Raine details 3 themes driving its sports investing as it hunts for more deals

Joe Ravitch and Jeff Sine’s investment and advisory firm, The Rhine Group, Invested millions in Hollywood companies Like Imagine Entertainment and Moonbug to capitalize on the popularity of their shows and movies. It is increasingly applying that approach to games as well.

Rhines was an early investor in DraftKings – which helped establish the US sports-betting sector – and is investing at the rate of about three companies per year. It raised a new fund of $760 million in 2023 to focus on sports, media and gaming.

like other Private-equity companies are attracted to sportsRhine’s thesis is that the value of sports content will persist despite the rising costs of media rights, pushing sports broadcasting to tech giants like Apple and Amazon, for whom media is not their core business.

“We want to be the arms dealer that supplies the stuff,” said partner Colin Neville. “If anything has been clear over the past few years, it’s that games are really the only thing moving the needle in the traditional linear package. Content and game content, in particular, is one of the few things in this fragmented world that brings together audiences of all genders, ethnicities from different countries and that’s what gives us great relief that as the distribution model is worked out over the next several years, we think the leagues themselves will do well and their Maintain position.”

Rhines is looking to take stakes in the leagues with rights, allowing them to monetize in various ways and invest in growing, founder-led companies. In addition to DraftKings, its portfolio includes Premier Lacrosse League And Castor, a sports apparel company,

It’s also focusing on participation sports like pickleball and youth sports, which make money from events.

Rhines has invested in RCX Sports, which organizes youth sports camps and other programs, and Reigning Champs, which connects coaches and high school athletes (since sold to IMG).

As a leading M&A advisor, Rhine believes this brings additional benefits to portfolio companies.

“If you use the example of DraftKings, we help them raise money, we help them build partnerships with media companies, we introduce them to sports team owners. That’s where We really try to connect with the founders and be with them, not just the capital,” said managing director Garrett Gomes.

Rhine is not looking to invest directly in teams that do not meet its high return criteria. Doing this can also avoid conflicts of interest with the teams he advises. Banks with private equity weapons have faced Criticism To compete on deals with the same investment firms they advise.

Rhine sees college sports as the next big opportunity

Institutional investors have moved into every aspect of sports except college athletics. Private-equity firms are increasingly taking a closer look at college sports, especially as they are becoming more professional in their structure and operations. Florida State has partnered with PE firm Sixth Street on a potential investment in FSU’s athletic department as part of an effort by JPMorgan Chase to help the school bring in institutional investors, CNBC. informed of,

Rhines says college sports still hold a big opportunity for outside investors, no matter the structure of college athletics adds complexity,

In 2019, Rhines helped the Pac-12 Conference raise private equity (which eventually decided not to, rain too helped The PGA Tour has raised $3 billion this year through a for-profit foundation.

“There are examples of nonprofits raising capital. So there are a lot of smart lawyers across this country who will figure out those problems, no doubt about that,” Neville said.