We look at a possibly under-appreciated aspect of sports finance and why wealth management is getting increasingly involved: there's no substitute for live action by humans and it cannot be replaced by algorithms.

As bankers and wealth advisors ponder the impact that AI will have on investment and business, one way to frame the conversation is to ask which areas might be relatively immune, at least for now, to this technology. It turns out that one area is professional sport.

Knowing that you’re viewing your favourite football team battle it out in a live game or seeing your heroes and heroines sprint in a 100-metre dash, hurtle down a Swiss ski slope, or drive an F1 car at Monza or Silverstone, is something that cannot be simulated, far less faked. These are reasons, in fact, while drug doping, match fixing and cheating are taken so seriously. 

The appeal of live sport by fallible humans also explains why technologies that intrude into sport, such as video-assisted referees, matter because of the fine line between victory and defeat. This is what happens when flesh and blood humans compete.

Add to the fact that millions of people love the sense of watching a game in real or digital companionship with others, with all the romance, drama, comradeship and even joyful silliness of sport, then you have a potent business. It is one that attracts significant money.

Banks realise the opportunities in advising owners, buyers and interested parties on sport. Citi Wealth, for example, works with owners and would-be purchasers of sports teams; it explained its approach here. And, as reported earlier this year, sports finance has become such a large area that Deutsche Bank’s private banking arm launched a specialist offering in March, which covers Europe and the US. The business is led by Arjun Nagarkatti, who is the head of the private bank for the US and Europe international business. Deutsche Bank has appointed Sowmya Kotha in London and Joshua Frank in New York, who report to Adam Russ, head of wealth management and business lending.

For the wealth management industry in general, the business of sports teams, as well as the individual financial affairs of sportsmen and women, has become a distinct and large specialism.

“Sport is one of the few asset classes that has a moat around AI,” Nagarkatti told WealthBriefing during a meeting in his London office. WB met him around the time of a major conference that the bank had convened in London to explore the intersection of finance and sports. Nagarkatti described his dream of making it the “Davos of Sport,” with a nod to the annual World Economic Forum event held in the Swiss mountain resort, bringing together the whole ecosystem of the industry. Attendees were families, family offices, private equity investors, lawyers and policymakers. Deutsche Bank also recently released a detailed report on sports investing, issued by its chief investment office, entitled: Sports Investing: Big League Opportunities.

“When you look at sports, it plays definitely into what you mean by a global house bank,” Nagarkatti said. Deutsche can showcase its important linkages between its investment banking, corporate and private arms.

Sport is unique from an intellectual property point of view. “It is the only one where you will tune into [a game/match] at a particular time. And there is almost no correlation with any other asset," Nagarkatti continued. “There are also scarcity values to these assets. When I look at ultra-high net worth clients, I would say sports team owners are often very interesting clients. They’ve built things and decided to become a sports team owner. They have a range of needs.”

According to figures from Deloitte, the European football market grew 6 per cent to surpass €40 billion ($40 billion) for the first time in 2024/25. The "big five" leagues contributed 54 per cent of that, or €22 billion.

Crossing boundaries
The sports/wealth crossover manifests itself in other ways, for example in the brand and sponsorship campaigns that banks engage in: Standard Chartered, a lender that earns much of its revenues in Asia and outside the UK, is the principal sponsor of Liverpool FC; UBS is a Formula 1 sponsor for the Mercedes-AMG PETRONAS racing team. For the wealth management industry in general, the business of sports teams, as well as the individual financial affairs of sportsmen and women, has become a distinct and large specialism. For example, the Rockefeller Global Family Office in the US has experts who look after athletes and entertainers. Other firms that have expertise in and around sports include Carnegie Private Wealth, for example, and Merrill Lynch Management. In the UK, Coutts has a sports, media and entertainment division for its wealthy clients. 

The marketing angle enters the wealth management business in other ways. In September, in its annual report on the financial health of the UK wealth sector, BWC Benchmarking pointed to relatively low spending on marketing as a share of revenue when ranked against comparable business sectors, arguing that it must rise if firms are to achieve more organic growth. Sports sponsorship and engagement is, and could be, part of the mix, although this depends on whether the strategy is aimed at business-to-client or B2B.

Within the ranks of those making money in Wall Street and other walks of life, there are plenty of UHNW individuals who have bought into sports. Steve Cohen, chairman and CEO of the hedge fund firm, Point72, owns the New York Mets; Josh Harris, co-founder of Apollo Global Management, led the group that bought the Washington Commanders, while David Blitzer, chairman of Blackstone’s tactical opportunities division, owns stakes in the Philadelphia 76ers and the New Jersey Devils. Dan Gilbert, who made his money in financial services, bought the Cleveland Cavaliers for $375 million in 2005. He operates the Rocket Arena in Cleveland, Ohio. A group including Man Capital, the London-based, family office of entrepreneur Mohamed Mansour, bought a new team in San Diego that competes in Major League Soccer.

American investment firms have also widened their horizons by buying into foreign sports teams. The English soccer world has been a big area. For example, Liverpool Football Club is owned by Fenway Sports Group (FSG). The principal owner of FSG is John W Henry, who is also the principal owner of Liverpool. Before FSG came along, the UK football team, one of the most successful in the country’s history, was owned by US businessmen George Gillett and Tom Hicks. In another case, back in April 2021, Gamechanger 20 Limited, with US ties, bought Ipswich Town, a soccer team in the east of the UK. Subsequently, Bright Path Sports Partners, a US private equity firm, obtained a 40 per cent stake in it, cutting ORG's (majority shareholder) stake to 50 per cent. 

As explained here by our US correspondent, changes to college sports and how players are rewarded has opened up a new wealth management market. And then there is the burgeoning field of women's professional sports to consider. 

In its white paper on sports investing, Deutsche Bank notes characteristics such as relatively low correlations of sport and other asset classes. There is also generally low volatility in franchise value.

“North American franchises are characterised by annualised volatilities that are slightly lower than those of 10-year US Treasury bonds although higher than that for real estate. However, measured volatility is likely dampened by the illiquid nature of sports franchises, infrequent transactions and the statistical estimation techniques used in private-market valuation indices such as the RASFI,” it said.

“The volatility of the `Constant 6’ Premier League teams’ valuation is also low on average – especially during the last 10 years,” it continued. However, the bank said there has been a substantial dispersion in valuation growth and volatility among the Premier League’s leading clubs, with individual clubs experiencing markedly different growth paths.

(Editor’s note: It would be remiss not to mention allegations of financial misconduct by Manchester City, and whether the matter will have a chilling impact on sports investing. The club was purchased by Sheikh Mansour’s Abu Dhabi United Group in 2008 for £200 million ($264 million). There is speculation that the club might be relegated and heavily fined by the Premier League as punishment, but exact details are unclear as of the time of writing. The club has denied the claims. Time will tell as to what impact this story will have on investment into UK football.)