Sports-team private-equity fund Arctos Sports Partners now has $6.64 billion in assets, an increase of nearly 69% compared to a year ago.
Arctos, a Dallas-based operation owned and led by Ian Charles and Doc O’Connor, primarily invests in minority stakes in professional sports teams in North America and Europe, including the NHL’s Devils, NBA’s 76ers and NWSL’s Utah Royals. It also has stakes in sports-related businesses such as SeatGeek and sports tech venture capital fund Sapphire Sport.
Arctos disclosed the assets, as of the end of 2022, in its annual Form ADV, a report detailing operational particulars that the Securities & Exchange Commission requires from registered advisors who manage more than $150 million in non-family assets. The $6.64 billion figure, which compares to $3.94 billion at the start of 2022, is termed regulatory assets under management as required by the SEC. That means the figure could reflect the use of leverage in Arctos investments, as opposed to how net assets are typically reported by funds.
“We can’t comment about anything AUM related as we are in market fundraising,” Arctos’ Charles wrote in an email, referring to the firm’s assets under management.
The documents also show Arctos had assets exposed to the implosion of Silicon Valley Bank earlier this year. SVB, which was listed as custodian of Arctos’ funds in 2021 and 2022, was seized by the FDIC in early March after a bank run threatening depositor access to funds.
In a deal to protect depositors and continue access to the funds, First Citizens Bank & Trust Company, a North Carolina bank, acquired most of SVB’s assets. First Citizens is custodian for each Arctos’ funds now, according to the filing. Arctos added new language in this year’s disclosure noting that “financial stress or difficulty, similar to that experienced by Silicon Valley Bank and Signature Bank in March 2023” is a risk.
Arctos was formed in late 2019 to capitalize on growing institutional interest in investing in sports teams, and by the start of 2021, it had $866 million in assets, according to disclosures. While Arctos is a pioneer in investing in limited partnerships of teams, it’s a sector that is becoming increasingly popular with institutional investors, as the fund noted in its filing.
“Over the past several years, an ever-increasing number of investment funds have been or are being formed, and many fund sponsors have increased the size of successor funds as compared to their corresponding prior funds …” the filing said. “In this highly competitive environment, the valuations of many potential target investments have recently risen to historically high levels.”
(This post has been updated in the second paragraph to include Doc O’Connor’s role.)