Ticket sales to sporting events could become collateral for the next type of debt securitization, according to a Feb. 18 note from Academy Securities, especially as more investment firms snap up shares of professional sports teams.
Private equity firms are buying stakes in sports teams more frequently, at the same time that more stadiums are being built or renovated. That dual dynamic should fuel sales of debt backed by sports facilities, which include ticket sales, and other sports-linked debt, according to Stav Gaon, a strategist at Academy.
“We expect a healthy investor appetite for sports securitizations as securitized-products investors embrace a widening range of esoteric securitizations, such as digital infrastructure and music royalties,” Gaon wrote in the note.
In August, the owners of National Football League teams voted to allow private equity firms to buy passive stakes of as much as 10% in their franchises. While the approved list of private equity sponsors is limited, Ares Management has already bought an ownership stake in the Miami Dolphins and Arctos Partners has invested in the Buffalo Bills. This early surge is expected to continue.
“Ticket revenues, parking revenues and concessions revenues all fit a flavor of the asset-backed securities financing boxes so those seem like more realistic ABS technology uses for professionalizing sports team ownership further,” said Ben Hunsaker, the head of structured credit at Beach Point Capital Management.
Investors in the securitized finance markets, especially insurance companies, are increasingly buying bonds backed by unconventional assets, diversifying from the core sectors that include auto and equipment loans and leases, credit cards and student debt. Last year, esoteric ABS issuance helped boost overall sales to a new post-Great Financial Crisis record.
Sports teams already impact the securitization markets, especially debt tied to commercial real estate, given franchises can supercharge hotels, restaurants and malls, among other assets. Stadiums like the New England Patriots’ Gillette Stadium or the Green Bay Packers’ Lambeau Field have helped build out nearby properties, Gaon wrote.
