The “Share the Gains” Strategy Behind Drew Sheinman’s Sports Private Equity Firm

As you look out into the ecosystem and you're evaluating the types of things that you'll invest in, what does that evaluation look like? What does an ideal kind of investment scenario look like or an ideal deal look like for you?

Yeah.

For us, a- again, it has to be EBITDA driven.

Yes.

So typically, ten million or more EBITDA.

Ideally, we like to take a control position just 'cause we could have greater impact on the business, particularly with the operational impact and the culture side of things.

So to date, we've done seven deals, five buyouts, two co-invests.

Mm-hmm.

So the EBITDA, again, typically ten million or more.

We can write check sizes, you know, north of seventy-five million in equity.

You know, we've looked at a billion-dollar deal to raise the capital for that.

We took a pass because the company wasn't making its numbers and aligned with, with what our interests were.

But, so that's on the deal size, but also on the growth size.

We gotta see the opportunity to grow the company a certain level in a certain period of time, and then to exit at a certain period of time, leaving enough value for the next buyer to really come in and take the company over, so.

It feels like it's gotten a little bit more challenging, especially when it comes to investments in clubs in the sports business, right? Because the numbers have just gotten crazy.

A lot of this driven by media rights, obviously.

Is, is there a bubble risk here? How are you looking at the things you invest in? Are you investing in clubs, I guess, is one question, or is that time sort of passed for us in terms of what's reasonable in terms of rate of return?

I don't see a bubble anytime soon 'cause I think a lot of this is driven by scarcity.

Hmm.

And there's so much new capital coming into sports.

A lot of generational family offices, second gen is really excited, like, "Wow, I could actually invest in something I'm insanely passionate about and I really am excited about," versus some of the other businesses that they may have invested in.

So I don't see it hap- uh, slowing down or bubble anytime soon, domestically or on a global basis.

For us, given where we're at, we look more around the ecosystem of sports-

Mm-hmm

...

As you look out into the ecosystem and you're evaluating the types of things that you'll invest in, what does that evaluation look like? What does an ideal kind of investment scenario look like or an ideal deal look like for you?

Yeah.

For us, a- again, it has to be EBITDA driven.

Yes.

So typically, ten million or more EBITDA.

Ideally, we like to take a control position just 'cause we could have greater impact on the business, particularly with the operational impact and the culture side of things.

So to date, we've done seven deals, five buyouts, two co-invests.

Mm-hmm.

So the EBITDA, again, typically ten million or more.

We can write check sizes, you know, north of seventy-five million in equity.

You know, we've looked at a billion-dollar deal to raise the capital for that.

We took a pass because the company wasn't making its numbers and aligned with, with what our interests were.

But, so that's on the deal size, but also on the growth size.

We gotta see the opportunity to grow the company a certain level in a certain period of time, and then to exit at a certain period of time, leaving enough value for the next buyer to really come in and take the company over, so.

It feels like it's gotten a little bit more challenging, especially when it comes to investments in clubs in the sports business, right? Because the numbers have just gotten crazy.

A lot of this driven by media rights, obviously.

Is, is there a bubble risk here? How are you looking at the things you invest in? Are you investing in clubs, I guess, is one question, or is that time sort of passed for us in terms of what's reasonable in terms of rate of return?

I don't see a bubble anytime soon 'cause I think a lot of this is driven by scarcity.

Hmm.

And there's so much new capital coming into sports.

A lot of generational family offices, second gen is really excited, like, "Wow, I could actually invest in something I'm insanely passionate about and I really am excited about," versus some of the other businesses that they may have invested in.

So I don't see it hap- uh, slowing down or bubble anytime soon, domestically or on a global basis.

For us, given where we're at, we look more around the ecosystem of sports-

Mm-hmm

...