Forging the future of sports investing
We invest in professional sports teams, leagues, and businesses in the sports ecosystem that are pursuing ambitious, challenging tasks. We will focus our investments in opportunities where our elite network of principals add value. We’ve spent our careers building companies, forging partnerships and evolving the operations within the sports industry globally. The strength of our network and experience is unmatched, with our partners generating over $2 billion of value over 20+ years. At MSP Sports Capital we use our past success and a hands on approach to uncover the most unique and valuable opportunities.
Mr. Moorad is one of the most recognizable names in professional sports and has been a leader in the sports industry for more than 25 years. The founder of Moorad Sports Management and long-time partner in powerhouse agency Steinberg & Moorad, he began specializing in athlete representation, covering both Major League Baseball (“MLB”) and the National Football League (“NFL”), and negotiated more than $3 billion in athlete contracts over 20 years. From 2004-08, Moorad was General Partner and Chief Executive Officer of the Arizona Diamondbacks. From 2009-12, Moorad was the Vice Chairman, Chief Executive Officer and part-owner of the San Diego Padres. In 2013, with sports industry veteran Peter Ueberroth, he founded Moorad Sports Partners, LLC, a private investment firm that invested in and managed sports-related businesses. He serves as Chairman of Morgan Lewis’s Global Sports Industry Practice, as a principal of Morgan Lewis Consulting, and as an Adjunct Professor at UCLA’s Anderson School of Management, where he teaches an annual “Business of Sports” class.
Mr. Najafi is the CEO and owner of Najafi Companies, an international private investment firm with
holdings in sports, consumer, media, technology, and real estate sectors across several countries for more than 15 years. With internally generated capital, the firm makes highly selective investments in companies with strong management teams, often in sectors undergoing rapid technological transformation. Mr. Najafi is a visionary investor who plays a critical role in developing founders and management. He is Vice Chairman of the Phoenix Suns and an Alternate Governor on the Board of the National Basketball Association.
Mr. Rees is widely known for his work as a senior executive at sports broadcasting network ESPN, a subsidiary of the Disney Corporation where he held various positions including Chief of Staff to ESPN President George Bodenheimer, GM of International Digital Media, and Vice President of
International Development. Prior to joining ESPN in 2006, he spent six years as the Head of Strategic Business Development at UEFA, helping grow the EURO and Champions League brands’ global image. Mr. Rees also worked for UBS Capital in their technology venture fund prior to joining UEFA. Mr. Rees is an Adjunct Professor at Columbia Business School, where he teaches media strategy. Mr. Rees served as Chief Operating Officer at RSE Ventures from 2013 – 2016, and as a partner at Vayner/RSE.
Mr. Wasserman is Vice Chairman, since June 2018, of Roosevelt Investment an asset management firm based in New York. He is also Senior Advisor to Atalaya Capital Management (an approximately $5bb hedge fund) and previously was CEO of Seaport Investment Management.
Mr. Kantowitz is a Vice President at MSP Sports Capital, where he is responsible for evaluating new investment opportunities, executing transactions and supporting portfolio companies. He conducts detailed financial analyses, liaisons with third-party advisors and financing sources, aids in structuring and negotiating transaction terms, and assists portfolio company management with financial and strategic initiatives.
Before joining MSP, Alan was Head of Strategy at the Alliance of American Football and worked directly with the CEO on fundraising and a wide variety of business projects. Prior to the Alliance of American Football Alan was an Associate at Providence Equity Partners, a global private equity firm, where he focused on growth and leveraged buyout investments in media, sports and technology-enabled services industries. He also provided strategic support to Topgolf, a leading sports entertainment company, which included evaluating and executing tuck-in acquisitions, assisting in strategic initiatives and assessing capital structure alternatives. He also assisted in Providence’s acquisition of DoubleVerify, a leading third-party digital ad measurement and authentication company, in 2017.
Prior to joining Providence in 2018, Alan worked as an investment banking analyst in the Technology, Media, and Telecom Group at Bank of America Merrill Lynch. Alan received a B.S. in Finance and Economics from New York University Leonard N. Stern School of Business
News + Press
It’s clear that no industry has gone unscathed by the coronavirus pandemic, but sports is one sector that has been hit the hardest, having to cancel or significantly push back whole seasons.
MSP believes there will be a re-pricing in the sports industry as the impact of COVID-19 will spread through the ecosystem until the end of 2021. Under financial pressure, many involuntary sellers will have to negotiate starting at discounted valuations. The underlying team assets will continue to be viable businesses, many of which are locked into lucrative long-term media contracts. However, there are many teams and related businesses that will suffer from working capital issues New opportunities will allow for investments in teams, leagues, and businesses in the sports ecosystem at discounted positions.
As the global sports industry re-starts, beginning in the second half of 2020, and continuing into 2021, we will be opportunistic buyers, focused on businesses and sellers in need of liquidity. Additionally, as we enter this next phase of investing, we are not encumbered by a portfolio of legacy investments.
1. Short and long term changes in consumer psychology around large event attendance.
• U.S. sports, generally, have been suffering from reduced gate revenue and attendance (even before COVID-19). COVID-19 is forcing the sports ecosystem to navigate unchartered territory with restrictions on crowd size together with fan resistance to large gatherings. In the long-term we believe attendance levels at sporting events will bounce back but not to the levels reached during the last few years prior to the outbreak. While attendance numbers may be challenged, we believe some balance can be achieved with ticket pricing, and unique value opportunities on the media and broadcast sides of the business.
2. How, if at all, does this accelerate any changes in the sports broadcast landscape and how will that affect our approach?
• Sports and sports-adjacent companies are generally recession resilient with highly engaged consumer communities, with extremely strong brand loyalty and affinity. So, while attendance may suffer we believe this provides unique opportunities for broadcast and media/data more generally. A central theme of our fund is to target investments in sports content, which is essentially the intellectual property of the industry. It is our view that pent-up demand for live sports will lead to substantial growth in consumer interaction and spend as soon as sports re-start. There is an opportunity for broadcasters and media companies to explore new and unique solutions to enhance in-game data and graphics. Companies enabling these changes and enhancement, as well as those servicing the gaming and betting markets, stand to benefit tremendously in the wake of the epidemic.
3. Performance and liquidity of minority positions in sports properties vs. other private market opportunities.
• Sports properties are scarce in nature. This supply scarcity, combined with the growing number of wealthy individuals looking to be part of the ecosystem and invest, will drive sports team values globally for the foreseeable future. Incremental improvement in team economics post- COVID recovery will also contribute to outsized returns. State of the art multi-use stadiums, daily fantasy sports/live betting products, augmented & virtual reality, new secondary ticketing markets and the growth of sponsorship vs. classical advertising (immersive experience vs interrupting 30 second ads) are major revenue growth drivers for teams going forward.
• In most leagues, minority positions also trade at significant discounts as well. Therefore there will be significant upside when we are invested in the capital stack during a change of control transaction. Additionally, the major sports leagues are on a path towards, and in some cases have already adopted, changing ownership rules that allow investment funds to own non-controlling minority stakes in multiple clubs in the same league. As more funds get involved, this will significantly increase the liquidity for minority stakes and shrink the available discounts for these positions over time. Being a first mover is crucial and will provide significant, incremental upside.
4. Performance and liquidity of minority positions in sports properties vs the public markets.
• Franchise valuations across the four major U.S sports have historically outperformed the S&P 500. Additionally, so much of the established financial system works on borrowed capital. As such, as soon as companies cannot get credit to cover committed payments, they will consider selling equity positions. We are seeing significant downward pressure on valuations in non-essential business verticals generally, especially on those that the market is skeptical will be deemed non-essential after the COVID-19 pandemic passes. We believe this will play into the favor of well-performing, and historically healthy, private companies whose access to private market investors will cap the downside valuation projections vs. publicly traded peers.
5. What global markets will be most conducive to sports investment going forward?
• Two of our early investments have been in 2nd division soccer clubs in Europe, Estoril in Portugal and Alcorcón in Spain. European soccer presents some unique opportunities. Driven by their historical developments as community-owned entities, many clubs that are traditionally financially healthy will be challenged and will be trading as distressed assets well below their true value.