-

UNITE HERE Releases Investor Alert Warning of Risks in Private Equity’s Sports Funds

Investor Memo Highlights Valuation, Liquidity, and Labor Concerns in Sports PE Funds Such as Those Managed by Arctos Sports Partners and RedBird Capital

BOSTON--(BUSINESS WIRE)--UNITE HERE, North America’s hospitality workers union, has issued a new alert for institutional investors, urging public pension fund fiduciaries to pause new commitments to private equity funds investing in professional sports franchises.

Pension trustees advised on risks of record-high valuations, difficult exits, limited governance rights, and poor human capital management practices in a nascent asset class led by private equity managers like Arctos Sports Partners and RedBird Capital.

Share

The memo advises trustees on the risks of record-high valuations, difficult exits, limited governance rights, and poor human capital management practices in a nascent asset class led by private equity managers like Arctos Sports Partners and RedBird Capital. In assessing the potential risks of investing in an Arctos Sports fund, the Deputy CIO for the Kentucky Public Pension Authority noted that sports franchises were a “difficult asset to exit” due to the fact that there is a “limited investment universe” and the “fund term may be extended at GP discretion.” 1

Even RedBird founder Gerry Cardinale has publicly cautioned,

“The biggest risk investing in sports today is to get lulled into believing that values will always go up.” 2

Among the alert’s key concerns:

  • Valuation Risk: Sports franchise valuations are at an all-time high, raising concerns of a bubble. 3
  • Exit Constraints: League rules impose restrictions on private equity exits, including holding periods and requiring league approval of sales. 4
  • Limited Oversight: Minority private equity investors lack the control necessary to manage risks from labor disputes and ESG challenges.
  • Labor Tensions: The alert highlights recent worker unrest at Fenway Park—partially owned by both Arctos and RedBird—where concessions workers employed by Aramark recently protested low pay.

The memo calls on trustees to:

  • Pause new investments in sports-focused PE funds;
  • Demand disclosures on sports-focused PE exit strategies, governance rights, and ESG policies;
  • Reassess fund allocation policies around exotic, niche asset classes like professional sports.

UNITE HERE works with public pension funds to align investment practices with long-term value creation. The full alert is available here: www.local26.org/sportspe

1 https://www.kyret.ky.gov/About/Meeting-Calendar/Materials/December%2020%202022%20KRS%20Investment%20Committee%20Meeting%20Materials.pdf pg. 42, Anthony Chiu, Deputy CIO Kentucky Public Pensions Authority

2 https://redbirdcap.com/redbird-on-the-biggest-risk-in-sports-investing

3 https://www.arctospartners.com/wp-content/uploads/2024/07/Arctos-Sports-Partners-Third-Annual-Presidents-Summit-Consolidated-Slides.pdf pg. 19

4 https://deloitte.wsj.com/cfo/private-equity-ups-its-game-with-sports-franchises-d9349c04 & https://www.sportico.com/business/team-sales/2024/nfl-private-equity-policy-compare-nba-mlb-mls-other-leagues-1234794967/

Contacts

Jaimie McNeil
(978) 335-2079
jmcneil@unitehere.org

Industry:

UNITE HERE

Release Summary
UNITE HERE investor alert urges pension fund fiduciaries to pause new commitments to private equity funds investing in professional sports franchises.
Release Versions
English

Contacts

Jaimie McNeil
(978) 335-2079
jmcneil@unitehere.org

More News From UNITE HERE

UNITE HERE Local 26 Releases Report Critical of KSL Capital Partner Purchase and Multiple Financings of the Hersha Hospitality REIT

BOSTON--(BUSINESS WIRE)--A UNITE HERE Local 26 report questions key decisions made by KSL Capital Partners in its financing and refinancing of multiple Hersha Portfolio hotels...

UNITE HERE - Will You Cross a Picket Line? Hotel Boulderado Workers Warn Sundance is Not Disclosing Labor Dispute at Festival HQ as Ticket Sales Open

BOULDER, Colo.--(BUSINESS WIRE)--Before tickets go on sale October 15 for the first Sundance Film Festival in Colorado, hotel workers are warning about the active labor dispute at the festival’s headquarters – one they fear festivalgoers are not being told about. Since demanding a fair process to decide on a union in July, front desk staff, housekeepers, and food service staff have held pickets advertising the hotel’s non-union status, and they have marched down Pearl Street. Actions may contin...

UNITE HERE Launches GraduateFails.org About AJ Capital Partners and Graduate by Hilton Hotels

WASHINGTON--(BUSINESS WIRE)--Hotel workers’ union UNITE HERE has launched the website GraduateFails.org detailing ways AJ Capital Partners and Graduate by Hilton Hotels have failed workers and communities across the country. The website is accompanied by digital ads to hotel customers and follows the issuing of a travel advisory for the brand. Graduate Hotels are owned by AJ Capital Partners, and their preferred operator is Schulte Hospitality Group. Graduate by Hilton Hotels are themed around...
Back to Newsroom