Private equity firm RedBird Capital Partners is selling its 40% stake in player intellectual property licensing business OneTeam in a deal valuing the three-year old business at about $1.9 billion, according to multiple people familiar with the transaction.
Private equity firms HPS Investment Partners, Atlantic Park and Morgan Stanley Tactical Value are investing into OneTeam on RedBird’s exit. It is not clear how the firms are divvying up RedBird’s equity or if the co-founding entities, the MLB Players Association and the NFL Players Association, are adding to their combined 60% holdings.
The three incoming private equity firms are expected to be more passive investors than RedBird, which was an active participant in building OneTeam to its current size. The transaction is being finalized this morning and will be formally announced later today, according to the people familiar with the deal who asked not to be named because the deal isn’t public. RedBird declined to comment through a spokesperson.
For its part, RedBird exits with a gain that outpaces even the superheated private equity industry of recent years. Based on the deal valuation and RedBird’s estimated stake, the firm books a profit of around $600 million, a more than 500% return. By comparison, private equity on average has seen a 99% return over roughly the same timeframe, according to data from PitchBook.
Originally formed in mid-2019 by the MLBPA and NFLPA along with RedBird, OneTeam has grown rapidly and now represents the commercial interests of more than 10,000 athletes. In addition to football and baseball players, OneTeam works with Major League Soccer players, the U.S. Women’s National Team and NWSLPA soccer players, basketball’s WNBPA, the U.S. Rugby PA, and the esports union LCSPA.
OneTeam also works with college athletes, partnering with companies including trading card maker Panini and e-commerce giant Fanatics to produce customizable college football jerseys, with the advent of college athletes’ access to their NIL rights.
OneTeam’s financials have improved rapidly, too, according to the people familiar with the sale. The business’ earnings before interest taxes depreciation and amortization (EBITDA) of about $40 million from its early formation have surged to about $200 million recently. EBITDA is a commonly preferred financial metric of young, fast-growing companies. The investment by HPS, Atlantic Park and Morgan Stanley reflect that swift growth: The transaction values OneTeam at more than six times the initial $300 million put on the business in 2019, according to people familiar with the deal.
Until the formation of OneTeam, businesses looking to license sports intellectual property mostly struck broad deals with leagues and teams, only occasionally striking deals with athletes directly. The collaborative licensing model of OneTeam is becoming commonplace—as is Wall Street interest in funding the effort. Hedge fund billionaire Bill Ackman recently began funding a new pro tennis players association as a way to invest in the skyrocketing world of players IP rights. That tennis business is led by former OneTeam exec Ahmad Nassar, who left his role as CEO a few months ago and sold his equity in the business.
In some cases, players’ newly exercised power is leaving the traditional power brokers of sports behind. Video game publisher Electronic Arts let a deal with the world soccer organization FIFA expire this year, since its direct deals with players directly will allow it to continue to offer its blockbuster soccer game, albeit without the FIFA label.
HPS Investment Partners is a New York-based asset manager that focuses on corporate loans and debt financing while also making traditional private equity investments. Among its many holdings is Authentic Brands Group, the owner of Reebok and intellectual property including of Elvis Presley and Muhammad Ali.
Atlantic Park invests across all industries and is a joint venture of established PE firms General Atlantic and Iron Park. Morgan Stanley’s investment is through its Tactical Value team, which specializes in illiquid investments.
PJT Partners represented OneTeam in this sale.
With assistance from Eben Novy-Williams