Pro sports teams generally aren’t in the import/export business, so tariffs shouldn’t have a meaningful direct impact on cashflows. But a broader economic slowdown could have follow-on effects, especially if a dip in consumer or brand spending threatens ticket sales, sponsorships or other key revenue sources.
However, Arctos shared research demonstrating that pro team finances have a history of withstanding economic headwinds. The private equity firm, which has minority stakes in teams across every major American pro league, pointed to the security of long-term, contractual revenue streams such as sponsorships and media deals. It also noted that teams have weathered past dips in consumer spending.
“Should household net worth fall sharply and consumers adopt more cautious spending habits, some downstream effects could emerge. But historical precedent suggests these would be modest,” Arctos wrote. “During the 2008 financial crisis, the Big Four leagues experienced only marginal declines in attendance, largely offset by pricing strategies and creative ticket bundling.”
In fact, the ability to withstand recessionary trends is partly what’s made pro teams such an appealing asset class for private equity and other investors.
Other insiders pointed to how a drop in consumer spending could affect local taxes that support sports facilities, though it would likely be a short-term dip.
“After 9/11, the taxes that were supporting the bonds that were being discussed in negotiations cratered,” said Mitchell Ziets, CEO of advisory firm Tipping Point Sports. “Say a city-based hotel tax increase; I saw drops of the order of 20% in a one-year period, from 2001 to 2002. But amazingly, they bounced right back. Within a couple years, they were back on the same trajectory they were before.”
That might not be the only tax-related concern: Earlier this year, White House press secretary Karoline Leavitt suggested the Trump administration would consider eliminating “special tax breaks for billionaire sports team owners.” Those benefits, such as amortizing a franchise fee or depreciating an arena, can be significant.
“It’s possible a potential control partner could walk away from a deal because those tax benefits go away,” Ziets said. “But it’s just talk right now.”
