AI-driven workforce fuels private equity surge in sports
The influx of businesses investing in AI is a key factor driving the surge in private equity (PE) within the leisure and sports sector, as sports is the new luxury.
Cleary Gottlieb partner Tihir Sarkar explained to City PM, “With day-to-day activities being taken over by AI, there’s going to be a lot more time for participation in leisure as well as sports, but also participation.”
“There are potential investment opportunities over the longer term with investment returns, because people are going to have more free time, and they can have more free time for leisure.”
Sports have experienced a surge in activity as private equity interest in the sector has risen over the last few years, with nearly 200 deals in 2024 alone.
In 2022, Clearlake Capital completed a $5.3bn acquisition of Chelsea Football Club, while Oaktree Capital took a 31 per cent stake in Inter Milan in 2021.
But it’s private equity in US sports that is growing, with over 74 North American teams now having some level of PE involvement following the ease of ownership rules by major leagues, including the NFL, NBA, and NHL.
Sarkar explained: “The US, which is leading the way for all this, pretty much all the sports, all the major sports, hockey, basketball and even college sports, are allowing private equity investments.”
Lawyers enjoying the surge in work
With sports benefiting from the surge of extra capital, lawyers are also experiencing the flurry of inquiries, as “it’s very heavily regulated” and governed by “complex rules”.
There is “an immense amount of regulation, mostly bespoke, and that requires sophisticated financial investors. In addition, the regulation often has a very old framework,” explained Sarkar.
With the complexities that require lawyers to be involved at every angle, the legal sector is expanding to meet the surge in work. He noted for Cleary Gottlieb, a US law firm in London, this work “has been a big area of focus”.