Smith Entertainment Group, the parent company of the Utah Jazz and Vivint Arena, and shareholders of Real Salt Lake and Rio Tinto Stadium, among others, acquired private equity firm Arctos Sports Partners as a minority stakeholder on Friday. Added. Bringing his third professional sports team to Utah.
Arctos’ investments in SEG include investments in Jazz (pending approval from the NBA’s Board of Directors), RSL, and Vivint Arena.
Still, the headline news was detailed in a news release from SEG, referring to the group’s “intention to bring a third professional sports franchise to the state.”
“We are delighted to partner with Arctos,” Smith Entertainment Group Chairman Ryan Smith said in a statement. “As SEG continues to build the state’s professional sports environment, our partnership with Arctos brings Utah’s strong commitment to sports and deep connections across all major sports leagues.”
What are Arctos Sports Partners?
Arctos has a “partner” model.[ing] Working with owners and leagues to increase liquidity and financial flexibility for the owner group, “acquiring passive minority stakes in professional sports franchises and providing customized liquidity and passive growth capital solutions to sports franchises” Provide control owners and governors.”
The company has invested in more than 20 sports groups and was the first company to own stakes in NBA, NHL, MLB and MLS teams.
It currently owns 17% ownership of the Sacramento Kings and recently increased its ownership of the Golden State Warriors from 5% to 13%. It has direct stakes in five Major League Baseball teams (Dodgers, Cubs, Giants, Astros and Padres), two NHL teams (Tampa Bay Lightning and Minnesota Wild), several European soccer clubs, and the Premier Lacrosse League. Arctos also invests in Fenway Sports Group, the parent company of Premier League football club Liverpool FC, MLB’s Boston Red Sox and NHL’s Pittsburgh Penguins.
The company already held a minority stake in local Major League Soccer club RSL, in which SEG invested last January.
According to a Sportico report this December, “The NBA, MLB, MLS and NHL have all changed their ownership terms in the last 18 months to allow private equity funds to invest in their franchises. Regulations have eased. It gives owners new ways to access capital and makes it easier for them to sell minority stakes that have become difficult to sell.”
The same report details the restrictions on such transactions, but the NBA’s bylaws state that “a team may not own more than 30% of shares owned by institutional investors and may not hold a single A fund cannot own more than 20% of any team.” franchise. Most funds, including Arctos, can only own shares of up to five teams. ”
What does this mean for sports in Utah?
The company and Arctos are “bullish in Utah’s sports and entertainment market,” according to a SEG release, and the two companies are “collaborating” on the idea of bringing another professional sports team to Utah. is.
A third team will participate in a unique sport that the state does not currently have, according to SEG sources. Options appear to have been narrowed down to his NFL, MLB, and NHL, as it suggests the discussion is centered around his four major sports leagues in North America.
The NFL’s odds seem particularly low because, as the Financial Times points out, the NFL “still bans professional investment in teams.” Beyond that, the cost seems exorbitant. Even with the sale of Qualtrics, the experience management company Smith co-founded, and a “significant financial investment” from Arctos, the NFL remains staggeringly expensive. His expansion fee for the Houston Texans (the league’s newest new franchise, returning for its first season in 2002) was $700 million.
Meanwhile, the Denver Broncos were sold to new owners in June for a whopping $4.65 billion.
The price is exorbitant given the ever-expanding foothold of professional football in the sport.
What about professional baseball and hockey? Is it likely that an existing MLB team will relocate here?The NHL will likely relocate to the West again given the incredible support he has shown for his two newest teams, the Vegas Golden Knights and the Seattle Kraken. can it be expanded to
Even if it did happen, it doesn’t seem like an imminent event.
In baseball, it’s true that the Oakland Athletics have struggled with local government officials to find a new stadium solution to replace the aging Oakland Coliseum and are considered candidates for relocation. I have a proposal for a new waterfront ballpark that I think has some support for. If that doesn’t work, the team is in serious talks about moving the franchise to Las Vegas.The Tampa Bay Rays also have stadium problems.
Beyond that, it’s unlikely Salt Lake City will leapfrog Portland, Oregon, as the next viable MLB location.Pacific Northwest.
But what if the league expands to 32 teams? MLB has not added a new franchise since the Arizona Diamondbacks and Tampa Bay in 1998, and the problems with stadiums in Oakland and Tampa appear to provide arguments for expansion, but commissioner Rob Manfred and players Both of the association’s executives, Tony Clarke, recently said they want to reach .32 teams.
Again, there are countless cities vying for teams (Portland, Vegas, Charlotte, Montreal, Nashville, etc.) and prices don’t come cheap.Manfred said last year that MLB could look for expansion franchises. Suggested. Fees in excess of $2 billion per team.
Utah Gov. Spencer Cox said last month that “Utah wants a baseball team.”
“Certainly, one day, as the fastest growing state in the nation, I think Major League Baseball will be here,” Cox continued. “I don’t know if it’s this round or a future round, but I want to make a baseball team.”
But does the NHL make the most logistical sense?
The local ECHL’s Utah Grizzlies don’t draw a lot of attention, but when the NHL holds preseason exhibition games at the Vivint Arena, which usually feature the Los Angeles Kings, they’re a big turnout. did.
Still, the league is now 32 teams after the addition of Vegas in 2016 and Seattle in 2021 (although the Golden Knights paid a reported $500 million expansion fee and the Kraken reportedly (so it cost less than other sports). $750 million).
However, considering the league’s last expansion was in 2000 (the Columbus Blue Jackets), it may not be enthusiastic about having the most franchises among the Big 4 leagues. Salt Lake City will once again face tough competition, even if the NHL wants to add more.
Quebec City has dreamed of reviving the team since the Nordiques were bailed out to become the Colorado Avalanche in 1995. The city also already has his state-of-the-art NHL-capable stadium at the Videotron Center. Meanwhile, Texas billionaire Tilman Fetitta wants Houston to add his first hockey team since the old Eros of the former World Hockey Association when he bought his center Toyota with the NBA’s Rockets in 2017. said.
However, the Blue Jackets, Arizona Coyotes, Florida Panthers, and New York Islanders all seem to be suffering some degree of financial hardship and attendance problems.
However, that’s all in the realm of theory and a matter for the future.
But this is the question that SEG and Arctos say they answer.
Chad Hutchinson, partner at Arctos Sports Partners, said: “…Arctos works with a visionary group of owners, and the State of Utah is doing it with SEG. We are thrilled to work with Ryan and the team to explore opportunities to increase sports-related opportunities across the state and build a premier sports and entertainment center here.”
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