Enterprise Value Return Series2 (“Sports Series”) has demonstrated cycle-tested, consistent growth over the past decade, at times outperforming indices like the MSCI World. A risk-return analysis shows that the sports asset class has delivered higher annualized total returns (~13%) than key benchmarks such as the MSCI World, the S&P 500 and the Bloomberg Global Aggregate Bond Index, with moderate volatility levels.
Historical risk and return2
Correlation analysis further highlights the potential diversification benefits of sports investments. Historical data from 2007 to 2024 indicates a near-zero correlation (-0.01) between the Sports Series and Global Equities, as well as a modest negative correlation with fixed-income indices like Global Agg Bonds (-0.49) and U.S. Agg Bonds (-0.45). This suggests that sports investments often move independently from traditional equity markets and reinforces the role that sports investments may play in portfolio risk reduction.3
We believe the low correlation between sports investments and traditional asset classes may help to manage total portfolio volatility and increase risk-adjusted returns. While some of the lower correlation is due to less frequent valuations, we believe much can be attributed to the unique revenue streams associated with sports investments, such as media rights and sponsorships, which have tended to exhibit less sensitivity to broader market fluctuations.
We attribute much of the moderate volatility and near-zero correlation to public equity to the structure of long-tailed sponsorships and sports media contracts, as well as sticky customers, which we believe function similarly to long-term infrastructure agreements. For example, national revenues account for 65–75% of NFL team revenues, with the vast majority coming from long-term media contracts.4
Sports media contracts5
| Broadcast partner | Contract term | Approx. total value ($B) | Approx. total value ($B) |
|---|---|---|---|
| ABC/ESPN/Disney | 2022-33 | $29.7 | $2.7 |
| YouTube TV / Google | 2022-29 | $22.0 | $2.0 |
| Fox | 2022-33 | $24.2 | $2.3 |
| CBS / Paramount Global | 2022-33 | $23.1 | $2.1 |
| NBC / Comcast | 2022-33 | $22.0 | $2.0 |
| Amazon | 2022-33 | $12.1 | $1.0 |
Conclusion
We believe sports investments offer a compelling opportunity for portfolio diversification, enhanced risk-adjusted returns and reduced volatility. With its low correlation to traditional stocks and bonds, as well as traditional private markets, we find that even a modest allocation can enhance portfolio performance.
Just as a winning baseball team relies on a deep bullpen, ready to step in and stabilize the game when needed, we believe a well-diversified portfolio can benefit from a unique differentiator like sports investing in its portfolio allocation.
