Welcome to this week’s edition of Cape May Wealth Weekly. If you’re new here, subscribe to ensure you receive my next piece in your inbox. If you want to read more of my posts, check out my archive.

A note from Jan: This week's piece comes from a guest author. Our analyst Svea covers the business of sports and entertainment on her Substack and on LinkedIn and brings sports knowledge and an investment lens together. If you don’t follow her yet, you absolutely should!

The FIFA World Cup is underway. 48 teams, 16 cities across three countries, roughly five billion expected viewers, and an estimated $13 billion in total revenue for FIFA in its 2023–2026 cycle – up 72% from the previous Qatar cycle. Whatever your feelings about this particular tournament (and there are legitimate reasons to have complicated ones, given the political situation in the main host country and ticket prices that have put the stadiums out of reach for most football fans), the scale of the business is not really in dispute.

But I don't want to spend too much time on the World Cup itself. What matters more is what it says about the broader shift in sports: sports has become an asset class, and institutional investors have been pouring money into leagues, teams, media rights, and adjacent businesses, especially in North America and Europe. 

How to invest in it is probably the most frequently asked question. The answer depends entirely on the segments of the market accessible to you. 

For most of the 20th century, owning a sports team was not an investment decision. It was the most expensive status symbol available to people who had run out of things to buy. The economics were secondary. In the 1930s, roughly a decade after the NFL (American football) was founded, a franchise could be purchased for the almost comical sum of $2,500. Even by the 1980s, an NFL team typically cost ‘only’ $50–100 million. Most owners, usually ultra-high net worth individuals (UHNWIs), weren't focused on generating returns. The appeal was the front-row seats and the prestige that came with being one of the few people in the country who owned a professional sports franchise. Today, that logic has been inverted. Teams are now among the most valuable assets in the world – a transformation I explored in greater detail in my breakdown of the Dallas Cowboys' business model, the world's most valuable sports franchise. 

What changed was the transformation of media rights. Live sports turned out to be one of the last categories of content that audiences insist on consuming in real time. In a world where almost everything else can be streamed, paused, and watched days later, sports still creates “appointment” viewing at a scale that broadcasters and streaming platforms have struggled to replicate. The NFL generates roughly $10 billion annually from its U.S. media rights alone, a figure that approaches Netflix's approximately $18 billion global content budget. In other words, a single sports league commands media revenues comparable to those of a company financing hundreds of productions across dozens of countries. The same dynamic is visible elsewhere. The NBA (basketball) signed a $76 billion media rights agreement in 2024, while the Premier League's domestic broadcasting rights are worth more than £6 billion per cycle.

As media rights grew, franchise valuations followed. A team's largest revenue line is its share of the league's broadcast deal, and that line has been on a near-uninterrupted upward trajectory for three decades. According to the Ross-Arctos Sports Franchise Index (RASFI), which tracks North American franchise transactions across six decades, Big Four sports franchises (NFL, NBA, MLB, NHL) have compounded in value at roughly 13% per year since the 1960s. 

The other piece that matters is scarcity. You cannot launch a new NFL team and start competing next season. Entry is controlled by the league, and the same is true in Formula 1, the Premier League, the NBA, and most major leagues. With only 32 NFL franchises and little expectation that number will change, ownership stakes represent access to a limited set of assets that are difficult, if not impossible, to replicate.

Once the economics became impossible to ignore, institutional capital began circling professional sports. It took longer than many expected, largely because league governance remained conservative and ownership rules restricted outside investment. European football actually moved first. Private equity capital started flowing into the continent's top leagues from the 2010s onward, long before the major North American leagues opened their doors. Investments into European leagues grew from €66 million in 2018 to €10.6 billion in 2023, a stunning 160-fold increase in just five years. The US leagues followed separately, and more cautiously. MLB opened to private equity in 2019, with the NBA, NHL, and MLS following in subsequent years. The NFL, always the most protective, held out until August 2024, when it finally allowed institutional investors to take passive stakes of up to 10% in a franchise, subject to a minimum six-year holding period.

To look at more recent numbers: In Q1 2026, despite U.S. equities falling 4.3% and the media and entertainment sector falling nearly 10% amid geopolitical turbulence, the RASFI returned 4.9% for the quarter. Over the trailing twelve months, sports franchises returned 16.5%, ahead of private equity at 12.3%, private credit at 7.4%, and real assets at 5.2%.

Here is where it gets more complicated. Those returns mentioned above exist in the private market. And while affluent investors can generally access private markets at “reasonable” sums starting in the low seven figures, the sports-focused funds that have captured these returns are much more difficult to access than a “normal” private equity or venture capital fund.

Direct ownership of an NFL, NBA, or other major franchise that might give you “bragging rights” when talking to your friends is essentially off the table for individual investors. Minority stakes alone range anywhere from $20 million to well over $600 million, and even then, acquiring one requires league approval and governance processes that can stretch over years. The institutional funds that assemble diversified portfolios of franchise stakes, like Arctos Sports Partners, are the next “best thing”, but they come with their own barriers. A direct LP seat generally requires $5 to $10 million at minimum, with institutional tranches often starting at $25 million, and these vehicles tend to be oversubscribed. Feeder structures do exist at lower ticket sizes of around $1 million or even less, but those are broadly pooled vehicles with no targeting and no meaningful influence over which assets you are exposed to. For a private investor with €5 to 25 million in assets, getting a meaningful direct allocation is therefore difficult, and in many cases not possible at all regardless of ticket size. In practice, the most interesting part of this market is also the least accessible, and the products that are accessible are generally not the most interesting ones.

So the obvious next question is whether listed sports equities offer a way in. It may surprise you that a number of clubs and sports entities are actually publicly traded – from Borussia Dortmund to Juventus and Ajax, as well as the company that owns the New York Knicks (current NBA champion). (The mention of individual stocks here is purely illustrative and not meant to be construed as investment advice or a recommendation for or against any of the mentioned companies.)

Their track record should raise some caution. Manchester United has been listed on the New York Stock Exchange since 2012. Over 14 years of the Premier League's global expansion, the explosion of streaming rights, and the rise of women's football, the club delivered returns of only about 3.7% p.a. Juventus, Ajax, Borussia Dortmund tell an even less appealing story with negative returns over the last five years. As a result, these stocks have underperformed basic equity benchmarks, often by a significant margin.

The reason is mainly structural. What drives franchise value appreciation (scarcity, media rights growth, global brand equity) is not the same as what drives equity returns for minority public shareholders. Football clubs are run in the interest of their controlling owners, who want trophies, and their sporting operations, which need expensive players. Wages as a share of revenue in European football regularly run at 65 to 75%. There is very little left for the minority equity holder who bought shares expecting to participate in the brand's global growth. Misaligned incentives remain a problem, even when the underlying asset is appreciating.

The American leagues tell a slightly different story, but not necessarily a better one for private investors. The NBA, NFL, MLB, and NHL have kept franchise ownership largely private and tightly controlled. The listed vehicles that do exist tend to be holding companies adjacent to sports rather than direct franchise exposure. Madison Square Garden Sports (MSGS), for example, gives you exposure to the Knicks and Rangers, but it trades at dynamics shaped as much by its complex corporate structure and the Dolan family's control as by the underlying franchises. The same pattern holds across most listed American sports vehicles. You are not really buying a franchise, you are buying a complicated corporate wrapper around one.

Formula 1 is one of the few examples of a successful public market sports investment. Liberty Media's F1 tracking stock has delivered roughly 15% annualized returns over the past decade. Yet, much like MSGS, Formula 1 under Liberty is not really a traditional sports asset. It is fundamentally a media and entertainment business built around a portfolio of exclusive commercial rights. Liberty executed a business transformation (new races, U.S. market development, the storytelling shift driven by Drive to Survive) and the stock price reflected it. The returns came mainly from business-building, not from passive appreciation of an underlying franchise asset. 

The pattern that emerges from the listed market is fairly consistent. Public equity gives you access, but tends to strip out the returns that made the asset class interesting in the first place.

If private franchise equity is largely inaccessible and listed equity gives you access without the returns, it is worth asking whether there is a third path. There is.

Consider the contrast in financing structures. In real estate, LTVs of 40 to 65% are standard practice. In infrastructure and utilities, leverage ratios approach 70%. Sports franchises, by comparison, carry debt at just 10% of loan-to-value – a figure that Apollo Sports Capital highlighted in an analysis published last year. Sports teams are, in conventional finance terms, dramatically under-leveraged, despite being among the more resilient revenue-generating assets in existence. No major North American league franchise has ever defaulted, and revenues proved durable even through the COVID shutdowns of 2020.

Part of this is intentional. Many franchises run operating deficits, spending aggressively on players and facilities to remain competitive, which means cash flows often look worse than the underlying franchise value would suggest. Traditional lenders, understandably, found this confusing and treated sports as a niche asset rather than a stable collateral base. This was reinforced by league governance that historically restricted borrowing to preserve owner control, and by individual owners wealthy enough to fund their own acquisitions who had little incentive to bring in outside capital anyway.

The consequence is a structural financing gap. A lot of value sitting in equity that could, in principle, be partially monetized through structured lending, without meaningfully changing the economics for the franchise owner. The opportunity this creates is in hybrid capital: structured financing products that sit high in the capital stack, backed by franchise equity or contracted media rights, offering returns in the high single to low double digits while carrying considerably more downside protection than a minority equity position. You are backing the asset without owning it, less exciting to explain at dinner to your friends, but when the collateral has compounded at 13% annually for decades without a default in the major leagues, the risk-adjusted case doesn’t look too bad. This is still largely institutional territory for now. But the broader democratization of private credit has pushed some vehicles in this space toward ticket sizes that affluent individual investors can realistically consider. However, the fund landscape is earlier-stage than private equity in sports franchises.

I want to close with something slightly different, because I think the framing of sports purely as an "asset class" misses something important about why it matters to certain investors. You will not see sports in a standard strategic asset allocation alongside stocks, bonds, and commodities at a private bank or wealth manager like us. And that makes sense. Sports assets are illiquid, operationally complex, and in most forms inaccessible to individual investors.

But if you are familiar with the Aspirational Investor Framework, which we mention frequently and incorporate into our personalized wealth concepts, you will know that sports would belong in the Aspirational Bucket. I don’t view it as a core portfolio holding, nor as an investment chosen primarily to optimize a portfolio's risk-return profile (although, in some cases, it may well do so). Rather, I see it as an investment that carries personal meaning beyond its financial return. We recently spoke with a client with a balanced portfolio who mentioned that they would really love to own a small stake in an NFL franchise. The appeal isn’t the potential return, but the idea of being an owner, even if only of a tiny stake, of something they enjoy watching and supporting. The satisfaction of that matters often more than achieving another percentage point or two of performance, because sometimes, personal meaning outweighs marginal gains.

Whether sports ultimately deserves a place in your portfolio is a separate question. What is clear, however, is that sports has evolved from a pastime into a global asset class. With the World Cup, Olympics, and major leagues commanding ever-larger audiences and generating growing media revenues, sports remains one of the most fascinating intersections of culture, business, and investing and a space worth watching, even if you're not a sports nerd like me.

To wrap it up, I’ve focused primarily on the major North American leagues and European football. But the trend extends far beyond them. Golf, tennis, pickleball, UFC, and a range of other sports have also attracted significant capital, with valuations rising dramatically in recent years. Exploring each of those markets would require an article of its own.   

If you'd like to explore more examples of how investing intersects with the worlds of sports and entertainment, feel free to check out my weekly newsletter on Substack, where I share case studies and investment stories from these industries.