As private equity investments continue their reach into American sports, Ares Management Partner & Co-Head of U.S. Direct Lending and Sports, Media & Entertainment Mark Affolter expects more investment opportunities to arise as limitations around the sorts of capital teams are able to raise/leverage. Speaking at SBJ’s Dealmakers conference in D.C., Affolter said that there is still plenty of room to grow in North America. 

“All of the North American professional sports leagues are absolutely in the sweet spot for us,” Affolter said. “And we’ve invested in all of them, directly or indirectly. … Ironically, the North American professional leagues tend to be a little more restrictive in terms of the debt limitations associated with the teams. And so, as a result of which, I would say we’re probably a little under index relative to, let’s say, European football.” 

Affolter said that Ares has a “first mover advantage” as they are one of the only firms of its kind currently investing in American sports in this fashion. With that, Affolter believes they are set up well to capitalize as there become fewer barriers to entry, especially with the NFL. 

Affolter added, “My thinking is that by being a part of the program, maybe we can be helpful if the [NFL] ever does decide to create a little more flexibility with respect to capital structures.”
 
He believes other factors beyond teams will drive interest as well. Affolter: “Real estate development in particular has been an area where we’ve just seen incredible demand for the type of capital that that we can bring.” 

Affolter also spoke on what the future could look like with private equity in college athletics, adding that Ares “haven’t done anything.” He pointed to members of Ares’ advisory board such as former NBAer Grant Hill and former ESPN President John Skipper who are helping set the vision for those future investment strategies. 

“Look by any sort of metric that you look at … and compare big time collegiate sports to professional sports,” Affolter said. “Collegiate sports is vastly under monetized by anything from ratios of four to one to five to one relative to professional sports leagues. And so therein lies some of the opportunity.”