Goldman Sachs has reportedly created a “sports franchise” unit within its investment banking division.
The new unit aims to provide wealthy clients with the opportunity to invest in sports teams, combining sports mergers and acquisitions with sports financing, The Wall Street Journal (WSJ) reported Friday (Sept. 15).
While specific teams have not been disclosed, Goldman Sachs has previously worked on deals involving prominent sports organizations such as Chelsea Football Club, Formula One and the Tennessee Titans football team, according to the report. The bank has also expressed interest in including minor-league teams as potential investment options.
Investing in a sports team offers more than just financial returns, according to the report. Some investors are attracted to the nostalgia and passion associated with owning a piece of a team or exclusive perks, such as front-row seats to games.
Limited supply is one of the main attractions of investing in sports teams, as opportunities arise only when team owners pass away or encounter troubles, per the report. It’s also a status symbol for the wealthy and famous.
The investment can be lucrative, especially with the increases in valuations for many sports teams, according to the report. However, there are also risks, as teams can sometimes shutter.
Goldman Sachs aims to fill the gap left by commercial banks that have pulled back from providing financing for stadiums due to concerns about the impact of the commercial real estate downturn on sports venues, per the report. The bank will offer clients the opportunity to invest in both equity and debt deals related to sports teams. Institutional clients can also participate in these investments.
The news comes as the bank is refocusing its efforts on traditional investment banking and market-driven operations. During its most recent earnings call July 19, Goldman Sachs CEO David Solomon said the capital markets climate is a bit better than earlier in the year.