Only the richest investors can afford to place big bets on professional sports teams that generally come with billion-dollar price tags. Don’t look now, but retail investors may have just found a bookie.

Some of the leading alternative investment managers, like Apollo and Ares Management, are working on new funds that would open the exclusive world of sports investing to individual investors. Ares’ top chief Michael Arougheti reportedly said financial advisors had specifically requested the new strategies for their clients. It’s the latest move to democratize investments in sports, while opening up a whole new segment of lucrative customers to alternative asset managers.

Neck and Neck

Ares became the undisputed heavyweight in the sports sector after it raised a $3.7 billion fund in 2022. Its next venture will target both debt and equity investments across sports leagues and media businesses in a semi-liquid fund that pays out quarterly, according to a Bloomberg report published last week. The Los Angeles-based firm has its sights on some $100 billion in assets from individual investors by 2028, which it said could generate an estimated $600 million in management fees.

Not to be outdone, Apollo wants to build a “permanent capital vehicle” that would eye up longer-term investments in the industry. That strategy would primarily focus on loans to professional sports teams and leagues, with the option to take equity positions, per the report.

The funds come on the heels of a groundbreaking decision by the National Football League to allow private equity firms to take minority stakes in individual franchises last year — a rule that paved the way for owners to raise fresh capital. About a third of all teams in both Major League Baseball and the National Basketball Association are already backed by PE.

The Home Stretch. It could become big business for the alts industry. Alternative assets are expected to top $2.5 trillion by the end of 2028, according to a 2024 report from Cerulli. The research also found:

• Advisors owned roughly $1.4 trillion in less-than-fully-liquid alternative investment assets last year.
• While just 13% of AUM is from the retail channel, it’s projected to almost double to 23% over the next three years.

The downside is that the funds will likely only be accessible to accredited investors — those who generally meet $1 million in investable assets minimums, or other income thresholds — and can sometimes come with minimums in the millions of dollars, experts said. Space will also be limited until more products launch, with similar funds closing in about a month. Get ’em while they’re hot.

Advisors love a good hobby — anything from skydiving to the ancient Japanese art of Bonsai.

But it was golf, camping, and fitness that topped the list of the most popular pastimes for advisors in a recent survey by AdvizorPro. The data confirmed long-standing assumptions about the industry — namely, that golf and business go hand-in-hand — but also listed more niche hobbies that advisors take part in to cater to specific client interests, like knitting, quilting and fencing.

With a sport like golf that takes four to five hours per round, on average, advisors recognize that’s a lot of one-on-one time with potential clients, said Dustin Echenique, an executive at AdvizorPro who worked on the report. “It may be more influential to get [clients] into one of these unique hobbies where they can invite them for more hours to actually have an open and honest conversation,” he added.

Hobby Lobby

It’s no secret that advisor-client relationships often blossom on the golf green or in other non-office environments, and that this face-to-face time often pays off: CEOs who regularly play golf earn 17% more than those who don’t, according to Forbes. But hobbies can also cater to specific client demographics, Echenique said, noting that some activities are more popular in certain parts of the country. “If you’re in a golf-heavy location like South Florida or California, you’ll see more of those interests aligned where they’re trying to find equal ground with the high-net-worth individuals they’re targeting,” he said. “Advisors in mountainous regions, the Rockies, the Cascades, we’re seeing [more] skiing and winter sports as hobbies.”

The AdvizorPro report scraped data from more than 75,000 licensed advisors’ LinkedIn profiles, biography pages, and personal websites. Other findings included:

• Astronomy, ceramics and skydiving were among the activities listed as notable “niche” hobbies by the report, meaning at least 15 advisors mentioned partaking in them.
• Golf, camping and fitness made up the three most popular advisor hobbies, with volunteering and fishing finishing fourth and fifth, respectively.

OOO. The post-pandemic client development landscape took a decidedly out-of-office turn as workplaces shuttered and remote work became the norm, Echenique said. “[Covid] spurred the element of, ‘How can I actually get out in front of clients, whether that’s grab a cocktail out at a tiki bar in the back that’s open and airy, or play a sport,” he said. “That is absolutely something that we saw take off during the pandemic years, and I think it’s continuing.”

Do we have a deal?

The RIA industry just broke a record for the most active second quarter ever for dealmaking, topping 102 mergers and acquisitions, according to Echelon Partners. While the deals are typically great for business, bringing on fresh capital and improved technology, integrations are often hard and client experience remains a critical consideration. Will clients stay with their preferred custodians? Will they continue to have access to the same investment products?

“Sometimes firms look for the biggest paycheck, but aren’t paying attention to what the integration will be like,” said Mike Camp, head of client solutions at tax-focused fintech firm 55ip.

What’s the Dealio?

Beyond volume, the wave of deals signals a continuing shift in the industry’s approach to M&A. Strategic buyers like broker dealers and other RIAs, which account for over 87% of transactions through June, don’t want only scale and returns. Instead, their aim is expanding platforms, entering new markets and building out new investment strategies. Meanwhile, financial acquirers like private equity firms that focus on generating returns, accounted for just 28 transactions.

“If you go back a couple of years, there was this notion of the aggregator, ‘I’m going to accumulate these businesses, and when the market goes up, I’m going to earn double digits on their books,’” Camp told Advisor Upside. Today, acquirers seek integration with the RIAs they purchase, often putting their own CIOs in charge of investment product menus, so advisors can focus on selling to clients and recruiting new ones, he added. Some notable deals from the quarter include:

• Bain Capital’s $825 million acquisition of a 9.9% stake in Lincoln National.
• T. Rowe Price, Alpha Wave Global and Temasek making a $1.6 billion investment in Hub International, valuing the company at $29 billion.

While deals can bring plenty of monetary and operational benefits, selling RIAs have to remember to put clients first, Camp said. “Ultimately, it’s their businesses on the line,” he said. “It’s their name on the shingle, and many of these client relationships are near and dear to their hearts.”