Private Equity money flowing into an ecosystem is a tell-tale sign that an industry is attractive.
And you know where a lot of the PE money has been going currently?
Sports.
It’s not just buying NBA teams or flipping underperforming European soccer clubs…
But also scooping up assets in what I believe is the most lucrative area of them all.
Youth Sports.
Let’s Dive In ????
What’s Been Happening
Over the last few years, we’ve seen billions flow into the youth sports market.
It all began in 2018…
When Bain Capital acquired Varsity Brands, a maker of cheerleader uniforms and school spirit items, for roughly $2.5 billion.
When Bain Capital bought Varsity Brands it snapped up most of the U.S. cheerleading industry.
2019
Juggernaut Capital invested a large sum into youth sports operator 3 STEP Sports.
3 STEP has since gone through an acquisition frenzy itself scooping up club and AAU operators all over the country.
The pandemic slowed things down, but not for long…
2021
Waud Capital Partners bought a majority stake in the youth sports management platform TeamSnap for an estimated $150M.
Just like 3 STEP did with club operators, TeamSnap has been doing the same by acquiring complementary software companies.
2022
Susquehanna Private Capital invested in Soccer Shots, a youth soccer franchisor that provides quality and engaging training programs in partnership with childcare centers, schools, and other public locations.
2023
And just a few months ago…
Endeavor agreed to sell its IMG Academy sports education business to the private equity firm BPEA EQT in a deal valued at $1.25 billion.
The interest in American grassroots sports is stronger than ever before.
The Youth Sports Market
According to reports, the youth sports market was valued at $24.9 billion in 2023.
Which makes sense…
More than 60 million kids participate annually in the United States.
The average U.S. parent spends over $1,400 per kid on amateur athletics. Ian Goldberg from iSport360 believes this number is pretty accurate.
Globally, the youth sports market is projected to reach $77.6 billion by 2026.
And right now, there are about ~500 startups building in the youth sports ecosystem.
LIV Golf & PGA Tour
While I understand this doesn’t seem to have a direct correlation with the topic at hand…
I assure you it does.
The merger between LIV Golf & The PGA Tour has shown us the massive impact money has on sports.
Right now, most of the “smart money” is focused on the big professional leagues.
But what happens when they get overvalued (and therefore oversaturated)?
The money will flow downstream and start looking for opportunities at the grassroots level of sports.
Looking Ahead
With very few governing bodies, youth sports are extremely fragmented (which means there is a lot of opportunity in consolidating it).
Private equity has slowly started to enter the space — which is overall a net positive in my opinion.
Do we want every 8-year-old lacrosse league to be commercialized?
No.
But I do believe having more structure in the youth sports space from 7th-12th grade would benefit everyone.
Exciting times are ahead!
