Funding investments: strategic capital in sport

The landscape of sports investment is undergoing a marked shift. Once driven largely by relationships with governing bodies and legacy institutions, capital is now flowing into sport from investors with more sophisticated strategies, clearer commercial expectations and long-term ambitions. From club ownership to infrastructure development and media platforms, sport is no longer seen as a passion project or philanthropic cause but as an asset class in its own right.

This evolution brings new complexities. As competition for prime assets intensifies and valuations continue to rise, structuring the investment has become just as important as selecting the opportunity. Deal terms, governance rights, regulatory constraints, and financing strategy all play a critical role in determining the success of an investment and in aligning it with the investor’s objectives.

In this article, we explore how sports investments are being funded today, with a focus on:

• equity investment structures and how they are tailored to reflect investor priorities, whether control, returns or strategic alignment; and
• the role of debt finance in sport and the different strategic priorities and key considerations for lenders in this space.

We also look ahead to the next key question for investors: how to value and diligence a sports asset before making a commitment.

Strategic considerations: why invest in sport?

Investing in sport has always held intuitive appeal: global audiences, deep-rooted loyalty, and the opportunity to shape cultural and social narratives. But today’s investment thesis goes beyond the emotional. Investors are increasingly drawn to sport by its commercial potential, especially as clubs, leagues and platforms professionalise their operations, monetise their brands, and build out diversified revenue streams.

The scope of opportunity has expanded. While top-flight football clubs still attract the most attention, investors are also deploying capital into stadium infrastructure, elite training academies, league-level media rights, and emerging areas such as women’s sport, esports, and sports-adjacent tech. Fan engagement platforms, betting infrastructure, and AI-enabled performance tools are now part of the investable universe.

The investor base has diversified as well, ranging from private equity and institutional investors to family offices, ultra-high-net-worth (UHNW) individuals, corporates, and sovereign-backed entities. For some, the goal is clear commercial return. For others, the motivation is strategic – brand amplification, social impact, or access to audiences.

This diversity means no two investments are structured the same. Some investors seek full control and are willing to take on operational complexity. Others prefer strategic minority stakes, gaining meaningful influence through governance rights without assuming full responsibility.

In the UK, a clear example of this model is Sir Jim Ratcliffe’s investment in Manchester United. The stake was acquired through Trawlers Limited, a vehicle backed by INEOS, and structured as a minority interest in Manchester United plc. While non-controlling in legal terms, the deal included a transfer of operational control over the club’s football operations to Ratcliffe and his team, along with the right to lead strategic projects, including the proposed redevelopment of Old Trafford. The structure reflects a deliberate strategy: deploy capital through a bespoke vehicle, secure real influence through negotiated governance rights, and avoid the disruption of a full public buyout.

Elsewhere, similar themes emerge. Media rights are being carved out into joint ventures. Multi-club ownership models are being tested and directly impacted by evolving regulatory expectations (eg Crystal Palace’s demotion from the Europa League as a result of John Textor’s ownership of both Crystal Palace and Lyon). Infrastructure is being co-invested through consortium vehicles. In short, sport is being treated less as a trophy and more as a sector. One that is capital-intensive, reputation-sensitive, and highly regulated.

Structuring the investment: equity approaches

Sports investments, particularly in high-value or regulated assets, rarely follow a one-size-fits-all structure. Investors are increasingly tailoring their approach to reflect the asset in question, their commercial objectives, and the regulatory framework they are operating within.

For many investors, a majority stake with full operational control offers the clearest path to value creation. It enables direct implementation of commercial strategy, changes to governance and staffing, and full control over exit planning. However, majority acquisitions often require higher capital outlay and deeper engagement with regulatory and stakeholder processes, particularly where fan involvement, league approvals, or community obligations are in play.

By contrast, minority stakes can offer a lower-risk entry point while still delivering meaningful influence. This influence is typically secured through negotiated governance rights such as board representation, veto rights over key decisions, enhanced information rights, and pre-emption protections. In the right structure, a well-negotiated minority interest can deliver much of the upside of control without the full responsibility.

In increasingly complex or capital-intensive deals, such as stadium redevelopments or league-level media joint ventures, investors are also collaborating through joint ventures or syndicates. These structures allow multiple investors to pool resources, share risk, and combine strategic expertise. They can also help navigate reputational sensitivities, such as foreign ownership in English football, or provide a clearer pathway for future exits or restructurings.

In the UK and Europe, structuring is also shaped by football governance frameworks. The FA’s fit-and-proper ownership test, UEFA’s multi-club ownership rules, and league-specific influence thresholds all inform how investments are made, particularly in cases involving existing interests in other clubs or media assets. These frameworks often make structured minority investments, ring-fenced joint ventures, or enhanced governance models more attractive to strategic investors.

Where investors do not intend to hold indefinitely, structuring also needs to accommodate exit mechanics. These may include pre-agreed IPO pathways, drag-along and tag-along rights, or step-in rights for new capital providers. Notably, longer-term holding periods are becoming more common in the sports sector. From Kosmos’ initial 25-year Davis Cup JV to CVC’s 50-year involvement in La Liga’s media rights, investors are increasingly viewing sports assets as long-cycle plays requiring stable structures and sustained governance involvement.

Debt financing

Debt financing has become an integral component of the sports finance ecosystem, supplying essential capital to fund operational growth, stadium and training ground redevelopments and player acquisitions. The investors lending into this space range from traditional banks and institutional investors to family offices representing high-net-worth individuals (HNWIs) and private credit funds. Each type of lender brings its own set of priorities and motivations, shaped by factors such as risk appetite, regulatory constraints and return expectations.

Traditional lenders, such as commercial banks, typically tend to adopt a more conservative approach, preferring to lend to clubs with robust financials and stable, predictable revenue streams. While their cost of capital tends to be lower, they often have fairly rigid policies and credit committees, necessitating a more cautious approach to structuring the loan, the collateral package, financial covenant setting and ongoing financial performance monitoring throughout the life of the loan.

On the other hand, private credit and debt funds are more likely to lend in situations where traditional lenders might be reluctant – such as where a club’s cash flows are less predictable, where a club competes in a lower league or if a deal involves a more bespoke structure. These lenders may demand higher interest rates in exchange for taking on greater risk. They may also accept less comprehensive security over the club’s assets and adopt a lighter-touch approach to financial covenants and monitoring.

Notwithstanding the varying strategic priorities of each lender, all will need to consider a few important factors when deciding whether to lend:

• Structuring the financing: There are various ways to structure the financing to achieve an optimal outcome for both the lender and the club. For example, when lending to football clubs, a lender might choose to factor the club’s receivables – legally assigning the club’s rights to future, predictable income streams such as transfer fee instalments and media revenues. Alternatively, the lender could provide a secured loan backed by the club’s assets. The choice of financing structure may ultimately depend on several factors, including whether the club wishes to keep the debt off its balance sheet and whether the club is willing and able to grant security over its assets (see paragraph on ‘Security’ below).
• Existing debt in the club: A lender will need to understand whether the club has any existing debt in place, as the documentation governing such debt will almost certainly contain restrictive covenants—such as negative pledge clauses or limitations on incurring additional indebtedness—that could prevent the club from taking on new financing. Existing debt and security arrangements may also impact the lender’s priority of repayment in the event that the club defaults or becomes insolvent. Furthermore, the new lender may be required to enter into intercreditor arrangements with the existing lender which can add complexity, time, and cost to the transaction.
• Security: In a traditional loan structure, lenders will generally seek collateral in the form of both intangible and tangible assets. For example, when lending to a football club, intangible assets may include the club’s intellectual property, rights under media and sponsorship agreements and commercial contracts whereas tangible assets would include the club’s stadium and training grounds. However, it’s important to note that certain lenders may be wary of the practical and reputational challenges in trying to enforce their security over the tangible assets in particular.
• League and regulatory restrictions: Lenders must navigate a complex web of league and governing body regulations designed to protect the integrity of the sport and prevent clubs from falling under the undue influence of major creditors. For example, English Premier League (EPL) and English Football League (EFL) clubs are only permitted to assign transfer fee receivables to qualifying 'Financial Institutions' – specifically, UK-regulated deposit-taking institutions (save where they have been otherwise approved). In addition, the EPL has recently introduced the Acquisition Leverage Test, which prohibits fully leveraged buyouts of EPL clubs and imposes a cap on the debt-to-equity ratio for club acquisitions at 65%. Governing bodies and regulators are also increasingly factoring in risks associated with multi-club ownership and are scrutinising lenders’ existing investments across a specific sector before granting approvals. Prospective lenders will need to obtain specialist legal advice in the relevant jurisdictions in relation to the regulatory and legal frameworks of such jurisdictions well in advance of providing the debt.

Aligning structure with investor objectives

No two sports investors are identical. Some are driven by financial return, others by strategic positioning or reputational gain. As the investment landscape has matured, so too have the priorities that drive how deals are structured and how value is measured.

A core distinction lies in the level of control sought. Investors aiming to drive transformation on or off the pitch will often seek majority ownership or operational control. These structures provide the latitude to change management, reshape strategy, and implement new commercial models. However, they also attract greater regulatory scrutiny and public accountability, particularly in the UK’s high-profile sporting environment.

Conversely, passive or minority investors may prioritise exposure to a growing asset class while limiting their operational burden. In such cases, returns are often linked to overall valuation uplift, dividend access, or monetisation of commercial rights, rather than direct day-to-day control. These investors typically negotiate enhanced governance rights to protect their position, but without assuming responsibility for sporting performance or reputational risk.

Private equity funds tend to be outcome-focused. Their playbook is often centred on value creation through operational efficiency, commercialisation, and governance reform. Their investment horizon is usually defined – often three to seven years – and structures are built to facilitate clean exits, whether through a secondary sale, public offering, or recapitalisation.

By contrast, family offices, UHNW individuals, and sovereign wealth funds may take a more strategic or patient approach. For some, ownership of a club or sports platform is a reputational asset, a brand extension, or a cultural investment. These investors may favour joint ventures or long-hold minority stakes that allow them to participate in growth while remaining aligned with the club’s existing values and community role.

The rise of dual-shareholder models, where stadium infrastructure is owned separately from club operations, is one example of how structure can reflect divergent investor goals. In some cases, commercial subsidiaries are carved out to raise capital without diluting control over sporting decisions. Elsewhere, investors have used shareholder agreements to enshrine social impact commitments or fan engagement protocols, ensuring that financial return is balanced against reputational integrity.

Ultimately, the structure of a sports investment is not just a legal matter, it is a statement of intent. It tells the market, regulators, and supporters what the investor values, and how they plan to contribute to the sporting ecosystem.

Returns and value realisation

Returns in sport have historically been viewed as opaque, sentiment-driven or unpredictable. But in recent years, the increasing professionalisation of clubs and leagues, the expansion of digital revenue streams, and the inflow of private capital have created clearer models for value creation and exit.

The most obvious source of return is operational revenue – broadcasting, sponsorship, ticketing, merchandising, and, increasingly, digital engagement. The growth of streaming platforms, data-driven fan engagement, and global merchandise licensing have opened up new revenue streams, particularly for globally recognised clubs. In women’s sport, for example, commercial momentum is accelerating at pace. Global revenues are projected to reach over US$2.35 billion in 2025, more than doubling from US$981 million in 2023, with media rights forming a growing share of that total. This growth is being driven by rising viewership, increased investment, and stronger regulatory and commercial frameworks across leagues and competitions.

In practice, most investors are not focused solely on income yield. The real driver of return is often asset appreciation. High-profile clubs and franchises have demonstrated an ability to increase in value dramatically over relatively short periods, particularly when accompanied by brand development, commercial restructuring, or improved on-field performance.

For example:

• According to Football Benchmark, the average enterprise value of Europe’s top 32 football clubs has increased by 96% over the past seven years, outpacing broader public market benchmarks.
• Manchester United, acquired for around US$1.4 billion in 2005, is now valued at approximately US$6.6 billion, representing a 4-5x increase over two decades.
• Outside football, CVC Capital Partners’ investment in Formula 1 is often cited as a benchmark for sports returns. After acquiring the business for roughly US$1 billion in 2006, CVC exited ten years later at a valuation of US$8 billion, generating a return of over 4.5x.

Exit paths vary depending on asset and investor type. For PE-backed investments, trade sales or recapitalisations are common. For longer-hold strategic investors, returns may be realised via media joint ventures, monetisation of carved-out IP rights, or refinancing of infrastructure. In the most mature models, such as with Formula 1 and La Liga, long-term licensing or media structures create a recurring return profile without the need for full exit.

What these examples show is that returns in sport are increasingly measurable, and that sport is no longer a niche or anomalous asset class. When structured correctly, with clear commercial rights and well-aligned governance, sports assets can deliver returns on par with, if not in excess of, comparable investments in media, entertainment, or infrastructure.

What comes next: valuation and diligence

Behind every sports investment lies a judgment call, not just on the commercial opportunity, but on the risks, blind spots and unknowns. As competition for high-quality assets grows, investor success will increasingly depend on the rigour of their diligence processes and their ability to price risk accurately.

The next article in this series will look at the critical elements of diligence in a sports investment context, including:

• Valuation methodology – how to assess the fair value of a sports asset with limited financial disclosure
• Regulatory approvals and consents – from league clearance and fit-and-proper tests to change of control provisions in sponsorship and media contracts
• Reputational, cultural and legal risks, including fan engagement, community obligations, and historical liabilities
• Governance and succession – whether the club or platform has the operational depth to absorb investment and deliver on its strategic goals
• Examining existing funding structures and how best to retain, adapt or unwind them

Where equity or debt is being deployed in the tens or hundreds of millions, commercial instinct alone is no longer sufficient. Sophisticated investors are bringing diligence disciplines from infrastructure, media and private equity to bear, and legal advisers are playing a key role in shaping that process.

Closing thoughts

The UK remains one of the most attractive jurisdictions in the world for sports investment – home to world-renowned clubs, a loyal global fanbase, and a mature legal framework that supports complex structuring and stakeholder governance.

But sport is no longer a passion project or a vanity asset. It is a regulated, reputation-sensitive, capital-intensive sector that demands the same rigour as any other high-value investment class.

Whether deploying equity or debt, investors need structures that reflect their objectives, protect their interests, and support long-term value creation. With the right structure, the right governance, and the right partners, strategic capital can unlock real growth, not just for investors, but for sport itself.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, September 2025