In a League of His Own: A Conversation with Arctos' Ian Charles

The Emergence of Sports Investing

Ian Charles, the managing partner at Parkdough Sports Partners, discusses how his team has been buying minority stakes in sports franchises in North America and Europe. Initially, only one North American sports league allowed for this kind of investment, but that changed three years ago when Major League Baseball permitted it. Charles talks about studying the unique characteristics and beta factors of the North American sports market, as well as the regulatory challenges that existed in the industry. He also mentions the underestimated demand for their operational capabilities and capital, with about half of their deals involving growth capital opportunities in partnership with innovative sports owners.

Strategies and Timing in Sports Investing

Charles explains that when they started their fund, they had to underwrite several risks, including whether they could build a world-class team, whether other North American leagues would open up to institutional capital, and whether they could offer value-added services to partner clubs. They also had to consider whether the sports industry was durable and non-correlated. Their strategy initially focused on providing liquidity to minority owners in sports teams where there was no natural liquidity path. However, they soon discovered a strong demand for growth capital and underestimated the need for their operational capabilities. Around half of their deals to date have been growth capital opportunities, while the other half follows a secondary liquidity execution strategy.

Collaboration with Leagues and Value Creation

By aggregating meaningful ownership at the league level, Charles positions their firm as a partner to the leagues they invest in. They engage with league partners to discuss priorities and collaborate on strategic investments, international growth, and reconsolidation of local media rights. Charles emphasizes the importance of using data analytics and applied research to provide insights, services, and tools for decision-makers and owners in the sports industry. He highlights the power of mathematically measuring the impact of decisions made in the narrative around a business, exemplifying how small tweaks to the product can positively influence engagement, fandom, and revenue generation. Overall, their vision for the growth of Parkdough Sports Partners lies in becoming the partner of choice for ownership groups, while continually investing in human capital, technology, and value-added services to serve their partners and enhance their applied research and data science efforts.

Dry Powder: The Private Equity Podcast

In a League of His Own: A Conversation with Arctos' Ian Charles

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Quick takeaways

Deep dives

The Emergence of Sports Investing

Strategies and Timing in Sports Investing

Collaboration with Leagues and Value Creation

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