Are Sports Teams the Next Big Investment? | AWM Insights #239

Join Chief Investment Officer Justin Dyer and Portfolio Manager Mena Hanna, as they explore the fast-evolving landscape of sports as an asset class. This episode breaks down the allure of owning a team, the financial realities behind headline-grabbing valuations, and the risks and rewards that come with investing in both established franchises and emerging leagues. Whether you’re a lifelong fan curious about team ownership or an investor eyeing the next big trend, you’ll gain expert insights on what drives returns—and what pitfalls to avoid—in this unique corner of the market. Don’t miss this candid conversation packed with strategy, stories, and the real game behind the business of sports.

Chapters
(00:12) Sports as an Investable Asset Class
(01:35) Financial Asset Versus Trophy Asset
(03:29) Spectrum of Sports Investment Opportunities
(05:31) Valuations and Market Nuance
(06:37) The Broader Sports Ecosystem
(07:39) Risk, Diversification, and Hype
(12:43) Market Share, Attention, and Growth Potential

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Creators and Guests

Host

Justin Dyer

Chief Investment Officer and Chief Operating Officer at AWM Capital

Host

Mena Hanna

Senior Investment Analyst at AWM Capital

What is AWM Insights Financial and Investment News?

A bite sized discussion on timely financial news and investment topics, to help you maximize your net worth and wealth for the next generation with Justin Dyer and Mena Hanna of AWM Capital.

Justin Dyer: Hey everyone.

Welcome back to another episode
of a WM Insights, Justin Dyer,

here, CIO, uh, chief Investment
Officer that is of a WM Capital.

Happy to be here.

Happy to talk, uh, about a pretty
interesting topic with, uh, Mina Hana.

Portfolio manager here at a WM Capital
and, uh, my co-host on insights, as you

all very well know, uh, and that topic,
Mina, is sports as an asset class.

Um, you know, if, if, if you're
not familiar with what I just said,

sports as an asset class, it's
probably just a matter of time.

Um, there's a lot of headlines and
certainly if you're paying attention

to financial media around this.

NFL being a big one, allowing private
equity to come in and become more

of an owner, uh, more meaningful of
an owner, um, of those franchises.

And then there's, you know, a
whole swath of a, of, of adjacent

type investments around this
idea of sports as an asset class.

Um, so it's a, it's a topic that.

Coming up and I think drives
attention for a variety of reasons.

Um, you know, there a lot of people
are sports fans and you want to

own part of your, your team and
sometimes there's a public option

or very few, uh, examples of that.

But there are some publicly traded teams.

Um, and in any case, so we're gonna
start the conversation today focused.

Focus

More starting it with more of what
the, the lay of the land is, and

then give you at least a quick take
of how we're thinking about this.

You know, it's a big, big topic.

We could probably do a couple
episodes on this and maybe

we'll do that down the road.

But, um, I guess Mina, why don't
you take it away and, and paint the

picture of sports as an asset class.

What does that actually mean?

Mena Hanna: Yeah, it's.

Looking at sports as an investment,
whether it be for pure financial benefit

or for something that's a little bit more,
maybe you wanna look at investing in the

Los Angeles Lakers and keeping them in
your name because they're a trophy asset.

They're the team that you rooted
for and supported your entire life.

So there's a few ways of
kind of looking at it.

The two main paths that I would take are.

A financial asset, which is a true
asset class, like what you're talking

about, or a trophy asset where we're
gonna set a lower bar, potentially.

I am going to take on more
of an operational role.

It's gonna be a little bit of a headache,
but it's something that I want to

do because I want to own the team.

I want to participate in
the team's decision making,

ideally drive them forward.

And it is just different from how
you would, you know, obviously buy

shares of Meta or Google or Apple.

It's a different level of ownership.

Justin Dyer: Yeah, right.

And we're not gonna get into
great detail today on the avenues

I mentioned private equity.

You can obviously take that.

Um, that direction.

You could, if you have enough money,
you could own a team directly.

That's kind out of the scope of
what we want to talk about today.

What, what, what we're focused
primarily, like I said, is

kind of high level top down.

So you, you set us up
really, really well there.

I would.

Then take it a step further and almost
define what those two categories that,

that you presented could then be, right.

You could have established teams,
so, you know, think about the, the,

the major sports leagues, right?

MLBN, B-A-N-F-L.

You know, hockey is debatable.

Very debatable.

Yeah, very

debatable.

But, um, right, those are the,
these established leagues.

And, and there is probably more of that
trophy seeking aspect, I would argue.

Um.

There and, and the prices
are, are, are substantial.

Um, and so we'll, we'll get into kind of
where, where we go from here, given that,

but there's a lot of, uh, a lot of hype,
let's call it, around those big names.

And then you have what I would
call, um, kind of a middle ground.

You know, you could
still call them emerging.

Leagues franchises.

Um, but there's, there's some
that are, are, are, are more

mature throughout that journey.

So think about the WNBA, right?

Everyone probably knows what that
is, has watched A-W-N-B-A game.

A lot of people we talked to have even
gone to A-W-N-B-A game and, and have some

really good things to say about that.

Uh, kind of behind that is women's soccer.

That, um, that's certainly
a global sport, right?

Is becoming quite popular
here in the United States.

It's becoming, or has been popular
in places like Europe and then.

Taking a kind of a bigger
step down from there.

Uh, the true emerging sports leagues
and franchises are, you know, the,

the track and fields of the world.

I would even put pickleball in there.

Uh, women's volleyball, I think is,
is coming up hot and heavy as well.

And, and then there's some more esoteric
type things like, uh, sail, gp, you

know, that has, that's an emerging.

Um, emerging sport for sure, but
it's been around for quite some time

and it's kind of just, uh, changed.

Its its shape and form and each one of
these has, has different, um, investment

profiles, different risk profiles, but
really at the end of the day, we're

talking about different investment

Mena Hanna: Yeah.

And even in like the big leagues,
talk about the NBA, there is a massive

difference between valuations of.

Call it the big market teams and the small
market teams, two teams in California,

the Lakers and, and the kings like
the Lakers are worth on paper four to

five times as much, which shows you
that it doesn't just depend on what

league you're investing in, it's also
what market are you buying into and.

How are you potentially going to unlock
value if you do buy a small market team?

Like what is the play there?

You're limited by your fan base.

You're limited by the income of the
area that you're actually operating in.

Do you move the team?

Do you try to figure something else out?

It's, it's a completely
different game from an investment

standpoint, and you do get just.

Massive differences in valuations
based on where the team is located and

historically how the team has done.

Justin Dyer: Yeah, I mean,
it's a great point, right?

Within any asset class, there's
so much nuance and so many

different drivers of, of return.

Um, it's just a great reminder.

Uh, I, I don't want to forget to
mention these, kind of call it, uh,

uh, tangential asset classes to.

This general topic, which are
things like the sports ecosystem, so

technology that goes into sports or
might be supporting teams, stadiums.

Um, et cetera, right?

Those are, those are really, really,
uh, important also to talk about.

Not really gonna dive into them a ton
today, but then even further down the

ecosystem, a, a term and, and some money
that I'm seeing, uh, go into, um, uh,

supporting as youth sports as well.

We all know, Lord knows that
that's a huge, huge market.

Uh, you know, I've got kids and spend
plenty of money on youth sports, but

then it's becoming big business as well.

So these are, um, those are two
categories just, just adjacent to

what we're talking about today.

We're gonna focus again, more so on
these major teams, team ownership, um,

and really Mina, let's jump into kind of
our, our high level expectation, right?

Like just.

Okay.

Category by category.

Again, to your point, there's nuance
between the big market teams and the

small market teams and whatnot, and
there's obviously corresponding risk

that come comes into those equations.

But let's just talk a little bit about
how we think about the investment

opportunity set across this asset class.

Mena Hanna: Yeah, and something
that kind of reigns true and, and

this is actually something that gets
pitched when people talk about youth

sports all the time, is sports.

If you're including them
in your portfolio, it's for

diversification purposes.

You're probably going to pay
for your kids' soccer camps.

Even if we're in a recession,
if we hit, you know, a 2008,

you're probably gonna pay for it.

So, um, that actually also bleeds
its way into sports in general.

A lot of people and a lot of people
that are selling these products or

ownership into these funds that are
buying sports teams are pitching it

as a recession proofed asset class.

And I think that that ranges
true across the board.

But if you look at the major
sports, like if you're kind

of looking at these mega cap.

Teams.

The Dallas Cowboys, the Lakers, just the
biggest teams like, yeah, that might, that

might be true, but there's also women's
sports teams, or the NHL, which just have

less traction, which are going to be more,
a little bit more sensitive to things now.

Their rates of return and where you
can actually capture a significant

financial outcome, that's probably
where you're gonna end up wanting

to invest because so much money has
poured into those big leagues and

the big teams that the valuations
are kind of sky, sky high already.

Menna Hanna: already.

Mena Hanna: Um, but there's, there's
different risk factors that come

into all of these asset classes.

And then I would argue that there's
also no go zones, which are like

the third tier English team.

Uh, we see this actually as
surprising about soccer teams.

Yeah.

Yeah.

Soccer teams.

Soccer, yeah.

Um, where they're bleeding a ton of money.

And unless you're Ryan Reynolds,
you have no business investing

in these teams because.

You're just gonna hold them until
they go under and, and yeah.

It's a, it's a losing strategy.

Justin Dyer: Yeah.

Well, I mean, you, you mentioned a couple,
a couple things that I want to, uh.

Uh, bring into one, one clear point
where I think a lot of the, um, the

coverage on this and the, and the
interest here is hype driven, right?

You see Ryan Reynolds turn around
that football club in the uk you see?

Um,

of these legacy families, you know, the
Lakers just sold somewhat recently and the

numbers are substantial, and so there's
an element of hype and rule of thumb.

Hopefully if you're listening to
this podcast on a regular basis, you

generally know or hear us talk about,
Hey, stay away from, from hype trades.

They're, they're generally not
a good investment strategy.

Um.

But it's also one of those things, you
gotta, the devil's in the details, right?

You take the Lakers as a, as
a great example, sold for,

uh, what was it, $11 billion.

And you know, the, we can play with
some numbers here, so I'll, I'll put

an asterisk by this, but you, you
look at what the initial buy-in price

was and then what they sold for.

Now there's nuance to that.

I think they sold some, uh, real
estate property along the way,

but that rate of return actually.

Barely kept up with the s and
p 500 over the hold period.

And so, yeah, you see these billion
dollar numbers and you know, they're

single families that exit at that
number and that's impressive.

But the, the,

Menna Hanna: the

Justin Dyer: the tried and true kind
of public market equivalents easy thing

without the operational burden and
all that good stuff actually would've.

Kept up or, or put you in, in
the, the exact same position.

The other thing I want to
hit on too is valuation.

Like it is from a established sport,
um, established franchise point of

view, these entry points are just
really, really hard to wrap around my,

my head around and get excited about.

Yeah.

Could they, could they still
have a positive return from here

For sure, but are they gonna.

Double, triple, quadruple, which I
think a lot of these, a lot of investors

are kind of hoping for in some cases.

I think the the odds are, are
against those type of outcomes.

Um, just solely because of the entry
prices of, of some of these things.

Mena Hanna: Yeah.

Unless you're able to unlock, like
think about it, software can five XA

software company can five x because
you can create a new product, you

can find another stream of revenue.

What you're saying is spot on because.

If you're investing in the Lakers,
like what are you gonna do?

You're already international.

You've already gone international,
you're already probably in youth

leagues, you're doing a lot of things.

Like you're just going to get a little bit
of just revenue expansion as people make

more money, as the economy does better.

But yeah, there's, there's not,
you're not gonna five x from here

with a mature team like that.

Justin Dyer: Yeah, no, I, it,
it's a great comment to dovetail

into the, the other sports, right?

What you're talking about is really
market share and we're, we're, we've

been in, and we continue to exist in
a world where everyone's attention is.

Is being split in a multiple,
in multiple different ways now.

Sports really benefits, uh, I think
from the desire to be in person

and get away from some of that.

But then there's also so much bifurcation
in everyone's interest right there.

The, the mono monoculture that used to
exist when I was a kid is no longer there.

You know, you can be obsessed
with whatever, you know,

obscure football league in, in.

In South America and I could
have no idea that that exists.

And there's a super strong fan
base on something like that.

And so tho the established teams have
all of these up and comers to contend

with and, and I think that's where
you're seeing some of this growth.

And that's where the be is now.

There's a lot of risk and return, ri
risk and potential return, but I would

argue at least where we stand is.

The more common sports like women's
basketball, women's soccer, you

know, those are places where we've
actually put some dollars behind.

Um, 'cause there's a little bit
more predictability, there's a

lot of upside through, again,
capturing more of these eyeballs at.

Away either net new eyeballs that ne
not, weren't necessarily huge sports fans

to begin with, but then also competing
with these more established leagues

and they're like, Hey, I can actually
resonate more with women's basketball,

women's soccer, et cetera, et cetera.

So there's a lot of, uh,
interesting societal dynamics

at play that are, that are.

Creating a general tailwind
for up and coming sports.

And sports in general.

But then the, like we talked about, the,
the hurdle that these established teams

and whatnot have to get over from these
valuations today is, is pretty dang high.

Yeah.

Mena Hanna: You have to find something
that's legitimate, that's not gonna

go under like the XFL once you hit
a, a speed bump, but it's juice.

It hasn't been completely juiced.

It's not just a dried lemon at
this point and completely gone.

Um, and you're left with nothing.

So, so yeah, it's an interesting
delicate balance that you have to play.

To make it

worth it.

Justin Dyer: It is.

And hey, that, that's
why we invest, right?

There's, there's, there's risks to
this and we sit and digest all the

data and, and thoughtfully make,
um, make investments accordingly.

But, uh, but yeah.

Anyway, hopefully, hopefully
this conversation is interesting.

Again, very, very high level.

If you have any specific questions around
the general topic, shoot, shoot me in a

Mena Hanna: 6 2 6 8 6 2 0 3 5 5

Justin Dyer: and we'll keep
the, the conversation going.

We will, uh, unpack this as much as
we need to, but until then, until

next time, own your wealth, make
an impact, and always be a pro.

Thanks for listening.