Sports teams work as alternative investments because their value moves on league economics and scarcity rather than the stock and bond markets, and accredited investors can now buy passive minority stakes in NFL, NBA, MLB, and NHL franchises while retail investors reach the same asset class through publicly traded team stocks and sector ETFs. Neither route resembles a normal portfolio holding. Private stakes require league approval and lock your capital up for years; public shares give you exposure to the business without any say in the team.
What Makes a Franchise an Alternative Asset
An asset is “alternative” when it doesn’t rise and fall with the S&P 500 or the bond market. Sports franchises fit. Their underlying worth rests on long-term broadcast contracts and a fixed supply of teams, so a broad consumer downturn doesn’t automatically pull franchise values down with it.
Scarcity is the other half of the story. The NFL, NBA, MLB, and NHL each run as closed systems with a set number of franchises. Adding a team requires approval from existing owners, so supply grows slowly if at all, and demand for ownership stays high. That closed structure is why franchise values track league-specific economics instead of the wider market.
These are also deeply illiquid holdings. Selling a team means league approval, months of negotiation, and a small pool of qualified buyers. You can’t convert the position to cash the way a shareholder sells stock.
Two Ways to Invest
There are two practical routes. The first is a direct private stake in a franchise, either controlling or minority. This route is limited to accredited investors and institutions, and even then the capital commitments run into the tens of millions. The second is buying publicly traded team-related securities or sector ETFs on an ordinary brokerage account. Same asset class, very different experience.
Private Stakes: League Rules by League
Each of the four major North American leagues now allows private equity funds to hold passive minority positions, with its own caps and conditions.
The NFL approved private equity investment in August 2024. A single fund can hold stakes in up to six teams. Total private equity ownership in any one team is capped at 10 percent, and each individual stake must be at least 3 percent of the franchise.1NFL.com. NFL Owners Vote to Allow Private Equity Funds to Buy Stakes in Teams NFL investors face a six-year minimum holding period.
The NBA allows a single fund to own up to 20 percent of one franchise, with aggregate private equity ownership capped at 30 percent. As of December 2025, the league raised the limit on how many teams a single fund can invest in from five to eight. NBA investors must hold their stakes for at least five years.
MLB sets the individual fund cap at 15 percent of a team, with total private equity ownership limited to 30 percent. There is no league-wide limit on how many teams a fund can invest in, but every investment carries a five-year holding period.
The NHL allows up to 20 percent individual fund ownership (with board consent for larger stakes) and 30 percent aggregate ownership, capped at five teams per fund.
Who Qualifies
Private stakes are open only to accredited investors and qualifying institutions. For an individual, that means a net worth above $1 million excluding your primary residence, or annual income of at least $200,000 ($300,000 with a spouse) for two consecutive years with the expectation of maintaining that level.2U.S. Securities and Exchange Commission. Accredited Investors Entities generally need investments or assets exceeding $5 million.3U.S. Securities and Exchange Commission. Accredited Investor Net Worth Standard Clearing those thresholds is only the entry point; actual minority commitments typically begin in the tens of millions.
Vetting and Approval
Every prospective owner runs through a screening process before a deal closes. Leagues order financial audits and background investigations, usually through independent firms, examining the source of the buyer’s wealth, past legal disputes, and potential conflicts of interest. The process can take several months and cost hundreds of thousands of dollars in legal and advisory fees. After vetting, the sale needs approval from existing owners, and most leagues require a supermajority, roughly three-quarters, to admit a new controlling owner or approve a significant transfer.
Public Market Exposure
If you don’t meet the accredited-investor bar, or don’t want to lock up eight-figure sums, public securities are the accessible route. Several teams or their parent companies trade on major exchanges. Atlanta Braves Holdings (BATRK) trades on Nasdaq. Manchester United (MANU) is on the New York Stock Exchange. Madison Square Garden Sports (MSGS) gives shareholders indirect ownership of the New York Knicks and New York Rangers. These companies file quarterly and annual reports with the SEC, so their revenues, expenses, and financial condition are public.4SEC.gov. Form 10-K5Securities and Exchange Commission. Form 10-Q Shareholders get financial exposure, not a vote on roster decisions or operations.
For broader exposure, sector ETFs offer a diversified route. The Invesco Leisure and Entertainment ETF (PEJ) holds a basket of 30 U.S. leisure and entertainment companies, with significant allocations to hotels, restaurants, and entertainment businesses that overlap with sports.6Invesco US. Invesco Leisure and Entertainment ETF You won’t own a team through PEJ, but you get liquid access to the surrounding economics.
How Franchises Are Valued
The largest driver of a franchise’s value is its share of national and local media rights contracts. These multi-year broadcasting deals provide a guaranteed revenue floor. Stadium and arena ownership, plus surrounding development rights, add a second layer. Intellectual property, the team name, logo, and merchandising rights, contributes further, and that brand value persists regardless of on-field results in any given season.
Analysts commonly value teams as revenue multiples, the ratio of franchise value to annual revenue. Recent transaction data and industry analysis put MLB franchises at roughly 5 to 7 times revenue, NHL teams around 8 to 9 times, NFL teams around 10 to 11 times, and NBA teams at approximately 9 to 12 times. Local subsidies for arena construction, luxury suite lease agreements, and competitive trajectory influence where a given team falls in those ranges.
The Tax Angle
One of the biggest financial draws of direct franchise ownership is amortization. When a buyer acquires a team, the purchase price gets allocated across intangibles: the franchise right, player contracts (classified as “workforce in place”), goodwill, and trade names. Each qualifies as an amortizable intangible, letting the owner deduct a portion of the cost against income every year for 15 years.7Office of the Law Revision Counsel. 26 USC 197 – Amortization of Goodwill and Certain Other Intangibles
Most teams are structured as pass-through entities, so income and losses flow onto each owner’s personal return. For minority investors, amortization deductions frequently exceed the team’s actual cash losses, producing paper losses. Those losses are generally classified as passive because a minority investor does not materially participate in operations.8Office of the Law Revision Counsel. 26 USC 469 – Passive Activity Losses and Credits Limited Passive losses can only offset passive income, not wages or investment gains, unless you have sufficient passive income from other sources.
The IRS has taken a closer look at this area. In January 2024, its Large Business and International division launched the Sports Industry Losses compliance campaign, specifically targeting partnerships in the sports industry that report significant tax losses.9IRS. IRS LBI Compliance Campaign Jan 16 2024 The campaign examines whether the income and deductions driving those losses comply with the code. The tax benefits remain legitimate when properly structured, but expect more scrutiny.
Illiquidity, Lock-Ups, and Capital Calls
Getting out is harder than getting in. NFL minority investors must hold for at least six years; NBA and MLS investors face a five-year minimum. Your capital is committed for that stretch regardless of market conditions or personal circumstances. Even after the holding period ends, a sale isn’t automatic. Any buyer of your stake must pass the same vetting you did, and existing owners typically hold a right of first refusal, allowing them to match an outside offer and buy the stake themselves.
There’s a second risk that catches minority investors off guard: capital calls. When the team needs funding for a new arena, roster moves, or operational shortfalls, the controlling owner can require all partners to contribute their proportional share. If you can’t meet a call, operating agreements commonly let other members fund your share and charge a penalty return, sometimes 18 percent annually or more, on the amount they advanced, with their contribution taking priority over yours in future distributions. In the worst case, your ownership percentage gets diluted or you’re forced into a buyout at unfavorable terms.
That means minority investors need not only the initial check but also reserves for future calls at unpredictable times. Combined with the lock-up periods, franchise ownership behaves nothing like a passive index fund position. Before signing, review the team’s operating agreement and understand exactly what happens if you miss a capital call.