Why Sports Investing Offers an Attractive Capital Preservation and Lifestyle Investment Strategy

In a world of volatile markets, inflation concerns, and increasing demand for differentiated portfolio strategies, sports investing is emerging as a compelling alternative.

The recently developed Ross-Arctos Sports Franchise Index (RAFSI) which measures the returns of team investments in the four major leagues in North America (MLB, NFL, NBA and NHL) offers a striking visualization:

The Sports Ownership Advantage

Sports investing has historically significantly outperformed the efficient frontier in terms of annualized return versus volatility. It has generated an annualized return north of 13% with volatility under 10%.

This puts it ahead of virtually all traditional asset classes such as:

- Equities: Higher volatility, lower return

- 60/40 Portfolio: Lower return and comparable volatility

- Treasuries & Commodities: Significantly lower returns with either low or extreme volatility.

Compared to other alternatives like private credit, real assets, and even venture capital, it remains in a class of its own.

The data shows that the Live Entertainment Sector – which includes sports franchises and related media rights – has provided outsize returns for relatively modest risk over the past two decades.

Why Sports Franchises Perform

• Scarcity of Supply: There are a fixed number of major league teams, and expansion is rare.

• Inflation-Protected Revenue: Media rights, ticket prices, and sponsorships tend to rise with inflation.

• Globalization: Increasing global demand for American sports content enhances monetization.

• Loyalty & Brand Power: Teams have multi-generational fan bases with reliable recurring revenue.

• Non-Correlation: Sports assets often move independently of public equities or bond markets.

  
  

A Modern Store of Value

Much like art or vintage cars, investing in sports franchises or dedicated sports private equity vehicles like RASFI functions as a modern store of value. Yet, unlike those assets, sports investments often produce substantial cash flows and have a growing institutional buy-side.

Pride, Status, and Access

Beyond returns, sports investing offers something few other asset classes can match: prestige and access. Owning a stake in a major league team or being part of a sports-focused investment group provides unparalleled networking opportunities, exclusive access to high-profile events, and the pride associated with stewarding a beloved cultural institution. Investors often cite these intangible benefits as key drivers of long-term commitment to the space.

Final Thoughts

As investors continue seeking reliable long-term returns with downside protection, sports investing offers a unique solution. With favorable fundamentals, powerful demographic trends, and proven historical outperformance, the space is poised to become a core allocation for sophisticated capital.For those looking to park capital in a high-performing, low-correlation, and inflation-resistant asset, the game is on.