Sports teams and leagues have been experiencing considerable growth for an extended period, with the value of franchises in the so-called four major North American leagues (NFL, NBA, MLB, and NHL) increasing from a collective $30 billion to over $500 billion over the past 25 years.
This has resulted in a rise in private equity investment in leagues, teams, and sport-adjacent businesses, as firms aim to capitalize on the potential upside – evidenced by KKR’s recent acquisition of Arctos Partners.
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May 2026 saw KKR, a leading investment firm, close its acquisition of Arctos Partners, a premier private equity firm in the sports industry. Arctos holds minority stakes in teams across the five major North American sports leagues, as well as European soccer, motorsport, and other sports-adjacent companies.
With the increasing interest in the industry from investment firms, KKR’s acquisition establishes the firm as a key player – using its global scale and relationships to further expand in sports. The acquisition further suggests that investment firms are increasing their valuation of sports as their own asset class.
A major reason behind KKR’s attraction to Arctos Sports perhaps stems from the strong growth outlook that the biggest leagues benefit from. This is driven by what Arctos identifies as league business revenues and local business revenues.
League business revenues include media rights and league-wide sponsorships, whilst local business revenues include ticketing, licensing, merchandising, and stadium events.
The broadcast deals for all the NFL’s domestic rights, from the start of the 2023 season through 2033, are worth $110 billion in total– an average of $10 billion for each of the 11 seasons and $312.5 million per team per season.
The increasing scale in broadcasting and sponsorship fees contributes majorly to the growing valuations that private equity firms place on teams; valuation multiples rise when revenue is predictable, and margins are high – which occurs if an increasingly large proportion of revenue comes from multi-year media and sponsorship deals.
Although Arctos’ $15 billion in assets under management (AUM) currently account for just 2% of KKR’s $700+ billion AUM, the acquisition allows Arctos to leverage the investment firm’s vast capital base, global networks, and operational infrastructure to accelerate this growth in its minority stakes.
Acquiring Arctos also helps KKR to mitigate risk via diversification. Sports, as an asset class, generally has low correlation with traditional industries, helping to balance a portfolio during periods of economic downturns. This adds a new avenue of fee-earning assets under management (AUM) alongside KKR’s core strategies – private equity, credit & markets, real assets, and insurance – by expanding its private equity platform into sports investing.
For example, long-term guaranteed contracts, such as media and sponsorship deals, are a significant revenue source for sports teams, providing a buffer against economy-wide downturns that may impact other industries. This revenue stability is a key factor in KKR’s decision to enter the sports sector through Arctos.
By acquiring Arctos, KKR gains immediate access to stakes in teams across the four major North American leagues, a diversification strategy that mitigates revenue and market risk while capitalizing on the high returns sports teams can generate.
Likewise, the resilience factor that comes with strong brand loyalty enhances the attractiveness of these investments. Based on the brand strength of a team, fans may continue to support their team during poor performance and exogenous shocks through purchasing tickets and merchandise, helping to sustain revenues over extended periods of time.
In most cases, firms acquiring stakes in teams expect to receive their return on investment (ROI) through the capital appreciation of the team and subsequent sale of their stake. In particular, firms want to see their investments appreciate at a higher rate than the market alternatives.
Arctos’ acquisition of a stake in the Golden State Warriors is a vivid example of capital appreciation. In 2021, Arctos acquired a 5% stake in the Warriors, later increasing this to 13% in the same year.
With the valuation appreciated by success in the previous decade, the team was worth $5.5 billion, and at the start of the 2025-26 NBA season, the franchise was worth $11 billion. This is approximately a 100% capital appreciation over the four years and a compound annual growth rate (CAGR) of around 18.9% per year.
In comparison, over the same period, the S&P 500 had a CAGR of 11.1% – largely due to suffering a downturn in 2022, likely linked to the Russia-Ukraine conflict. This emphasises the idea that the low correlation sport teams have with traditional markets enables capital appreciation to occur, even in periods of economic uncertainty. For a global investment firm like KKR, such uncorrelated high-growth opportunities are highly attractive for diversification.
There are still risks and constraints that can deter firms from investing, which KKR has likely considered – notably illiquidity. In many cases, profits are not consistently distributed to owners but are reinvested into the team to acquire and retain players and coaching staff, improve infrastructure, support other club operations, and service debt obligations. Therefore, firms generally expect to receive their return on investment through the sale of the minority stake.
However, league restrictions can affect the liquidity of the investment. For example, in the NFL, a private equity firm must hold its stake for at least six years before they are allowed to sell it, and the sale must be approved by league authorities.
Additionally, only pre-approved private equity firms, individuals, or family groups will be allowed to buy stakes. With a reduced pool of buyers, the time required for a firm to exit its investment can be substantially increased. That said, the NFL imposes the strictest restrictions regarding private equity investment.
However, KKR’s scale and patient-capital model reduce the liquidity risk. With $700bn+ AUM and long-duration or perpetual vehicles, it can dedicate capital to illiquid sports assets and hold NFL stakes well beyond six years, expecting long-term appreciation to justify the wait.
Outside of the NFL, more firms can acquire larger stakes with greater influence on operational decisions, especially in European football leagues. This broader landscape means KKR, through Arctos, can pursue opportunities globally, potentially acquiring meaningful stakes in teams (or groups of teams) where they can help drive growth and eventually realize gains without as stringent a timeline constraint.
Performance risk – especially in terms of on-field results – creates revenue volatility, which deters PE firms seeking predictable cash flows. This is more prevalent in leagues where revenue is not dominated by league-wide media deals: in the 2024-25 season, clubs finishing in the bottom third of the German Bundesliga, for example, earned just 44% of the average league revenue.
Repeated underperformance often leads to declining ticket and merchandise revenue and diminishing sponsorship valuations, making team success and brand strength critical for private equity investment.
KKR’s strategy to mitigate this likely involves investing in franchises with strong, resilient revenues and clear upside – large fan bases, attractive markets, and leagues with major media deals (e.g., NFL/NBA) – to buffer performance-driven volatility.
KKR’s acquisition of Arctos underscores that institutional investors see sports teams as an asset class. The draw for KKR is not the incremental AUM Arctos brings – it wants strategic access to high-growth, hard-to-access sports investments that have low correlation with broader markets.
Notably, this move aligns with a broader trend: private equity firms are accumulating an increasing number of minority, non-controlling stakes in sports franchises. In practice, KKR will be providing capital as a hands-off investor while leaving day-to-day team operations and control to the existing owners.
Since private equity firms have not yet sold stakes in teams from North America’s major leagues, questions arise about whether they can achieve a true return on investment aligned with capital appreciation, or if illiquidity constraints will limit potential gains.
It will also be interesting to observe whether smaller teams, with smaller fanbases and lacking recent success, will receive private equity investment as firms aim to capitalize on the growth potential.
