Warren Buffett’s Influence Extends to Family Offices and Sports Investments
The investment strategies of Warren Buffett, often hailed as the greatest investor of all time, are now influencing a new wave of interest in sports investments among American family offices. According to Anushka Gupta, head of Apex, the American branch of Goldman Sachs’s family office subsidiary, these high-net-worth families are increasingly emulating the investment approaches seen in the realm of lower-tier sports teams, a trend popularized by celebrities like Ryan Reynolds and Rob McElhenney.
The shift towards investing in sports franchises, particularly in emerging sports, aligns with Buffett’s hallmark investment philosophy that seeks long-term, predictable profitability and reasonable valuations. Much like Buffett’s Patient Investor model, which scores Microsoft (MSFT) and Apple (AAPL) highly based on their strong fundamentals and growth prospects, family offices are now eyeing the untapped potential in sports leagues such as the Ultimate Fighting Championship (UFC), surfing, and women’s sports.
Gupta highlighted this trend during the virtual Global Family Office Media Roundtable, noting that family offices—typically defined as families with at least $50 million to invest—are increasingly drawn to the growth potential and expanding sponsorship opportunities in these emerging sports sectors. This interest is fueled in part by changes in sports betting regulations, particularly after the Supreme Court’s 2018 decision to overturn restrictions on sports betting.
“There’s a big bucket of emerging sports where the opportunity feels nascent,” said Gupta. “But the bid and demand across groups, in how much excitement and buzz there are on some of these emerging sports, is really a big area of focus.”
This new investment trend mirrors the spectacular returns seen in traditional sports investments. For instance, Mark Cuban’s sale of a majority stake in the Dallas Mavericks for $4.5 billion in 2023 exemplifies the high returns sports franchises can offer. Cuban’s initial investment of $285 million in 2000 yielded a return of 1,478%.
American family offices are now following suit, with a keen interest in NASCAR, golf, sailing, rugby, and college sports, with a notable focus on women’s sports leagues such as the National Women’s Soccer League, the WNBA, and the Women’s Tennis Association. Gupta pointed out that women’s sports sponsorships have surged by 22%, making these investments particularly appealing.
Family offices are still in the preliminary stages of sports investments, carefully evaluating factors such as league expansion possibilities and media rights management. “There’s been a lot of focus on the rapid rise in media contract values,” Gupta said, “which has allowed engagement with a much broader audience.” This growing interest aligns with the broader trend of institutional investors recognizing sports as a largely uncorrelated asset class, offering a hedge during market downturns.
In Europe, the investment landscape differs, with a strong focus on soccer. Darren Allaway, managing director at Apex, noted that soccer continues to dominate, with historical investments by wealthy families leading to fierce rivalries. However, the success of Reynolds and McElhenney with Wrexham AFC has changed perceptions, encouraging investments in smaller clubs.
“That show has kind of changed the dynamic,” Allaway said. “So there are a lot of smaller clubs that are welcoming foreign ownership, potentially wealthy ownership, from families that have either no substantial interest and experience in sports, or this is their first foray and they’re happy to make an investment, upgrade the team, and see if they can be more competitive.”
This burgeoning interest in sports investments reflects the broader investment philosophy championed by Warren Buffett—seeking undervalued opportunities with the potential for substantial long-term gains. As family offices continue to explore these emerging opportunities, the influence of Buffett’s strategies remains a guiding force in navigating this exciting new frontier.