Private investment into sport - what governing bodies need to know

Transformational private investment deals in sport are big news not only for the target club or event, but for the sport as a whole and are likely to remain part of the landscape as the industry continues to mature and globalise. Transactions such as the sports investment group Kosmos’1, a ground-breaking agreement2 with the International Tennis Federation (ITF) in relation to a 25-year, US$3 billion project to revamp the Davis Cup competition and create an annual season-ending Finals event, involve a wide range of corporate, commercial, financial, sports governance and regulatory issues. Finding a balance between the investor’s commercial interests and the wider sporting and regulatory interests of a governing body is a complex challenge.

This article considers the sports sector from a private investor’s perspective, why they are investing more now than ever, and looks at different models for investment. It then examines external investment from the sports’ point of view and considers some common legal and commercial issues that sporting bodies could address in order to make their sports more attractive to external investors. Specifically, it looks at:

• The sport investment landscape: why and how private investors are investing

  • Equity deals

  • Asset purchases

  • Partnerships and collaborations

  • Creation of “new generation” events

• Legal and commercial considerations for sports governing bodies seeking investment

  • Commercial control vs regulatory independence

  • The necessary balancing act – relationships, tensions and public perception

  • The ability to identify “assets”

  • Key conditions – early stage considerations and long-term strategy

  • Exit plan