3 Ways to Invest in Sports, From Nike to Manchester United
This summer has been a busy one for sports fans, what with the Copa América and the European Championship soccer tournaments, Major League Baseball All-Star Game and the Olympics in Paris.
While spectators are enjoying the thrill of competition, investors can now take advantage of the ever-increasing popularity and marketability of big-time athletics. That's because sports — like gold, oil, coffee and corn — have become commoditized. And where there are commodities, there are investment opportunities.
So rather than investing your time watching sports, here are three ways to consider investing your money in the games.
No. 1: Invest in pro sports franchises
Many people have made a habit of emulating the investments of Warren Buffett, and last year the Oracle of Omaha dipped his toes into America's pastime.
In November 2023, Buffett's Berkshire Hathaway invested $8 million in Atlanta Braves Holdings, the only Major League Baseball team that's publicly traded. The company boasts a market cap of $2.67 billion and also holds Formula One Group as a subsidiary.
The Atlanta Braves won their fourth World Series in 2021, and their stock has been performing just as admirably. Since Buffett's investment, shares of BATRA are up 22.16% and have gained 11.33% over the past month.
The Braves aren't the only publicly traded professional sports franchise. While the Steinbrenner family is unlikely to ever relinquish control of the Yankees, New York sports fans can invest in the city's beloved pro basketball and hockey teams. Madison Square Garden Sports Corp., which owns the Knicks and Rangers, has seen its stock gain 9.71% in 2024 and 81.59% since September 2015.
Across the pond, Manchester United, the storied member of the English Premier League with a reported valuation of $6.55 billion, has seen its shares — which have been appropriately assigned the ticker symbol MANU — lose -5.21% over the past five years. But for Italian professional soccer's faithful, Turin-based Juventus could offer a more appealing investment. Shares of JVTSF have enjoyed a 18.20% year-to-date gain in 2024, and since hitting their one-year low on April 23, they have risen an eye-catching 90%.
Bear in mind that picking individual stocks — sports-related or not — always involves more risk compared to index funds, which offer investors broad exposure to sectors with companies spanning value and growth.
No. 2: Invest in sports brands
While BATRA, MSGS, MANU and JVTSF allow you invest directly in professional sports franchises, that's unlikely to appeal to fans of opposing teams. (Phillies fan are more likely to invest in cheesesteaks than shares of the Atlanta Braves.) But when it comes to sports equipment and apparel manufacturers, division rivalries can be put to rest.
Four years ago, Nike became the official uniform supplier of MLB and is also the outfitter for the NFL and NBA. Founded in 1964, Nike recently saw its stock fall off a cliff when it reported its worst quarterly earnings in years. In a single day in the second quarter of 2024, the company lost $28 billion in market cap and shares plummeted 20% from June 27 to June 28.
However, while revenues disappointed, earnings per share remained strong with 99 cents topping the analysts' consensus forecast of 85 cents. Looking forward, the Wall Street Journal gives Nike a one-year median price target of $92. At the time of writing, shares are trading for $71.41. Icing the cake is the stock's dividend, which currently yields 2.07% quarterly, or 37 cents per share, at current prices.
Meanwhile, MLS soccer kits — futbol speak for uniforms — are produced by Germany-based Adidas, a company whose cleats, shirts and jerseys are synonymous with the sport. The athletic brand has beaten revenue forecasts three of the past four quarters, and its stock has performed well this year, seeing a year-to-date gain of 25%. It even pays a modest dividend yielding 0.30%, or 9 cents per share, at current prices.
Both companies will have large sponsorship presences at this year's Summer Olympics in Paris, too. According to its website, Adidas’ sponsored Olympic teams include those representing Great Britain, Germany, Hungary, Poland, Ethiopia, Ireland, Bahrain, Cuba and Turkey.
Meanwhile, Nike has signed agreements to outfit U.S. Olympic athletes across all sports, as well as kits for the athletics teams of Canada, China, Kenya, Germany and Uganda; basketball for China, France, Japan and Spain; and Korean athletes in a new breakdancing event at the Paris Games.
No. 3: Invest directly in athletes
Alternative investments are increasing in popularity, with everything from vintage wine collections and fine art to memorabilia and luxury cars being securitized. Now, investing in athletes can be added to the list, through an unusual, largely untested arrangement.
Founded in 2022, FANtium bills itself as the leading platform for direct athlete support and investments wherein athletes sell ownership in their prize money to fans (or FANs once they become members). According to FANtium's website, "FANs get the unique opportunity to connect with their favorite athletes, engage with them and participate in their financial success."
Here's how it works:
- Athletes choose a percentage of their prize money to tokenize as well as additional unique FAN perks such as real-life experiences. They then issue and sell ownership of their prize money to FANs in the form of NFTs.
- FANs purchase an athlete's tokens through FANtium's platform and are entitled to a percentage of the athlete's prize money as well as any additionally listed benefits.
- After prize money has accrued, FANs can claim their payouts, which are paid out in USDC.e (Polygon), a digital currency fully backed by the U.S. dollar, with one USDC.e coin pegged 1:1 to the value of one U.S. dollar. Polygon is the network on which FANtium is built. Once received, the payout can be converted into fiat currency (e.g., CHF or EUR) via exchanges. Payouts can be tied to the success of an athlete during a single season or their overall career.
- FANs looking to cash in early can sell on third-party secondary marketplace like OpenSea. Once sold, the new owner will receive the prize money earnings and enjoy the additional benefits that come with it.
U.K.-based tennis news website Tennishead reported in March: "Over the last year, athletes on FANtium have raised more than $500,000, thanks to the support from the investor community. A total of $160,000 in prize money has been redistributed to these investors ... Investors in Alexander Bublik saw a 32% return, as his investors invested at a valuation of $1.25 million at the start of 2023 to and saw him return $1.65 million by the end, highlighting the potential for significant returns."
The platform mostly attracts professional tennis players, but according to its website, FANtium will soon feature professional soccer players, too.
It should be noted that NFTs carry higher levels of downside risk than other alternative and traditional asset classes, and as an industry, have yet to cement themselves with mainstream investing. Blockworks reports that "NFT trading volume in 2023 was less than half of what it was in 2022," sliding from $26.3 billion to $11.8 billion. And according to study cited by Business Insider, as of last September, some 95% of NFTs may be worthless.
However, whereas the fervor over NFTs two years ago focused primarily on decentralized ownership, FANtium's platform is a centralized marketplace more akin to purchasing shares of private equity. In this case, the security being invested in is professional athletes.
The ball's in your court
Sports-themed investments can seem gimmicky, and it's never a good idea to invest more than you can afford to lose — especially when it comes to alternative assets like NFTs. It's always important to conduct your own due diligence before entering a trade.
But for sports advocates and investors alike who are looking to add a touch of entertainment to their portfolios, these speculative investment opportunities can help — forgive the pun — get the ball rolling.
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