While Reynolds and McElhenney found their way to professional sports in 2020 through what was then a fifth-tier soccer team based in Wales, for which they paid $2.5 million, American family offices are looking for entry points among emerging sports, including the Ultimate Fighting Championship, surfing, and women’s sports.

Speaking at the virtual Global Family Office Media Roundtable on Tuesday, Gupta said the interest in these emerging sports is about more than just the growth potential that comes from reaching a larger audience—sponsors are changing how they view these leagues, in addition to potential opportunities involving sports betting. (The Supreme Court overturned a bill restricting sports betting in 2018.)

“There’s a big bucket of emerging sports where the opportunity feels nascent,” said Gupta. “But the bid and demand across groups, in how much excitement and buzz there are on some of these emerging sports, is really a big area of focus.”

The media roundtable followed a symposium with 170 Goldman Sachs clients and prospective clients from 15 countries. Based in part on those meetings, Gupta said that family offices—generally defined as families with at least $50 million to invest—are increasingly interested in sports investments.

In addition to the UFC and surfing, the most popular emerging sports include NASCAR, golf, sailing, rugby, and college sports, with a focus across leagues on women’s sports, Gupta said. Specifically, she mentioned the National Women’s Soccer League, the WNBA, and the Women’s Tennis Association. A number of changes make these investments more enticing, including that women’s sports sponsorships are up 22%, according to a report by Sports United.

Family offices are mostly in the early stages of considering sports investments, evaluating factors such as whether leagues are open to expansion and how they handle media rights. “There’s been a lot of focus on the rapid rise in media contract values,” said Gupta, “which has allowed engagement with a much broader audience.” Many investors view sports as a largely uncorrelated asset class, making it a good hedge when markets are down.

‘A big area of focus’

Currently, many investors are looking to invest in their local communities, she said, a continuation of what Goldman published in its family office report last year. And increasingly, institutional investor interest in sports is making it more expensive to invest, although many leagues are also currently considering whether institutional capital can invest at all. American private equity firms didn’t start investing in European sports until 2006, and U.S. sports didn’t open up to PE until about a decade later.

The best sports investments have wildly outperformed traditional assets. Perhaps most notable is Mark Cuban’s 2023 sale of a majority stake of the Dallas Mavericks, valued at $4.5 billion, which reportedly earned him a return of 1,478% after he paid just $285 million for the team in 2000. Private investment firm Arctos co-launched a sports index to track the performance of franchises the same day as the event.

“The discussion around the broader sports ecosystem is continuing to be a big area of focus for family offices,” said Gupta.

The areas of interest are different in Europe, according to Darren Allaway, a managing director at Apex who focuses on Europe, the Middle East and Africa. “From a European perspective, we don’t have a collegiate framework here,” said Allaway at the same event. “The U.S. sports are important from a TV perspective, but not from a kind of visibility perspective, because there are no competitive leagues in baseball, hockey, basketball, football, etc. But soccer continues to dominate.”

According to Allaway, just a few wealthy families have historically invested in the biggest European soccer teams, resulting in family rivalries throughout the continent. Through December, 22 Americans owned a piece of a European Football League team, according to The Athletic. Increasingly though, secondary and tertiary leagues are appealing to family offices from around the world—something much less common prior to Reynolds and McElhenney buying Wrexham (and producing the accompanying documentary, Welcome to Wrexam). Previously, many small clubs frowned upon such outside investments as “ill will,” Allaway said.

“That show has kind of changed the dynamic,” he added. “So there are a lot of smaller clubs that are welcoming foreign ownership, potentially wealthy ownership, from families who have either substantial interest and experience in sports, or this is their first foray and they’re happy to make an investment, upgrade the team, and see if they can be more competitive.”