Sports has emerged as one of the most compelling─and unusual─alternative asset classes of the past decade. Franchise valuations have risen substantially across the major professional leagues, media rights have reached historic highs, and private capital─long kept at arm’s length by league governance rules─has been progressively welcomed into the ownership tent. But sports is unlike any other alternative asset. Franchises are scarce, entry is expensive, decision-making is league-controlled, and the operative rules routinely override conventional business expectations. For investors, brands, and civic partners exploring sports franchise opportunities, having counsel that understands both the range of entry points and the legal architecture that governs them is essential.
Why sports is a distinct alternative asset class
Sports-related investments differ from traditional private equity in fundamental ways, starting with how success is measured. Private equity typically underwrites to EBITDA, valuing businesses based on their ability to generate stable cash flow and support leveraged capital structure. Sports investors, by contrast, focus less on current cash flow and more on franchise scarcity and the long-term appreciation of a league-membership interest whose value is driven by league-aggregated media rights, collectively bargained cost structures, and the finite supply of teams in each league.
The growing valuations mentioned above reflect a fundamentally different investment dynamic. A sports franchise is not simply an operating company; it is a membership interest in a league ecosystem. The value of that interest depends not only on the underlying team operations, but also on league-wide economics, collective bargaining outcomes, media relationships, and the scarcity created by a fixed number of franchises. As a result, league governance structures shape ownership rights and can limit transfers, financing arrangements, governance rights, and other actions that would ordinarily be determined by market participants.
How to invest in sports: Entry points from franchise ownership to host committees
Buying a controlling or minority stake in a major-league team is only one way to invest in a professional sports team. For most investors, it isn’t the most accessible or the most attractive risk-adjusted opportunity. The broader investment landscape includes:
- Direct franchise ownership: Typically requires supermajority league approval and a detailed review of ownership identity, financing structure, and governance.
- Minority and limited partner stakes: Offer exposure to franchise appreciation without the control obligations or approval burden of a full acquisition, with institutional stakes typically subject to mandatory holding periods and diversification caps.
- Special purpose vehicles and ownership groups: Aggregate multiple investors under a single control person who satisfies league approval requirements, allowing high-net-worth and institutional investors to participate economically without directly holding the control interest.
- Stadium and naming rights investments. Range from regional venue partnerships to marquee stadium deals. These are commercial contracts rather than equity, but their scale and duration make them significant strategic commitments.
- Sponsorship, kit (uniform), and category deals: Include jersey patches, shirt sponsorships, sleeve and helmet inventory, and other league- and team-level commercial partnerships.
- Host committee and major event partnerships: Offer brand association and strategic alignment with mega-events without direct league contracting. Adjacent assets include sports betting operators, sports media platforms, sports technology, NIL collectives, and youth and grassroots sports platforms.
Case study: How the Bay Area Host Committee structured Super Bowl LX
The Bay Area Host Committee (BAHC) illustrates why host committee partnership can offer a meaningfully different value proposition than league or team sponsorship. Rather than concentrating activation at the stadium, the BAHC built a region-wide model spanning nine counties and involving dozens of public agencies, iconic venues, and a broad base of civic and corporate partners, requiring a legal architecture more expansive than any traditional sponsorship structure.
Nixon Peabody served as legal counsel to BAHC, advising on the full range of agreements that made the model work: revenue and sponsorship agreements capable of funding a multi-venue program; venue and use agreements across open spaces, civic buildings, waterfront venues, and transit hubs; the fundamental agreement with the host team and league permitting the Super Bowl to be staged; and community-facing programs (fan zones, community field investments, an Innovation Summit) that turned a single game into a region-wide celebration. Community investments funded by the BAHC Foundation will continue well beyond game day. For brands and investors, host committee partnership offers closer alignment with community outcomes, region-wide activation, and, when structured well, a durable partnership network that outlasts the event itself.
Legal due diligence in sports investments: Key issues for investors
Regardless of the investment structure or entry point, sports investors and brands face a distinct set of legal and commercial considerations that differ materially from traditional M&A transactions. Key diligence areas include:
- League approvals and ownership restrictions: Includes league approval rights, ownership eligibility requirements, cross-ownership limitations, debt limits, rights of first refusal, transfer restrictions, and supermajority approval thresholds.
- Governance and control rights: Often materially narrower than those available in traditional private company investments. Minority investors may have limited board representation, consent rights, league communications, or voting authority, with governance frequently concentrated in the designated control owner.
- Capital structure and financing constraints: Include league limitations on indebtedness, acquisition financing, preferred equity, seller financing, earn-outs, contingent consideration, and pledges of ownership interests.
- Intellectual property and publicity rights: Include required trademark and brand licenses from teams and leagues, player name, image, and likeness (NIL) rights (particularly in light of the evolving regulatory framework governing collegiate athletes’ ability to monetize their NIL), collective bargaining agreement considerations, sponsorship restrictions, and the allocation of media, streaming, and broadcast rights, many of which are controlled or licensed at the league level.
- Category exclusivity and clean stadium rules: Include conflicts between team-level and league-level sponsorship rights, clean stadium requirements for major events, broadcast partner conflicts, venue naming rights, and legacy sponsorship arrangements that may create exclusivity conflicts.
- Term, termination, and reputation protections: Include morals clauses; force majeure provisions addressing pandemics, labor disputes, and season disruptions; change-of-control provisions; termination rights; rebranding obligations; indemnification; and other remedies tied to reputational or operational events.
Exit considerations in sports franchise investments
Unlike traditional private equity investments, sports franchise investments are generally long-term and subject to significant transfer restrictions. League approval requirements and ownership rules often constrain exit rights, including transfer, tag-along and drag-along, and put-or-redemption rights (where permitted), and other negotiated liquidity mechanisms.
When ownership interests do transfer, the reported valuations reflect the scarcity premium that defines the asset class. For example, in December 2023, the NBA Board of Governors approved the sale of a controlling interest in the Dallas Mavericks at a reported $3.5 billion. More recently, in August 2026, the Los Angeles Lakers announced the sale of the franchise for a record $12.5 billion. That transaction remains pending review and approval by the NBA Board of Governors.
Structuring sports investments for long-term success
Sports investing offers exposure to a scarce, growing, and culturally central asset class, but its legal architecture is fundamentally different from anything else in alternative investments. Success requires selecting the right entry point for the investor’s risk appetite and control preferences, navigating league approval and governance frameworks, and negotiating protections against the unique risks of long-dated, publicly visible partnerships. The strongest investments are those supported by experienced legal and business teams that anticipate these competing interests at the outset, align stakeholders, and build appropriate protections into the transaction structure before closing. Nixon Peabody’s Entertainment & Sports team is ready to help you find the right entry point and structure your sports investment for the long term.
Frequently asked questions:
How can a brand partner with a sports team without buying a stake?
Equity ownership is one way to engage with professional sports. Alternatively, brands can pursue naming rights and stadium partnerships, kit and category sponsorships (including jersey patches, shirt sponsorships, and sleeve and helmet inventory), or host committee and major event partnerships that offer regional activation and brand association without direct league contracting. BAHC’s Super Bowl LX and 2026 FIFA World Cup, and NBA All-Star Game 2025 models are a strong example of how a well-structured partnership can deliver region-wide visibility and a durable network that outlasts the event itself.
What makes sports franchises a compelling long-term investment?
Sports franchises benefit from a combination of factors few other asset classes can replicate: a fixed, finite number of teams in each league; league-aggregated media rights that have reached historic highs; and, collectively, bargained cost structures that provide a degree of predictability on the expense side. The result is an asset whose value is driven less by current cash flow than by scarcity and long-term appreciation. Recent transactions illustrate the trend—a controlling interest in the Dallas Mavericks sold at a reported $3.5 billion in 2023, while the Los Angeles Lakers announced a pending $12.5 billion sale in 2026.
What are the biggest legal and structural risks for sports investors?
Sports investments carry risks that don't exist in traditional private equity. League approval requirements can delay or block transfers, and governance rights available to minority investors are often far narrower than in conventional private company investments. Capital structures are constrained by league rules limiting debt, preferred equity, and pledges of ownership interests. Exit rights are similarly restricted, with transfer limitations and mandatory holding periods that make liquidity difficult to achieve on a conventional timeline. Reputational risks are also material given the public visibility of these assets, making morals clauses, force majeure provisions, and termination rights important negotiating priorities.
What legal approvals are required to buy a sports team?
Acquiring any interest in a major professional sports franchise typically requires supermajority approval from the relevant league's board of governors, along with detailed review of the prospective owner's identity, financing structure, and governance arrangements. Leagues also impose ownership eligibility requirements, cross-ownership limitations, debt caps, and rights of first refusal that can affect both the structure and timing of a transaction. These requirements apply not only to controlling acquisitions but also, to varying degrees, to minority and limited partner stakes. Navigating these requirements—and structuring a transaction that satisfies them—is where experience legal sports counsel becomes essential.
