Raising $5 billion! American PE Apollo aims to become a major financier in the sports industry

American private equity giant Apollo Global Management plans to launch a $5 billion sports investment fund, marking the company's first allocation of dedicated permanent capital to the sports sector. This move signifies that large global private equity groups are accelerating their entry into the rapidly growing sports finance field.

On September 2, media reports indicated that insiders revealed this PE giant, which manages over $800 billion in assets, will hire new personnel to oversee this strategy, focusing on lending to sports leagues and teams while also acquiring club equity.

The new fund will systematize Apollo's layout in the sports investment field. In recent years, the company has invested in various sports projects, from Premier League football clubs to horse racing, but these investments have previously been scattered.

The sports finance market is attracting increasing attention from private equity capital, mainly because traditional lending institutions are under-serving this area, while private equity firms can quickly deploy funds and achieve high returns.

Apollo Aims to Be the "Big Investor in Sports"

Reports indicate that the fund will adopt a dual investment strategy: on one hand, providing loan services to sports leagues and teams, and on the other hand, directly acquiring club equity. This model allows for stable debt returns while sharing in the long-term appreciation potential of sports assets.

Apollo's initiatives reflect the significant opportunities in the sports finance market. Due to traditional banks being cautious in lending to the sports industry, private equity capital can fill this gap by obtaining high returns through quick decision-making and flexible structures.

Apollo's existing investment portfolio in the sports sector showcases the core logic of its investment strategy. The company's most notable deal includes providing £80 million in high-cost debt to the Premier League's Nottingham Forest Football Club, secured against club assets including the stadium.

A more typical case is Apollo lending £40 million to football super-agent Kia Joorabchian's Sports Invest Holdings, with an annual interest rate as high as 10.25%.

This non-traditional debt is secured by multiple companies under the agent, including AMO Racing, AMO Stables, and Sports Invest UK, which services players from youth to international levels.

In addition to lending, Joorabchian is also actively seeking European football investment opportunities for Apollo, becoming an important partner for the company in expanding its sports footprint. This model reflects Apollo's strategy of deepening its investment layout through building industry networks.

Apollo's ambitions in sports investment go beyond lending. It is reported that the company has been in negotiations this summer to acquire equity in Atlético Madrid, the third-largest football club in Spain, indicating its interest in directly holding quality sports assets.

The company had also previously considered providing financing for the buyer of Manchester United and had reached an investment agreement of $1.25 billion for the Mexican football league, although the latter ultimately did not materialize. These large transaction attempts reflect Apollo's confidence in the long-term value of the sports industry Analysts point out that from the Premier League to La Liga, Apollo's investment footprint covers major football markets in Europe. The establishment of a $5 billion special fund will provide the company with more "ammunition" to seize more large-scale sports asset investment opportunities.

Private Equity Giants Flock to the Sports Sector

Apollo is not the only private equity giant optimistic about sports investment. Sports finance is becoming a popular sector for large private equity groups to compete in, with the competitive landscape becoming increasingly intense.

Long-term sports investor CVC has established a broad presence in this field, with a portfolio that includes Spain's La Liga, the Six Nations Rugby Championship, and the Gujarat Lions cricket team in the Indian Premier League.

Apollo's American counterpart Ares Management is also very active, having lent hundreds of millions of pounds to John Textor's Eagle Football Group and Chelsea Football Club.

These transactions demonstrate that private equity capital is deeply involved in the sports industry value chain in various ways.

As more private equity giants enter the sports investment field, competition for funds will drive up transaction valuations while also providing sports organizations with more financing options