Have you ever wondered why a private equity firm would own a part of a football team, concert venue, or broad entertainment company when it could invest in something that makes more sense for its business or is somehow related?
Well, there are several reasons, which is why we are seeing so many companies invest in the entertainment business. Sports and entertainment occupy an unusual place in business. Customers can complain about ticket prices, argue about management, go through terrible seasons, and then return the following year anyway.
But there is an even more special thing that’s happening in the sports industry. The fans, who are the main customers, form emotional relationships with teams, performers, and events. Ordinary companies spend enormous amounts of money trying to create this. Additionally, these entertainment businesses can turn into huge media platforms where they advertise their core business.
And investors have noticed this, which is the main reason why private capital has moved steadily into sports franchises, leagues, media businesses, and venues. Let’s dig deeper and try to understand this new trend that’s been going on recently.
There Are Only So Many Great Sports Assets
One of the main reasons why so many companies are interested in entering the sport or media industry is because of scarcity, especially with sports.
A successful company can create more products, open more shops, or build another factory. But they cannot create another New York Yankees, and that’s why this business model sounds attractive to them.
Major sports leagues deliberately limit membership. Franchises therefore resemble membership of an exclusive club whose number of seats changes very slowly. On top of that, in American leagues, investors also benefit from structures without promotion and relegation. In other words, an NFL team that finishes last remains an NFL team next season rather than disappearing into a lower division and taking a large portion of its revenue with it.
So, for some companies, it’s not so much about the profits but the prestige. It's their ticket to a limited membership club that comes with many perks. Basically, it is like horse racing. Horse racing as a sport has always been about prestige. People spend millions on Thoroughbred horses that never reach the top three positions in the Breeders’ Cup results. But owning a horse gives these people a chance to hang out with other investors, which may lead to more business opportunities.
There are no infinite amounts of sports teams out there, which creates scarcity, and therefore demand.
Live Sport Has Become More Valuable as Television Has Fragmented
The media business has changed dramatically.
People who once watched the same handful of television channels now divide their attention across Netflix, YouTube, TikTok, gaming, podcasts, streaming services, and whatever else their phone has convinced them is urgent.
Sport remains different because people still prefer watching much of it live.
Knowing that your team won yesterday is not quite the same as watching the winning goal happen.
That makes sports unusually valuable to broadcasters and streaming platforms trying to attract audiences at a specific moment. PwC estimated annual spending on major U.S. live sports media rights at roughly $28 billion for 2024 and noted that streaming services have become increasingly important distributors of those events.
Long-term rights agreements can also give teams and leagues something investors generally appreciate: visibility. Nobody knows exactly how many jerseys will sell three years from now, but a multi-year broadcasting contract is considerably easier to model.
One Fan Can Now Generate Revenue in Ten Different Ways
Another attraction is that modern sports and entertainment companies no longer depend on one income stream.
A fan can buy a ticket, pay for parking, purchase food, order merchandise, subscribe to a streaming service, buy a premium hospitality package, and interact with sponsors before eventually wondering where all their money went.
Formula 1 provides an excellent example of how broad the model has become. Liberty Media's 2025 filings show revenue coming not only from media rights and race-promotion fees but also sponsorship, hospitality, licensing, digital advertising, support championships and experiences surrounding events such as the Las Vegas Grand Prix. Formula 1 revenue reached $3.9 billion in 2025 as attendance and live viewership also increased.
This is one reason investors increasingly look beyond the team or competition itself.
Live Entertainment Has Something Streaming Cannot Fully Replace
Entertainment companies benefit from a similar advantage.
Spotify can reproduce a song perfectly.
It cannot reproduce being inside an arena when 20,000 people sing it together.
That difference has become commercially important as consumers continue spending on experiences. Live Nation reported continued growth in its venue business during 2026 and said premium areas at some newly opened amphitheatres were producing substantially more revenue than comparable venues. Its development pipeline included more than 25 large venues expected to open through the end of 2027.
Venues increasingly sell more than a seat.
They sell better seats, private areas, hospitality, food, branded experiences, and access that cannot be downloaded from the internet.
Intellectual Property Can Travel Almost Anywhere
Entertainment businesses also own something investors increasingly value: intellectual property.
A strong character, franchise, league or brand can move across formats. A movie becomes a streaming series. A game becomes a film.
A wrestling event can generate ticket sales, broadcasting income, sponsorship, merchandise, and video content from essentially the same underlying property.
So, the options for making money are limitless, and you operate with a very loyal audience, so business-wise, buying an entertainment business makes a lot of sense. With brand-awareness campaigns costing a lot of money, sometimes it is cheaper for a company to buy its own “medium”-a sports team or an event - and profit from it and use it as a promotional tool.
