FSG partners strike £223m NBA deal after bringing in next John Henry – Liverpool Echo

One of the silent partners in Liverpool owners Fenway Sports Group have completed a £223m deal for a stake in an NBA team.

Arctos Partners, who took a minority stake in FSG and its businesses last year, have acquired a 17 per cent stake in the Sacramento Kings according to multiple reports in the US, with the deal worth some $306m (£223m) for a slice of the Californian team, whose value stands at around $1.8bn (£1.3bn).

The deal is believed to be the largest private equity investment since the NBA relaxed some of its rules to open the door to institutional investors, with Arctos having already taken smaller stake in the Golden State Warriors earlier this year.

Sacramento are seen as one of the NBA’s most innovative off the court having blazed a trail in a number of areas, including being the first team to open a Twitter account back in 2007, the first to accept Bitcoin as as method of payment inside their arena in 2014 and the first to mine cryptocurrency in 2018 as part of its effort to support community work in Sacramento through innovation.

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The NBA’s rules on private equity investors were relaxed in response to soaring valuations and a financial pinch caused by the pandemic, with the new rules stating that private equity funds can buy as much as 20 per cent of a franchise, and it may own equity in up to five teams. No team can have more than 30 per cent of its equity owned by institutional investors.

When RedBird Capital Partners made their £534m ($750m) investment into FSG earlier this year the confirmation of the deal was accompanied by a full rundown of the 26 publicly disclosed partners of the business.

The roster of names included, of course, principal owner John W. Henry, Liverpool chairman Tom Werner, Henry’s wife Linda Pizzuti Henry, as well as the new faces including LeBron James, Maverick Carter, Paul Wachter and RedBird.

These are the publicly disclosed partners, and an omission from the list was that of Arctos Sports Partners, a private equity firm that took a small stake in FSG last year, and one that is adding to its very specific portfolio.

Arctos’ mission statement is to buy small stakes in professional sports organisations to provide liquidity and growth capital to ownership.

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Earlier this year Arctos brought in a man well known to Henry and FSG, the former Boston Red Sox general manager Theo Epstein, his remit to help in ‘advising owners of the teams Arctos invests in, across multiple leagues, on matters such as organisational leadership, culture-building and other business areas.’

There are those well placed in the US who have told the ECHO that Epstein could well have a larger role to play within FSG in the future when Henry and Werner decide to either step aside or dilute their involvement, suggesting the same of both RedBird and Red Sox president Sam Kennedy, both seen as key figures in FSG’s future.

In his role as executive-in-residence, Epstein will be tasked with ‘advising owners of the teams Arctos invests in, across multiple leagues, on matters such as organisational leadership, culture-building and other business areas.’

Owing to regulation, firms such as Arctos must not have a conflict of interest and must be passive, meaning Epstein won’t have a role in roster building, pay roll or on field matters within an franchise or team associated with their investment fund.

Another move into the NBA chimes with something that FSG could well get involved in moving forward as part of their ‘FSG 3.0’ plan that could also see more European football teams added to their portfolio that also includes the Roush Fenway Racing NASCAR team.

Kennedy, speaking to the Boston Globe earlier this year said: “We’re a huge admirer of the National Basketball Association and obviously the National Hockey League, it represents a natural place for Fenway Sports Group to look but we’ve not had any specific discussions or negotiations with any local market.

“But we have, as we’ve done over our two decades here, connected with (NBA commissioner) Adam Silver and his team and (NHL commissioner) Gary Bettman and (deputy commissioner) Bill Daly just to let them know that at some point we’d love to explore further opportunities in their league.

“Fenway 3.0 is going to be about tripling down on new and different teams, leagues, revenues, maybe here in North America, maybe abroad. But I think we’ll see more of the same, which is a commitment to blue-chip property and getting blue-chip management to come in and operate as we go forward.”

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