Mat Ishbia’s $4 billion deal to purchase the Phoenix Suns is welcome news for one of the team’s most recent investors—private equity fund Dyal HomeCourt Partners.
The firm, which is part of asset manager Blue Owl Capital (NYSE: OWL), is one of a handful of funds that has rushed to take advantage of new ownership rules that allow institutional capital to buy passive minority stakes in the NBA, MLB, NHL and MLS. HomeCourt bought into the Suns in July 2021 at a $1.55 billion valuation and intends to remain a part of the ownership group under Ishbia, according to someone familiar with the firm’s plans.
That could change as the deal points are finalized, said the person, who was granted anonymity because the details are private. Representatives for Ishbia and Blue Owl declined to comment on the deal points.
Regardless of exit status, the 158% valuation jump from Dyal HomeCourt’s investment to Ishbia’s agreement is a strong result for the fund, which is also an investor in the Atlanta Hawks and Sacramento Kings. It’s also an early win for institutional capital in American sports’ burgeoning “private equity era.”
The NBA was the first major U.S. league to open its ownership ranks to private equity—starting as a partnership with Dyal HomeCourt in 2020—and most of the other leagues quickly followed. The new rules gave owners another avenue for taking money off the table while making it easier for existing limited partners to sell small stakes that were growing increasingly expensive. Valuations have jumped accordingly. The average NBA team is worth 16% more than in 2021, according to Sportico’s numbers. NHL teams are up 9%, while MLS clubs have gained 6%.
Funds like Dyal HomeCourt and Arctos Sports Partners, another sports-focused PE firm that has raised more than $5 billion and executed more than a dozen deals, can collect management fees on their capital, but they are betting that franchises will continue to appreciate in value. Ishbia’s Suns agreement is just one early data point that backs up the strategy.
The appreciation of Dyal HomeCourt’s stake is nothing compared to the gain Sarver will realize on his purchase. Sarver bought the Suns in 2004 in a deal that valued the team at $401 million. He’ll exit at a 9x higher number.