Liverpool F.C., join the party.
News that the European soccer giant’s American owners are considering selling means yet another sports team is on the market, attracting many of the same uber-wealthy pool of buyers.
FSG puts Liverpool up for sale
Industry insiders say they don’t recall a time when so many professional sports teams were for sale at the same time, which right now stands at least at half a dozen. And that doesn’t include the many limited partner (LP) stakes that are frequently on the market, or the expansion planned in leagues like MLS and the NWSL, or the teams that are informally available at the right price.
“I sold two big LP stakes already this year — one basketball, one baseball — I’m working on another huge LP stake in baseball right now. Nobody will ever read about it,” said one sports investment banker, who requested anonymity because of the confidential nature of the assignments.
There are individual circumstances behind each possible sale. The Washington Commanders are possibly for sale because of the long run of scandals under the ownership of Daniel Snyder. The Ottawa Senators are selling because the owner, Eugene Melnyk, died recently. The Phoenix Suns are available because of the NBA’s pressure campaign to force owner Robert Sarver to sell after finding he presided over an abusive workplace and used racial slurs.
All that duly noted, owners are also clearly noticing the surging prices for sports teams, as limited partner stakes are now requiring as much money as a whole team purchase demanded just a few years ago. Obviously for Sarver and Snyder, the eye-popping sums they would pocket help overcome the reticence to relinquish their cherished teams.
“Banner deal after banner deal and so people are like, ‘Jeez, like, might as well sell now,’” said Andrew Kline, founder and managing partner of Park Lane, which operates a sports investment bank. “These prices that you see continuing to happen are certainly encouraging people to put their teams on the market.”
Kline also points to pent-up demand from the COVID-19 period when selling teams in that environment was difficult as sports franchises suffered steep losses because fans were banned or limited from attending games. So owners were less apt to put teams up for sale because it might be viewed as a distressed move stemming from financial losses, which would depress the price.
But why are prices still rising if so many teams are on the market? In classic economics 101, when there is a greater supply of something, prices moderate if not dip. Build a bunch of apartment towers in a small city with ample housing stock, and the new homes won’t cost a fortune. But sports has its own unique ecosystem.
First, one can’t just build new sports teams, this is exclusive oceanfront real estate that rarely changes hands as there is an artificial cap on the number of teams set by the leagues. So while the Denver Broncos sold for $4.65 billion in August, the Commanders will go for likely more than $6 billion — if Snyder does sell — to a buyer wanting to join the rarefied air breathed by NFL owners.
Buyer groups also do not always overlap among the leagues, those interested in hockey may not be the same types to bid for an EPL team (though Fenway Sports owns the Pittsburgh Penguins).
“Somebody who’s a hockey-oriented hockey fan, you know, was always interested in acquiring an NHL team is the one that will buy the Senators,” said Randy Vataha, a sports investment banker who advised Melnyk on the purchase but has no role in the sale currently. “I don’t think the buyer of that team would necessarily be a buyer for the, for the NFL team, and probably not, for any of the other teams is my guess.”
Bidders for the EPL and NFL teams could overlap, as they did with the Broncos and Chelsea FC. The ultimate buyers of Chelsea, a group led by Todd Boehly, also had a bid in for the Denver franchise. But this did not affect at all the record-setting prices set by the two transactions, an achievement that may be short-lived with Liverpool and the Commanders maybe changing hands next.
What is driving the run up no matter the league is sports’ unique position in the fragmenting media ecosystem as must-see live content. Cable operators want it as the last-gasp media holding together the traditional cable bundle, while the new generation of streamers want it to distinguish their wares from the competition.
“There’s never been a better time in the history of the world to be a sports rights owner,” Kline said. “You’re seeing these network deals, continue to climb, because these networks are these massive entities. And I think the thing that proves the best piece of content is live sports.”
Here’s a look at the teams for sale, at least those that are known.
The team hired Galatioto Sports Partners to handle the process. Of the big four North American sports leagues, the NHL is the only one without a $1 billion sale, with Fenway Sports 2021 purchase of the Penguins at $900 million the high-water mark. This deal is unlikely to top that given the smaller market and lower stature of the Senators.
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Los Angeles Angels
Another team that hired Galatioto Sports, owner Arte Moreno has struggled with his two-decade-long ownership in fielding a competitive team and securing a new stadium. The last team in MLB to sell was the New York Mets in 2020 to Steve Cohen for $2.2 billion. The Angels will be hard pressed to match that.
Blum: Angels owner Arte Moreno owes everyone an explanation
The team hired Allen & Co. in April to secure a buyer and the process has dragged on. One issue is the team’s litigation surrounding the rights fee received from cable outlet MASN, a case that has been toiling for nearly a decade. Allen & Co. has set a target price of $2.5 billion, which may be high.
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The team is likely not getting sold but it did this year hire Goldman Sachs to test the waters. The sons of ailing owner Peter Angelos are suing each other over the future of the team, so the litigation needs to be resolved first.
Orioles hired Goldman to assess sale
The team hired Moelis & Co. to advise on a sale. The unanswered question is how much of the team is for sale. Sarver owns 35 percent and the control shares, but only one LP has the right to piggyback on his sale (together that represents 40 percent). If a buyer only needs to acquire four tenths of the team, he or she might be willing to pay a premium for that. Talk is the team could go for more than $3 billion, though some in sports finance caution that Phoenix is not a top-10 market and the regional sports network business the NBA relies on is in peril.
Suns sale may set record NBA value, but will less than half of team change hands?
If Chelsea sold for $3.2 billion, there’s no reason this transaction won’t go for a similar amount if not more. Demand is more international than for US sports properties, with buyers not just from the US but Asia, the Middle East and Europe always in the mix for EPL clubs.
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Whether Snyder truly wants to sell is the million-dollar question, or maybe better put the $6 billion one. It may take that much, if not more, to finally get Snyder to relent and sell the team. Anything less and other owners would worry about their own franchise values and ironically might encourage him not to sell. That’s why Jeff Bezos makes so much sense here, but can Snyder overcome his venom for the Washington Post, which the Amazon chairman owns?
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(Top photo of Liverpool’s Mohamed Salah: Laurence Griffiths/Getty Images)