News & Views

Professionalising investment deals in the sport sector

The past few years have brought unprecedented investor interest to the European professional sports market. Private equity funds, sovereign wealth funds, family offices, and high net worth individuals are actively seeking exposure to sport - drawn by recurring revenues, loyal audiences, global reach, and the resilience of live entertainment.

According to a report on PitchBook, within the top tier five leagues in Europe’s biggest sport, namely football, more than 36% of the teams are backed by private equity, venture capital, or private debt firms.

Yet outside the top tier, many rights-holders still approach capital raising and equity sales on an informal basis. It is still common for boards to ‘test the market’ through personal networks or rely on sponsorship-style sales tactics rather than undertake a structured and professionalised investment process.

In a market where capital is becoming more selective, and regulatory oversight is tightening, this approach is risky. Professionalising how rights-holders prepare for and manage transactions can mean the difference between a value-enhancing partnership and a strategic misstep.

An era of new capital - but not all money is equal

New capital entering sport comes in many forms, each with its own objectives, governance expectations, and return timelines. Understanding these distinctions early is essential, for example:

• Institutional funds (private equity, infrastructure) typically seek defined exit horizons (8–10years) and governance rights proportionate to their stake.
• Sovereign and state-linked investors often look for strategic influence, often tied to geopolitical, in-country diversification or soft-power aims.
• Family offices and high-net-worth investors tend to prefer patient, lower-intervention capital, often for legacy or diversification reasons.
• Corporate and media investors may prioritise distribution or data rights over pure equity growth.
• Debt financing often looks for a favourable risk-return trade-off and using covenants and security to protect their investment.

The key for rights holders is alignment - selecting partners whose objectives match the organisation’s stage of maturity and long-term mission, and in an ideal world, accelerate it with tools beyond capital. Accepting the wrong kind of capital can burden a club or federation with unrealistic return pressures, erode independence, create regulatory headaches, or generate antipathy within the fan base.

The reality gap – why sports deals fail

Boards can underestimate the complexity of selling equity or raising debt in a in a sports club or business operating in a regulated environment. Unlike conventional businesses, sports entities combine financial, regulatory, and intangible emotional dimensions. Common pitfalls include:

• Unclear corporate ownership structures (subsidiaries, charitable arms, community stakes and multi-club and multi-sport groups).
• Incomplete financial and legal due diligence processes to highlight data or legacy liabilities (stadium leases, deferred wages, contingent bonuses, regulatory prosecutions).
• Misunderstanding valuation drivers by focusing on revenue not profitability, and/or on brand or fan base considerations rather than good corporate governance.
• Lack of strategic vision on market direction, particularly macro-economic issues such as the flatlining broadcast rights revenues.
• Overreliance on informal negotiations rather than confidential and legally binding processes.

Executives in sport often have strong expertise in commercial management but less experience of transactional deal-making. Outside of the European elites, the ability to retain quality professional advisory firms with proven track records is often out of reach.

Building a fit-for-purpose transaction process

For rights-holders below the elite tier, hiring an international investment bank may be unrealistic. But a well-run fit-for-purpose process, designed by a specialist legal and advisory team, can achieve professional results without excessive cost. Here are some steps that can be taken to achieve this:

Step 1: Define the strategic objective

Is the goal to raise growth capital, shore up the balance sheet, fund capital projects through debt, bring in strategic expertise, or allow existing shareholders to exit? Each scenario requires a different approach and structure including minority sale, refinance, joint venture, partnership, or a spin-out of commercial rights.

Step 2: Prepare the house and appoint the right professional advisory team

Before speaking to investors:

• Appoint the right legal and corporate finance advisors.
• Audit ownership, licences, and media/IP rights.
• Clean up corporate records and contracts.
• Identify and prepare mitigation on any potential ‘red flags’ early (debt, tax, litigation, employment, regulatory exposure).
• Prepare concise financial and narrative materials i.e. ‘data room light’.

Even modest preparation demonstrates seriousness and helps avoid value erosion later in due diligence and negotiations during an actual ‘live’ deal.

Step 3: Identify and segment potential investors or buyers

Not all buyers fit all assets. Being intentional on mapping investor categories – institutional funds, family offices, broadcasters, technology partners - helps to shape your approach, your understanding of their business interest and its fit for your asset, and pricing expectations.

Many mid-tier entities benefit from strategic capital rather than purely financial investors - for example, a lot of US capital that has come into the European sports market brings a more technology and data led approach that can provide expertise and experience to optimise operations across real estate, recruitment, sales and fan experience.

Step 4: Stage-gate the process

Build a process that specifically avoids open-ended conversations. A staged process – NDA, teaser document, data access, executive briefings, indicative offer - allows you to manage momentum and maintain control.

Your professional advisory team should structure clear timelines, disclosure protocols, and confidentiality undertakings to prevent leaks or misunderstandings during the deal process.

The governance equation: control, board seats, and minority rights

Equity sales in sport are never solely about cash, as control and influence are critical factors to consider for the future growth of the business. Key governance points to address as part of the deal process include:

• Board representation: Will the investor have a seat? What decisions require dual consent?
• Reserved matters: Spending caps, player transfers, strategic hires, dividend policy, elite performance strategy.
• Future funding: Will there be obligations to inject further capital? On what terms?
• Exit mechanics: Drag and tag rights, pre-emption rights, or buy-back clauses.
• Reporting obligations: Active investors will want to influence budgets, appoint executives, and shape commercial strategy. Passive investors may prefer quarterly updates and limited involvement.

Poorly drafted investment and governance documents are one of the main sources of conflict post-investment. Clubs and federations should seek to preserve flexibility while offering investors genuine visibility and accountability.

The legal building blocks

A professional advisory team does not need to cost the earth, but it does need to be disciplined, structured, and involve advisers with project management expertise. The key legal documentation will usually include:

• Confidentiality agreement (NDA) – tailored to cover stakeholder communications and data room disclosure.
• Term sheet or heads of terms – clearly defining the agreed terms, price mechanism, and conditionality.
• Transaction legal agreements – formalising the deal structure, financial framework, and appropriate protections, as well as the operational constitution of the post-deal business.
• Regulatory consents – from leagues, NGBs, or competition authorities as required.

Each of these documents sets the tone for the transaction and signals to investors that the organisation is deal-ready and professionally advised.

Looking ahead: a market of scarce strategic assets

Despite economic uncertainty, sport remains one of the world’s most finite investment classes. There are only so many clubs, competitions, and broadcast rights available - and new formats (such as The Hundred, SailGP, and the PTO’s T100 Triathlon Series) are attracting structured, professional capital.

As investors compete for relevance, UK and European rights holders - especially those outside the elite - have a unique window to attract interest.

How specialist sports lawyers can help

At O’Connors we advise sports rights-holders, clubs, sport businesses and federations that may not have access to global advisory firms such as The Raine Group. We work alongside corporate finance advisers, tax accountants, wealth managers, and sports consultants to project manage all the legal aspects of an investment process from start to finish - helping to run an efficient, confidential, and credible capital raising or sale process. In short, we help clients hit the target - ensuring that when opportunity presents itself, they are ready to engage on their own terms.

For further information, please email Philip Bowers, Sport Sector Lead at O’Connors, or call 0151 906 1000.