WILMETTE, Ill. — Sports as a business is well established, but investing in it is a more recent trend.
This month, The Business of Speed will examine this sector of the industry, how it operates and who is taking part in these opportunities.
A significant amount of investment capital toward sports occurred during the pandemic. Asset prices rose, requiring ownership structures to have disciplined financial management and operational effectiveness. These entities deployed best practices to cultivate fandom that resulted in new revenue.
The largest sports investments involved the acquisitions of teams, leagues or media partnerships. The remainder have been within other parts of the sports ecosystem, such as online betting, fitness hardware and software and fan experience technology. Those successful sports operations have the ability to attract and retain capital investors in search of returns.
Motorsports participates in this infusion. The global focus on Formula 1 teams has been constant. Finance and business executives already own several English Premier League soccer teams. The familiarity with the economics of European sports made open-wheel racing a logical next step.
Investment in NASCAR team ownership has also been quite active. There has also been investment in new racing series and broadcast platforms centered around motorsports.
The charter system, used in the NASCAR Cup Series, was established in 2016 after an agreement with the Race Team Alliance. Values languished for several years, and there was discussion about whether the formation had merit.
Skepticism gave way to renewed interest and the marketplace shifted. There was no singular reason, but the overall growth in sports investment and rising values in other professional sports franchises certainly impacted this momentum swing.
Asking prices for charters are approximately $15 to $20 million each. This is a big jump from prior years.
The rise in value can be attributed to the next media contract for NASCAR, which is currently being negotiated. The historical model for revenue distribution will probably be reformulated, resulting in a larger percentage for the teams.
The future for continued investment in sports and racing remains in the fast lane.
This story appeared in the Feb. 22, 2023 edition of the SPEED SPORT Insider.
