Private equity firm Arctos Partners released research challenging claims that sports team valuations represent a financial bubble, arguing that price increases reflect fundamental business improvements rather than speculation. Arctos owns stakes in multiple NBA teams such as the Golden State Warriors and Philadelphia 76ers,
The firm’s white paper, authored by managing director Zach Baran and executive Sushaan Modi, disputes six common myths about franchise pricing. Arctos launched in 2019 to buy limited partnership stakes in sports teams and now owns stakes in more than 20 franchises.
Sports teams slightly lagged the stock market from 2019 through the first quarter of 2025, according to Baran. The S&P 500 compounded 14.4% annually while the RASFI index tracking team values rose 13.8% with lower volatility and leverage.
Arctos tracked sports team valuations back to 1961, finding teams compounded 13% annually during that period. Half of those returns came from revenue growth and half from multiple expansions driven by improved profitability.
EBITDA margins evolved from structurally negative territory in the early 1990s to solidly positive levels around 10% today. The firm calls this transformation the “negative cost of carry reversal.”
“There’s nothing magical going on,” Baran said regarding rising sports team prices. “It’s perfectly explainable by fundamentals and in the context of the rest of the financial market.”
The research identified six periods since 1961 where franchise valuations declined, with only two occurring in the last 45 years. The peak-to-trough decline reached 9.8% in the mid-1990s, primarily driven by MLB teams after the 1994 World Series cancellation.
Arctos downplays private equity’s role in driving valuations higher. Team values in major North American leagues increased $270 billion since 2019, while available institutional capital totaled less than $11 billion as of Q1 2025.
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