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US PE Breakdown

PE firms flocked to lucrative sports, media and music deals in 2021

Private equity investments in the sports, media and entertainment industries caught fire in 2021 as firms looked to add sports franchise stakes, music catalogs and Hollywood-backed companies to their portfolios.

Private equity investments in the sports, media and entertainment industries caught fire in 2021 as firms looked to add sports franchise stakes, music catalogs and Hollywood-backed companies to their portfolios.

As highlighted in our latest US PE Breakdown, multiple firms focused on scoring minority stakes in sports teams last year as franchises’ valuations soared.

Dallas-based Arctos Sports Partners, which announced it had closed the largest-ever first-time US PE fund in October 2021 at $3 billion, secured minority stakes in multiple NBA teams. Those included a roughly 5% stake in the Golden State Warriors for around $275 million and a 17% stake in the Sacramento Kings at a $1.8 billion valuation.

Beyond the NBA, Arctos has deployed significant capital across at least 12 other investments, including the purchase of a stake in the NHL’s Tampa Bay Lightning.

Dyal Capital Partners went on an NBA tear of its own, acquiring a nearly 5% stake in the Phoenix Suns at a $1.55 billion valuation and a nearly 5% stake in the Kings. In June 2021, Sixth Street Partners acquired a 30% stake in the San Antonio Spurs alongside Michael Dell, with Sixth Street owning 20% and Dell the remaining 10%.

Sports investing has also cemented itself as a global trend. Luxembourg-based CVC Capital Partners purchased an expansion cricket franchise in the Indian Premier League for $736 million in October, and injected $3.2 billion into Spain’s La Liga soccer league.

 

Private equity firms were also in search of thriving media companies in 2021. In August, Next Generation Media Co.Blackstone‘s newly formed media business—announced a $900 million buyout of Hello Sunshine, the production company founded by Reese Witherspoon.

Next Generation followed up that deal with a pact to buy Moonbug Entertainment, a children’s entertainment company. That deal could reportedly value the business at $3 billion or more.

Apollo Global Management closed a $5 billion deal for Yahoo’s New York news division in September. Thomas H. Lee Partners acquired BazaarVoice—a provider of outsourced technology, community management, analytics and syndication services—for $1.75 billion in March.

Music catalog deals continued to be a hot ticket item. Since late 2020, Universal Music Group paid nearly $400 million for Bob Dylan’s song catalog, and Sony Music Group, with some financing from Eldridge Industries, bought Bruce Springsteen’s masters for $500 million in the largest deal to date. Shamrock Capital paid $300 million for the master recordings of Taylor Swift’s first six albums.

In March, KKR and BMG announced a partnership to acquire music rights. In December, the investing duo acquired the music catalog of American rock band ZZ Top, in a deal that included the band’s publishing catalog and their income from recorded royalties and performance royalties. This month, KKR and BMG also acquired the music catalog of singer-songwriter John Legend.


Featured image by Pgiam/Getty Images

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