In a deal valued at USD $1.4 billion in cash and equity, Kohlberg Kravis Roberts & Co. has agreed to acquire Arctos Partners, granting the firm minority ownership in some of the most storied franchises across all professional team sports.
Just a day after the deal went public, KKR’s Chief Financial Officer Robert Lewin – one of the architects behind the acquisition – sat down with BNN Bloomberg to break it all down. With a steely glint of confidence, Lewin declared, “We wouldn’t have done this deal without believing in the potential to grow a $100 billion-plus business together.”
His optimism in hitting that milestone is driven by the growth potential he sees in GP Solutions and secondaries. But most of all – sports team assets, which have surged in value and become a prime nesting ground for private equity over the last several years. So, how did we get here?
Investors would be surprised to learn that the four major sports leagues have quietly outperformed most other asset classes over the past two decades.
The reason is that unlike traditional markets, which are prone to the day-to-day jitters where uncertainty and opportunity move in lockstep, sports have always managed to sidestep volatility.
A big part of its strength is its anti-cyclical nature. Even in economic downturns, fans keep spending – on subscriptions, tickets, merchandise – because supporting their team isn’t optional; it’s a habit, a passion, a ritual. The game goes on, and so does the revenue, while lucrative sponsorship deals and the ever-growing competition for broadcasting rights have only made sports properties all the more valuable.
But it hasn’t been fan loyalty alone. A major growth catalyst emerged around the turn of the decade, when MLB opened its doors to institutional investment, paving the way for the NBA, NHL, and NFL to welcome direct private equity participation as well. Pro franchises, aware of their immense value, can now monetize it through minority sales. Few individuals are wealthy enough to buy a team outright, so deals are increasingly involving multiple investors and phased closings to spread risk and raise sufficient capital, allowing leagues to give owners liquidity without losing control, per Front Office Sports.
By taking stakes in sports organizations, PE firms can improve business models, increase revenue streams, and introduce innovative strategies to maximize value. This can include funding sports infrastructure – from stadiums to training facilities – or securing major media rights deals. The injection of capital also enables teams to invest in talent, adopt cutting-edge technologies, and deliver enhanced fan experiences – benefiting leagues, teams, and players alike, according to analysis from Citrin Cooperman.
Put simply, they hold the keys to shape the team how they see fit.
No sports owner would turn down more money in this hyper-competitive business, but Citrin Cooperman also notes concerns that an excessive influx of cash could shift the focus toward short-term returns, pushing teams and investors to prioritize profits over fans and the community-centered nature of the sport itself.
Additionally, Gerry Cardinale, majority owner of AC Milan and CEO of RedBird Capital Partners – which also holds stakes in Fenway Sports Group and Skydance Media – argued to CNBC last year that U.S. pro sports team valuations have ballooned due to private equity investment, creating an “asset inflation bubble” that could put parts of the sports ecosystem without backing at a disadvantage in the long run.
Yet there’s little stopping the flow of investment for now. Interest from sports teams in spinning off billion-dollar stakes is being matched by a queue of prominent asset managers eager to gain a foothold. Institutional firms such as Ares Management, Clearlake Capital, Apollo Global Management, and others have all dipped their toes into team ownership.
KKR, however, had not.
Standing above its peers as the largest alternative asset management firm by capital raised for private equity investment over the past five years – according to Private Equity International – KKR has long been an active, scaled investor across sports globally, with exposure to assets such as UFC, Formula 1, and FanDuel Group, to name a few.
Still, it lacked the one lucrative prize that many of its competitors had already secured: a direct stake in a professional sports team, as Lewin acknowledged. Of course, that absence was never driven by financial constraints. Armed with vast pools of capital, KKR always had the capacity to strike. Just weeks ago, it finally did by acquiring Arctos – in a move that arguably vaulted the firm right to the forefront of team ownership.
Arctos is the most prolific institutional investor in North American sports franchises. Founded by Ian Charles and Doc O’Connor in 2019, the firm has raised billions through its sports-focused funds and assembled a high-profile portfolio that includes stakes in the Golden State Warriors, Los Angeles Dodgers, Buffalo Bills, Pittsburgh Penguins, and Liverpool F.C., among others.
The deal provides USD $300 million in cash and USD $900 million in equity to Arctos shareholders, with USD $200 million reserved for employees at a later date. An additional USD $550 million is contingent on Arctos meeting certain performance targets and KKR’s share growth, potentially lifting the total deal value to nearly USD $2 billion, according to the press release announcing the merger.
The full Arctos team will remain in place at KKR, continuing to manage its sports assets and anchoring a new unit called KKR Solutions.
“Sports have become their own asset class over the past five years. Arctos is the clear number one in the world when it comes to buying stakes in professional teams, and in many ways, they helped create that asset class,” said Lewin.
Overall, Arctos manages more than USD $15 billion in assets. While this figure includes their Keystone division, which acquires stakes in other alternative asset managers, a substantial portion of their AUM is allocated to pro sports.
Perhaps most significantly, the Dallas-based firm stands out as the only private equity player approved to invest across every major American men’s sports league.
Arctos’ Charles has openly said he believes his firm is the best in the world at what it does, per Sportico. But in a market dominated by established global giants, lacking their financial firepower and capital-raising muscle makes it easy to fall behind. That’s where partnering with KKR changes the equation. Rather than competing on scale, Arctos now has backing from a firm managing USD $744 billion in assets, a stark contrast to the roughly USD $15 billion it oversaw independently.
“A big opportunity today lies with owners pursuing new stadium projects or sports-adjacent real estate. Today, Arctos doesn’t have the capital to pursue these kinds of investments,” said Lewin. “KKR has many pools of capital for investing in real estate – from the most senior capital, which we can provide through our insurance business and asset-based finance businesses, all the way to equity deployed through our investment funds.
“On the other hand, the partnership makes Arctos far more relevant to its global partners because it gives them a wider range of tools to bring to bear in their relationships,” added Lewin.
Lewin says that, fundamentally, every private equity commitment – regardless of industry – comes down to meeting the client’s objectives and deploying the firm’s resources to help the organization succeed, provided it delivers a good return relative to the dollar risk.
So when it comes to risk, the factors that make a U.S. professional sports team a strong investment will undoubtedly remain the same: scarcity of teams, predictable media rights, sophisticated league governance, and a growing pool of potential investors.
Together in 2025, the 50 most valuable teams were worth more than USD $353 billion – an average of USD $7.1 billion each – with the NFL, NBA, and MLB accounting for 44 of them. That represents a 22 per cent increase from 2024 and more than double the value from just four years ago, according to Forbes. With team valuations likely to climb even higher in 2026 and beyond, investments in this sector can be viewed both as growth opportunities and safe havens – the dream mix for any market opportunist.
The deal is still awaiting regulatory approval from the major U.S. professional sports leagues, with no set timeline for closing. Both sides expressed optimism that it will be completed.
In a single leap, KKR went from owning no teams to holding stakes across all major U.S. leagues. With institutional competitors circling the booming world of PE-driven sports investing, this is likely just the opening act in what promises to be a flurry of major moves in the years ahead.
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