There’s already $12bn being invested by a consortium of firms like Ares, Sixth Street, Arctos and a team nicknamed “The Avengers” including Blackstone, Carlyle, CVC and Ludis. (We’re taking nominations on who the Tony Stark of the group is.)

But sport isn’t a new playing field for a lot of alternative investment firms. European soccer has proven to offer a number of opportunities to PE firms in recent years, with Clearlake backing Premier League club Chelsea as just one example.

There’s also a credit angle to a lot of these sports opportunities. For example, Ares provided a second lien debt to the NHL’s Ottawa Senators in 2021, along with a $500m financing package for Chelsea last year.

Meanwhile, Monroe Capital has also been active in sports recently, providing a construction loan to Panther National to build a golf course, and supporting Growth Catalyst Partners’ carveout of The Equine Network, a broadcaster of horse racing and other sports.

As a recent CNBC report outlined, 31 of the 32 teams have an EBITDA below $250m. Perhaps the Rams and the Patriots are a bit too toppy for those direct lenders that target the upper middle market, but the Chiefs who are aiming for a third consecutive Super Bowl have a reported $90m EBITDA. And for those private credit firms targeting the lower end of the middle market, there are the Colts, Bengals, and the Bills all with a reported EBITDA below $50m that may hit the suite spot.

There, however, remains restrictions on how you can invest in US teams. Largely, US leagues only allow for up to 30% of a team to be owned by private equity. Moreover, an individual fund can only own between 15% and 20%, depending on which league the franchise is in. It may mean some of the PE firms that focus on controlling investments are initially a little hesitant to jump in.

Still, there’s a lot of room for these firms to invest and scale up, even just within the NFL universe. But as they figure that out, I know I’ll just be enjoying the Packers, Eagles game — just not from the owners box.

Big fish, little fish

As we discussed in last week’s newsletter, there is a growing gap between the big and small names in private credit. Last year, the top 15 fund managers represented nearly 70% of all private credit capital raised in North America, up from 63% in 2022, according to Preqin.

The unfortunate reality of the direct lending world these days is that size and scale matter a lot. Historically a way around this for smaller institutions is to focus on parts of the middle market that weren’t as saturated — such as the lower middle market.

But that now may be changing. For today some of those smaller firms are getting snapped up. This week, Ares announced that it had acquired The Riverside Company. Riverside is known for lending to private equity-sponsored and non-sponsored companies in the lower middle market.

The name of the game for financial institutions is to be a one-stop shop. Riverside’s lower middle market and non-sponsored lending doesn’t overlap with the business of large cap lending that Ares has honed in on. Ares can make itself available to lower middle market PE firms or family-owned businesses.

More consolidation is likely on the horizon, especially from those big firms without lower middle market strategy. But are the likes of Apollo, Carlyle, KKR, and, Blackstone — the private equity titans of the past that then came to position themselves at the top of the private credit market — soon to be the big names at the lower end of the market? Time will tell.

This week on the 9fin platform

Astorg pushes the button on Anaqua sale

Private credit M&A bolt-on tracker — August 2024

What’s in market

Anaqua — the Astorg-backed IP software firm is up for sale with the help of Jefferies and Arma Partners

MRI Software — in the market for a repricing of its existing $2.5bn debt and is seeking a $250m incremental loan for additional M&A

Porter Airlines — looking to raise CA$250m in preferred equity to bolster its liquidity and pursue growth objectives

Jaggaer — Vista is reportedly pursuing a dual-track process with both banks and direct lenders to support its acquisition of Jaggaer, per BBG

From around the web

Private Equity’s Favorite Borrowing Tool Sparks Fresh Scrutiny (BBG)

Warburg Pincus Closes Debut Structured-Investing Fund (WSJ)

Apollo to Build Out Trading Desk for Private Credit Loans (BBG)

The Unicrunch is our US private credit newsletter, in which we break down everything from unitranches to ABL lending. Find out more about 9fin for private credit.