The Emperor's New Franchise: Why Sports Investment Is Starting to Look Like Pets.com
A reckoning is coming in sports investing, and even the biggest dealmakers are finally starting to admit it in private.
After nearly two years leading strategy for a new creator-focused sports platform and spending a great deal of time talking with fund managers, team owners, and league operators, a pattern keeps showing up: there’s far more money chasing “sports exposure” than there are genuinely good sports deals.
One comment, in particular, cut through all my notes: when I asked a seasoned investor how business was, he paused and said, “I’ve stopped buying American sports teams.”
Not slowed down. Stopped.
“Why?” I asked.
“Valuations are insane. And I can’t figure out how to exit.”
That conversation, more than any analyst report or market deck, crystallized what’s been nagging at me for the past eighteen months: we’re living through a spectacular bubble in sports investment, and the people closest to the action are finally starting to say it out loud.
When everything gets valued like it’s the next NFL
In 2018, roughly $4.5 billion flowed into esports as investors convinced themselves they’d found the future of entertainment, funding teams, venues, and leagues at aggressive valuations. Teams built 20,000-seat arenas for video game competitions, franchise slots sold for eight figures, and Overwatch League spots went for around $20 – 35 million. By 2022, that capital had almost entirely evaporated: FaZe Clan, once valued at more than $1 billion, went public via SPAC and watched its stock crater from around $20 to under $1 in less than two years, while long-standing teams like CLG reportedly lost money for years before being sold off. Venture capitalists, burned by hype and sky-high valuations, stopped writing checks, and esports quickly became “anti-sexy” to many of the same investors who had championed it just a few years earlier.
That entire boom-and-bust cycle unfolded in roughly 36 months.
Fast forward to today, and a similar playbook is unfolding, but with a twist: instead of one overheated sector, we now have dozens of emerging sports leagues and properties competing for the same finite pool of attention, capital, and sponsorship dollars.
The cracks are already showing
Grand Slam Track filed for Chapter 11 bankruptcy in January 2026 after staging just three events, reporting liabilities of more than $40 million against less than $1 million in assets and listing roughly 340 creditors. Court filings indicate that top athletes, including Olympic champions such as Sydney McLaughlin-Levrone, are owed hundreds of thousands of dollars, while the league generated well under $2 million in revenue in 2025. A proposed restructuring plan would reportedly pay athletes roughly 85% of what they’re owed, around $6 million of $7 million, while vendors owed more than $13 million would split a tiny fraction of that amount, in the low single-digit percentage range, with new money from entities linked to Michael Johnson and Winners Alliance intended to keep the league on life support. It’s a textbook example of how, when a shiny new league blows up, some stakeholders get partially rescued while many others simply eat the loss.
The National Cycling League was another venture-backed attempt to “reimagine” a sport. In this case, American criterium racing, with celebrity investors, a tech-forward scoring format, and ambitious TV-facing positioning, but it folded after just two seasons, amidst canceled races, venue changes, and abrupt layoffs as operations were “paused.” Riders and staff lost jobs on short notice, and the much-teased reboot never materialized, despite polished branding and credible athletes on the start line.
Unrivaled’s women’s basketball league offers a different sort of warning sign. Early in its second season, some national broadcasts drew smaller audiences than comparable games in Year 1, even as the league expanded its schedule and footprint. At the same time, it has reportedly broken women’s basketball attendance records in certain markets and grown live-event metrics, underscoring how ticket demand and TV ratings can tell very different stories. Expanding while your core media audience is choppy is the move of a property sprinting ahead of its fundamentals.
Major League Pickleball is “on the brink of profitability” at the league level, but its team-level economics are far less rosy: recent reporting indicates that only a small handful of its 22 clubs are profitable or breakeven, while most are still burning cash. Franchise stakes have nonetheless traded in the $13 – 16 million range, and the league continues to add new teams at similar entry prices. That’s a capital structure that depends on fresh money coming in at equal or higher valuations to paper over weak operating performance.
Women’s soccer valuations have gone vertical while revenue growth, though real, hasn’t kept pace. A few years ago, some NWSL clubs changed hands in the low single-digit millions; today, expansion fees and private sales are pushing club values toward or above nine figures. In many cases, revenue has grown from “a few million” to “a few more million” a year during the same period, reflecting a venture-style valuation curve for what still appears operationally to be a challenging small-market media and ticketing business.
The structural problem nobody wants to talk about
There’s a fundamental issue with private equity in sports that distinguishes it from most PE-backed businesses: structurally, you often cannot run a team like a classic PE portfolio company.
The traditional PE playbook is simple in theory: buy a business, improve operations, cut costs where it makes sense, drive revenue, and exit at a higher multiple. In sports, league governance and ownership rules often prevent minority funds from exercising such control. You usually can’t hire or fire the general manager, reset the front office, or overhaul commercial operations without owner and league sign-off. You can’t reliably drive the efficiency gains or strategic pivots that normally justify PE fees and carried interest.
Most teams outside the very top tier run at or near a loss and require continual capital injections, especially after stadium projects, roster spending, and escalating costs. You often end up as a largely passive investor hoping the terminal value appreciates, which is the opposite of how private equity is supposed to create returns.
Even worse, exits are structurally constrained. League rules can impose holding periods, restrict the pool of eligible buyers, and require approval by the commissioner or board for any transaction. Your supposedly “trophy” or “infrastructure-like” asset can be effectively locked up for a decade or more. If the market turns and you need to sell, you’re reminded very quickly that the universe of buyers for a minority stake in a secondary-market franchise is small and highly negotiated.
In April 2025, UNITE HERE, the hospitality workers’ union, issued an investor alert urging public pension funds to pause new commitments to sports-focused PE funds, explicitly naming managers such as Arctos and RedBird. In that memo, the Deputy CIO of the Kentucky Public Pension Authority described sports teams as a “difficult asset to exit” with a “limited investment universe” and warned that fund terms could be extended at the GP’s discretion. One pension executive summarized the concern bluntly: they thought they were buying a stable, income-producing asset and instead got a speculative, illiquid bet dressed up as infrastructure.
KKR’s move to acquire Arctos Partners in early 2026 underscores that exit constraint in an unexpected way. KKR is paying about $1.4 billion in cash and stock, plus potential earnouts, to fold Arctos into a new KKR Solutions platform focused on GP solutions and secondaries, and has framed the deal as part of a strategy to build a $100 billion AUM vertical in long-duration, “solutions”-oriented capital. In other words, one of the cleanest “exits” available to a leading sports fund was to sell itself into a mega-platform that can monetize sports stakes as part of a larger product toolkit, rather than relying on a broad, liquid market for minority team equity.
What even the biggest players are saying
Gerry Cardinale, the founder of RedBird Capital and one of the most respected dealmakers in sports, controls AC Milan and has backed some of the biggest rights and franchise deals in the world. In a May 2025 interview, he said he had effectively gone “pencils down” on major U.S. team acquisitions because valuations had become excessive and were driven by assumptions about media rights that “no one has figured out,” describing the current environment as an “asset bubble” that needs a normalization of prices.
Think about that: the person who built a firm on the idea that sports are a durable, compounding asset class is saying in public that he’s taking chips off the table at today’s entry points.
At the same time, unions like UNITE HERE are telling pension trustees to pause new commitments to sports funds over valuation, liquidity, governance, and labor risk, while conference panelists increasingly describe returns in many sports vehicles as “speculative, relying on terminal value and belief in long-term appreciation” more than on current cash flows. Translation: many people in the room do not know what these things are worth; they are hoping others will pay more later.
KKR’s own framing of the Arctos deal adds another layer. On recent earnings calls and in deal announcements, KKR executives have emphasized that the acquisition is about building scalable GP-solutions and secondaries products, growing management fees, and increasing the share of AUM in perpetual and long-dated capital structures, not about making a pure directional bet that mid-tier sports franchises are mispriced bargains. That tells you where the real game is being played: in fee-bearing duration and product manufacturing around sports, rather than in fundamentally transforming the underlying team businesses.
The attention economy doesn’t scale
There’s another reality nobody enjoys saying out loud in a room full of capital: attention is a zero-sum game, and the NFL already dominates it.
In 2023, the NFL accounted for 93 of the 100 most-watched U.S. telecasts, breaking its own prior records from 2022 and 2019, and it continued to dominate the ratings table in 2024 despite intense competition from election coverage and tentpole entertainment. Everything else on the sports landscape is fighting for the leftover time slots, eyeballs, and advertiser budgets.
The NFL pulls in extraordinary media dollars per broadcast minute, with the NBA, Premier League, F1, and a handful of other tier-one properties occupying the next rung down in rights value. Everyone else is effectively in a long, crowded line for scraps. There are only so many hours in a day, so many broadcast windows, so many front-page placements in streaming apps, and so many sponsorship dollars a CMO or CFO can justify.
For dozens of new sports properties to succeed simultaneously, audience growth would need to explode far beyond anything current trends support. Instead, capital is often chasing narrative, celebrity involvement, and social engagement screenshots far more than it is chasing durable, diversified revenue and enforceable governance rights.
The real bull case, and why it’s a trap at the edges
There is a real bull case in sports, and ignoring it is part of how we got into this mess.
The top 1% of sports properties, the NFL, NBA, Premier League, a small set of global clubs, and F1 teams, are genuinely scarce assets with real structural advantages. Media rights for major global leagues now add up to tens of billions of dollars annually, and long-term contracts with broadcasters and streamers provide unusual visibility into future cash flows. Scarcity is real. For elite franchises in major markets, value appreciation has historically outpaced inflation and many equity indices.
You can see that institutionalization in the latest deals. KKR’s acquisition of Arctos gives it an instant platform of minority stakes across top-tier North American leagues and a specialist team that has already raised and deployed dedicated sports funds, and KKR intends to use that as a cornerstone of its KKR Solutions unit offering sports exposure to both institutional and wealth clients. Deutsche Bank’s wealth arm has elevated “The global sports industry – Game on: unlocking investor value” as a flagship theme, explicitly arguing that sports should be considered as a structural growth and diversification area alongside infrastructure, private equity, and real estate in client portfolios. Genius Sports, meanwhile, has agreed to buy Legend, a digital sports and gaming media network that owns assets like Covers.com and Casino.org, in a transaction valued at up to $1.2 billion, in order to knit together official data, media, betting, and advertising into a single, integrated attention and monetization stack.
These are not “trophy asset” moves in the old sense; they’re portfolio-construction and infrastructure moves. Arctos Fund I reportedly delivered strong returns, Deutsche Bank is telling clients that sports is entering a new growth phase, and Genius is betting that owning the pipes and platforms around sports attention is worth levering its balance sheet. These are not frivolous arguments.
The problem is that this bull case for top-tier, systemically important assets has been lazily extended across the entire sports ecosystem. It’s like saying that because NVIDIA has been a fantastic investment, every AI startup at any valuation must also be a good investment. The logic breaks down dramatically at the margin.
Current signals that sports is going “infrastructure”
In early 2026, the KKR–Arctos deal, Deutsche Bank’s “Game On” report, and the Genius–Legend acquisition together made one thing clear: sports is no longer just a trophy-asset playground for billionaires; it’s being packaged and sold as core portfolio infrastructure.
KKR is effectively buying the picks-and-shovels allocator to sports franchises and slotting it into a GP-solutions and secondaries platform it believes can scale to $100 billion of AUM, emphasizing perpetual and long-dated capital and fee-bearing products. Deutsche Bank is telling wealthy clients that the global sports industry has entered “a new growth phase” and explicitly highlighting M&A, private equity, and regional dynamics as structured opportunities for investors seeking diversification and growth. Genius is building a fully integrated infrastructure layer on top of sports attention by adding a massive, highly engaged fan and betting audience from Legend to its existing data and media capabilities.
All of that strengthens the case that sports as an asset class is maturing at the top, and that the long tail, where most of the froth lives, is about to be judged against a much more professional benchmark.
What this looks like when it ends
Here’s my read: we’re going to see a clear bifurcation in sports investment over the next 24–36 months.
On one side, the blue-chip franchises, the teams that own or control key real estate, sit in two- or three-team markets, and have long-term media deals, will likely continue to appreciate, even if returns normalize. They’re scarce, culturally entrenched, and have line-of-sight to meaningful, recurring cash flows. The largest pools of capital will increasingly access that exposure through diversified platforms (such as KKR’s sports vehicle), structured products, and integrated data/media plays rather than one-off trophy purchases.
On the other side, everything else is heading toward a reckoning.
Emerging leagues will either be absorbed into stronger properties or quietly shut down as capital dries up, as we’re already seeing in track and cycling. Valuations in women’s sports, especially at the expansion and early-stage level, will reset toward levels that reflect actual revenue, margin, and market traction rather than pitch-deck projections. Celebrity-backed ventures will be quietly marked down, sold for parts, or folded into larger media and entertainment platforms. Sponsors will become more selective about where they allocate funds, and capital will become more expensive and more demanding regarding proof of concept.
Early investors who priced risk appropriately and got in at rational valuations will make money. The massive pool of institutional and quasi-institutional capital that piled in during 2023–2025, chasing a narrative, a diversification story, and a cocktail-party talking point, will not.
And somewhere in that process, more athletes will miss paychecks because a league runs out of money or a capital call does not get funded, exactly what’s already playing out around Grand Slam Track and what riders and staff experienced when the National Cycling League shut down.
The hard truth
The sports investment landscape today looks like too much capital chasing too few genuinely good deals at the margin. We’ve seen this movie before, venture in 2021, SPACs in 2020–2022, esports in 2018, and the ending is always the same: once the narrative breaks, corrections come fast, and they are not gentle.
The reason I’m writing this now is that the people closest to the action are finally admitting it, quietly. When the most sophisticated dealmakers in the space are pausing acquisitions, warning of asset bubbles, and telling pension funds to slow down, while others like KKR are repositioning sports exposure into long-duration, fee-based “solutions” platforms rather than simple growth bets, that’s not a contrarian hot take. That’s a warning sign.
The uncomfortable question isn’t whether a correction is coming to the long tail of sports investment. It’s whether anyone with significant capital at risk is willing to say so out loud before it arrives.
My guess? Most won’t, until they have to.
If you’ve read this far and you’re investing in sports, raising a sports fund, or sitting on an investment committee that has approved these deals, I’d genuinely love your perspective.
How are you thinking about valuation risk, control, and exit strategy right now, especially as sports shift from “alternative” to “infrastructure” in portfolios?
The conversation is already happening in boardrooms, credit committees, and owners’ suites; it just hasn’t fully reached the public discourse yet.