Joe Ravitch and Jeff Sine’s investment advisory firm, The Rain Group, has poured millions of dollars into Hollywood companies such as Imagine Entertainment and Moonbug to profit from the popularity of shows and movies. . Increasingly, this approach is being applied to sports.
Mr. Lane was an early investor in DraftKings, which helped establish the U.S. sports betting sector, and has invested at a rate of about three companies a year. He raised a new $760 million fund in 2023 to focus on sports, media and gaming.
Like other private equity firms flocking to sports, Lane’s thesis is that even as the cost of media rights has soared and sports broadcasting has been pushed to tech giants like Apple and Amazon, where media is not their core business. First, the value of sports content will continue.
“We want to be an arms dealer that supplies content,” said partner Colin Neville. “If there is anything that has become clear over the last few years, it is that sports are the only industry that is changing the traditional linear packaging. Content and sports content in particular are one of the few A fragmented world where viewers of all genders and races gather across countries. That gives us great peace of mind and we tend to think that the league itself will do well as the distribution model establishes itself over the coming years. Hold your ground. ”
Mr. Lane wants to invest in founder-led growth companies with stakes in leagues that have rights that can be monetized in a variety of ways. In addition to DraftKings, the company’s portfolio includes Premier His Lacrosse League and sports apparel company His Castore.
The company is also looking at participatory sports, such as pickleball and youth sports, where revenue can be generated from events.
Reigning has invested in RCX Sports, which hosts youth sports camps and other events, and Reigning Champs, which connects coaches with high school athletes (later sold to IMG).
As a leading M&A advisor, Mr. Raine believes that M&A brings additional benefits to portfolio companies.
“In the example of DraftKings, we help them raise money, we help them build partnerships with media companies, and we introduce them to sports team owners. That’s where we really focused on creating “We’re trying to be close to our customers,” Managing Director Garrett Gomez said.
Laine won’t invest directly in teams that don’t meet high revenue standards. Doing so will also help you avoid conflicts of interest with the team you are advising. Banks with private equity divisions have faced criticism for competing on deals with the same investment firms they advise.
Lane sees college sports as his next big opportunity.
Institutional investors have entered nearly every area of sports, with the exception of college athletics. Private equity firms are increasingly focused on college sports, especially as organizations and operations become more specialized. Florida State University has partnered with PE firm Sixth Street on a potential investment in FSU’s athletic department as part of an effort by JPMorgan Chase & Co. to help attract institutional investors, CNBC reports.
Lane said even though the structure of college sports has become more complex, there are still big opportunities in college sports for outside investors.
In 2019, Laine helped the Pac-12 Conference consider raising private equity (which it ultimately decided not to do). Lane also helped the PGA Tour raise $3 billion this year through for-profit organizations.
“There are examples of nonprofits raising money, so there’s definitely a lot of smart lawyers in this country who can solve those problems,” Neville said.
