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.

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/