Today’s guest columnist is Chris Russo, CEO of Fifth Generation Sports.
While much attention has been paid to private equity investment in professional teams, PE interest now spans the entire sports ecosystem, including events, agencies, technology, media, youth sports and consumer products. But firms seeking investments in the broader sports ecosystem repeatedly encounter the same problem: There are not many independent sports businesses with at least $10 million of EBITDA. When a scaled company does come to market, competition can be intense, driving valuation to a premium level.
Private equity firms therefore face a choice. They can continue competing for a small group of obvious platforms, or they can adopt a broader and more creative approach to building scale. The latter strategy requires more work and sometimes more execution risk, but it may offer a better path to differentiated returns.
Start smaller and build the platform
The most obvious solution is to begin below the conventional size threshold. Rather than waiting for a $10 million EBITDA platform to appear, an investor can acquire a $3 million to $5 million EBITDA anchor company and build around it. Many firms resist this strategy for understandable reasons. A smaller business may have limited management depth, less sophisticated systems and greater customer or founder concentration. The sponsor also assumes the risk that contemplated add-ons will not close. Finally, given the size of certain funds, there is simply no way to efficiently allocate capital in small amounts for an anchor asset. Hence, while this approach may work for selected funds, other solutions are required for many of the PE firms seeking to invest in sports.
Look beyond asset light services
Much of private equity’s search activity in sports gravitates toward familiar attributes: recurring revenue, low capital expenditure, high margins and an asset-light model. Those qualities are attractive, but concentrating exclusively on them directs many investors toward the same narrow set of service companies.
Sports products and sports-related real estate can offer a less crowded route into the market. A sports equipment company may involve manufacturing, inventory and working-capital complexity, while a facility operator may require meaningful capital expenditures and real-estate expertise. Those characteristics can discourage generalist investors. On the other hand, these businesses can become foundations for higher-margin services, and the real estate asset or product can be a customer-acquisition engine for a broader platform.
Example: Unrivaled Sports, launched in 2024 by Josh Harris and David Blitzer with investment from The Chernin Group, brought together properties including Ripken Baseball, Cooperstown All Star Village, Sports Force Parks and Baseball Factory. Over time, the company has aggregated a combination of destinations, tournaments, leagues and camps, illustrating how physical facilities can anchor a broader participation business rather than function simply as real-estate assets.
Bring sports to a business outside the sector
Another strategy is to start with a company that is not currently considered a sports business at all. A marketing, experiential or professional-services company may have the capabilities to serve sports clients but lack the relationships, credibility or dedicated leadership needed to establish a robust sports vertical.
The logic is to combine an established operating base with credible sports leadership, rather than wait for a pure-play platform. With the right industry executives and commercial introductions, sports can become an additional growth engine rather than the company’s original identity. This approach expands the investable universe and may allow a sponsor to acquire a larger, more diversified company at a valuation that does not already reflect a sports premium.
Example: Crestview Partners invested in The Gersh Agency, an established entertainment talent agency, in 2023. In December 2024, Gersh acquired You First, a global sports representation and marketing agency, launching Gersh Sports. The combination illustrates how an established business outside sports can use private equity backing to enter the sector, pairing its existing entertainment relationships and client-service capabilities with specialized sports leadership and an acquired operating platform.
Search internationally
U.S. investors often search repeatedly within the same domestic networks. Yet sports is inherently global, and attractive businesses may be headquartered in Europe, Canada, Australia, Latin America or Asia. International companies may receive less attention from U.S. sponsors and may possess technology, intellectual property or customer relationships that can be extended into the American market. A sponsor with strong U.S. sports relationships can provide more than capital; it can help secure commercial partnerships and accelerate geographic expansion.
Cross-border investing introduces additional issues, including regulation, culture, tax, currency and local market dynamics. Sponsors may need country-specific advisors or operating partners to source and evaluate opportunities properly. Nevertheless, for investors willing to develop that capability, international sourcing can create access to businesses that domestic-only buyers overlook.
Example: Bruin Capital acquired Italy-based Deltatre in 2016, backing an established sports technology and streaming business with clients including FIFA and UEFA. Shortly thereafter, Deltatre announced a major expansion into the Americas. Leveraging Bruin’s relationships, the company signed commercial deals with MLB, MLS and the NFL, among others. In 2022, Bruin sold Deltatre to Bain Capital.
Do not ignore the public markets
Small- and mid-cap public companies represent another underexplored category. A number of sports-related businesses trade on U.S. and international exchanges with limited analyst coverage, low liquidity or valuations that may not reflect the value of their underlying assets.
Taking a company private is more complicated than acquiring a privately held business. It involves securities-law requirements, public shareholders, potential financing conditions and a transaction process that can become visible. But the public listing itself should not eliminate a company from consideration. In selected circumstances, private ownership can provide the time, capital and operating flexibility needed to reposition the business away from quarterly market pressure.
Example: In 2021, an investor group led by Nat Turner, D1 Capital Partners and Steve Cohen’s Cohen Private Ventures took Collectors Universe, parent of sports-card grading business PSA, private at an $853 million equity value. In 2022, the company announced a $100M capital raise at a $4.3B valuation. Pairing Turner’s industry knowledge with private capital, Collectors continues to be a leading force in the booming sports collectibles market.
A broader playbook for sports investing
For the near term at least, $10 million EBITDA sports businesses are likely to remain scarce. Investors pursuing the same established platforms will continue to face competitive processes and premium valuations. But the opportunity is broader than that familiar list: smaller companies that can grow into platforms; product and facility businesses with untapped service revenues; adjacent companies with a credible sports opportunity; and overlooked international or public companies. For sponsors willing to do the work, the search becomes less dependent on when the next obvious sports asset comes to market. The central question shifts from “Where can we find a $10 million EBITDA sports business?” to “Which business can we build into the next valuable sports platform?”
Chris Russo is CEO of Fifth Generation Sports, a boutique advisory firm focused on middle market sports transactions. His clients include founder-owned sports businesses and private equity firms, including a firm discussed in this article. Previously, Russo served as a managing director at Houlihan Lokey, and before his tenure in investment banking, he managed the NFL’s digital media group. Russo holds a BA from Northwestern University and an MBA from Harvard Business School.