North American franchise values grow 2.5% in the first quarter, demonstrating rare positive momentum among asset classes to begin 2025.
Sports franchises in the Ross-Arctos Sports Franchise Index (RASFI) representing the “Big 4” North American leagues saw mild growth of 2.5%, or 10.5% on an annualized basis, in the first quarter of 2025.
This quarter, RASFI has remained relatively stable. Although on an annualized basis, RASFI slightly underperformed its historical average of ~13%, its performance is indicative of the stability of sports franchises. Through March 31, RASFI outperformed U.S. equities at -4.3%, the broader U.S. Media & Entertainment Sector at -9.6%, and global equities at -1.2%, all of which were impacted by investor uncertainty leading up to Liberation Day on April 2nd.
As we discussed in our most recent white paper, tariffs are effectively a tax increase, charged to U.S. based importers. However, by and large, America’s major sports leagues appear well insulated. The underlying business model of sports benefits from exceptional stability due to long-term, contracted revenues across media rights, sponsorship and ticketing and enjoys sticky, largely domestic demand. On the expense side, sports franchises sell an intangible, entertainment product whose major costs are people, employed locally.
We do believe there are several risks to manage. Canadian franchises operating in U.S.-based leagues, such as the NHL, are exposed to currency risk, though it is unclear what the overall currency impact would look like. Second, new stadium construction is a potential pressure point, particularly for projects still in the planning phase where materials have not yet been purchased. Lastly, we have heard from some franchises that some companies are pausing new sponsorship deals until there is greater clarity on tariff outlook and consumer demand for 2025.
Transaction activity in Q1 slowed with limited transactions taking place over the first three months of the year. The most discussed transaction was the announced sale of the Boston Celtics to an investor group led by William Chisholm for a blended valuation of $6.6 billion. Although the transaction has been announced, it has not yet been incorporated into RASFI given its unique structure and lack of formal approval from the NBA’s Board of Governors. If approved, the Celtics transaction would outperform RASFI by 2.6% over the last 22 years (18.3x MOIC vs. 10.9x MOIC for RASFI over the same period).
In addition to the Celtics, there was one additional change-of-control transaction that occurred but is excluded from RASFI. In mid-April the Miller family, the former owners of the NBA’s Utah Jazz, acquired majority control of MLS club Real Salt Lake and the NWSL’s Utah Royals for a publicly reported $600 million from David Blitzer. It marks a rare occasion in which the same franchise was sold back-to-back before any other transactions in the same league occurred. The club was previously sold in 2022 to a consortium led by David Blitzer and Ryan Smith.
There was a single publicly announced non-control transaction included in Q1 RASFI, Sixth Street’s 10% primary investment into the San Francisco Giants and its real estate development, Mission Rock.
Media Update: Across North American Big 4 Sports, we continue to see a sports media market in flux. In the U.S., MLB and ESPN exercised their mutual opt-out after 2025, terminating a seven-year $550 million per-year deal three years early. Commissioner Rob Manfred cited ESPN’s declining coverage outside of live games and shrinking reach (down to ~54 million TV homes from its peak of 100M). MLB is now seeking a more future-facing partner, eyeing Amazon, NBC, and Netflix to potentially carry marquee assets such as Sunday Night Baseball, the Wild Card round and the Home Run Derby.
In Canada, the NHL signed a new national rights agreement with Rogers Communications through the 2037- 38 season, in a C$11 billion, 12-year deal. The extension, more than doubling the value of the prior agreement, cements Rogers’ position as the home of hockey in Canada with rights across TV, digital, and streaming. The new agreement will reduce blackouts, increase the number of national games, and most importantly will allow sublicensing, including the possibility of a direct deal with Amazon. With Canadian viewership up 50% over the last decade, the NHL doubled down on a trusted partner rooted in stability, exclusivity, and scale.
Disclosure: The Ross-Arctos Sports Franchise Index (“RASFI") is provided for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any security. RASFI includes data sourced from third parties and reflects market trends and economic forecasts which Arctos Partners, LP ("Arctos") and Stephen M. Ross School of Business at the University of Michigan (“Ross”) believe to be reliable; however, no independent verification has been conducted, and neither Arctos nor Ross warrants the accuracy, fairness, correctness, or completeness of any information provided. Certain statements included herein may be considered forward-looking and involve risks and uncertainties; actual results could materially differ from those projected. Historical trends indicated in RASFI do not assure or imply the continuation of such trends in the future. RASFI estimates historical sports team valuations based on a series of statistical models that may introduce sources of error. While we believe RASFI reflects past estimates of sports team values, they should not be seen as indicative of future performance or profitability. The benchmarks and indices provided herein were selected by Arctos and Ross for illustrative purposes only. Selection of such benchmarks or indices is inherently subjective and others might select other benchmarks or indices based on their assessment of the market. Actual results may differ, perhaps materially, from the trends presented herein.