The Growing Power of Sports Content and Entertainment: A Long-Term Investment Opportunity

One of Hudson Square Investment Management’s core convictions is that sports content and entertainment represent a category poised for extraordinary growth over the coming decades. As technology advances, automation and efficiency gains will likely lead to more leisure time and disposable income, creating a surge in demand for live events and immersive experiences. This shift, coupled with rising global fan engagement, has positioned sports and entertainment as one of the most attractive areas for long-term investment.

The Rising Value of Sports Teams and Media Rights

Ten years ago, when I attended Columbia Business School, I enrolled in a course titled "The Business of Sports" taught by Professor Sal Galatioto. At the time, this was considered a niche topic, far from the mainstream of business education. It was around this time that Steve Ballmer purchased the LA Clippers for an unprecedented $2 billion. At the time it sparked debates about the valuation of sports teams. Critics essentially labeled the purchase a billionaire’s hobby. Fast forward to today, and that figure seems modest. In 2021, the LA Lakers were sold for $5 billion, highlighting the dramatic appreciation in the value of sports franchises.

This rise is driven, in part, by the increased value of U.S. sports media rights. According to S&P Global Market Intelligence, the total value of U.S. sports rights payments could approach $30 billion this year, and projections suggest continued growth as streaming platforms, cable networks, and broadcasters compete for premium content. Investors like Bob Iger and Carlyle Group have even extended this trend to women’s sports, with stakes in National Women’s Soccer League teams like Angel City FC and Reign FC, underscoring the broad appeal and investment potential of this sector.

The Formula 1 Effect: Cities and Economic Impact

One of the most underappreciated aspects of sports and live entertainment is their economic impact on host cities. Formula 1’s Las Vegas Grand Prix provides a vivid example. Visitors to Las Vegas during race weekend spent $884 million—3.6 times more than the average visitor—resulting in a net economic impact of $1.5 billion, the largest ever for a special event in the city. As cities recognize these benefits, competition to host high-profile events has intensified, with many willing to pay handsomely to attract global audiences.

I attended the Las Vegas Grand Prix last year and spoke with a family from Florida who frequently travel to these events. Their enthusiasm and willingness to spend on these experiences shocked me. While anecdotal evidence, it does reflect the growing trend of affluent consumers prioritizing live sports as a key part of their entertainment choices. This behavior is mirrored globally, as Formula 1’s popularity has soared, thanks in large part to Netflix’s “Drive to Survive,” which brought the sport to new audiences and excited its fan base. We believe a similar phenomenon is set to occur with other underappreciated sports, such as WWE and UFC.

The WWE Phenomenon: Global Stars and Fan Engagement

Hudson Square recently attended a WWE SmackDown event in Brooklyn as part of our field research. Wrestling, often underestimated in the broader sports narrative, revealed a level of fan engagement and enthusiasm rarely matched by other sports. Fans displayed an unmatched intensity, and their willingness to spend on merchandise, tickets, and concessions underscores the profitability of such events.

WWE’s ability to create global superstars, such as The Rock and John Cena, has further extended its brand’s reach. The Rock, for instance, boasts over 380 million Instagram followers (!), making him one of the most influential figures in the world. WWE’s merger with UFC under the TKO banner has created a powerhouse in live entertainment, and the potential for international expansion remains immense. WWE recently signed a $5 billion, 10-year deal with Netflix to air its “Raw” programming, a move we believe will echo the success of “Drive to Survive,” bringing WWE’s stars and stories to a global audience.

The Future of Live Sports and Entertainment

The long-term appeal of live sports is driven not just by their cultural significance but also by macroeconomic trends. Automation and efficiency gains in the economy are expected to reduce working hours over time, allowing individuals to allocate more disposable income to experiences. Sports and entertainment stand out as key beneficiaries of this shift. Additionally, the internationalization of previously niche sports, such as UFC and WWE, presents a massive untapped opportunity. Cities worldwide will increasingly compete to host events, while companies like TKO expand into adjacent revenue streams, such as digital content, merchandising, and sponsorships.

At Hudson Square, we view this trend as a multi-decade investment opportunity. Live sports and entertainment teams and leagues are no longer hobbies for billionaires; they are engines of economic growth, cultural relevance and investment opportunities.

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Disclaimer: This report is based on the views and opinions of Hudson Square Investment Management LLC, which are subject to change at any time without notice. The information contained in this report is intended for informational purposes only and is qualified in its entirety by the more detailed information contained in the offering memorandum of Hudson Square Investment Partners LP (the “Offering Memorandum”). Hudson Square Investment Management LLC is an investor in TKO. This report is not an offer to sell or a solicitation of an offer to purchase any investment product, which can only be made by the Offering Memorandum.  An investment in the Partnership involves significant investment considerations and risks which are described in the Offering Memorandum. The material presented herein, which is provided for the exclusive use of the person who has been authorized to receive it, is for your private information and shall not be used by the recipient except in connection with its investment in the Partnership. Hudson Square Investment Management LLC is soliciting no action based upon it. It is based upon information that we consider reliable, but neither Hudson Square Investment Management LLC nor any of its managers or employees represents that it is accurate or complete, and it should not be relied upon as such. Performance information presented herein is historic and should not be taken as any indication of future performance. Among other things, growth of assets under management of Hudson Square Investment Partners, LP may adversely affect its investment performance. Also, future investments will be made under different economic conditions and may be made in different securities using different investment strategies. The comparison of the Partnership's performance to a single market index is imperfect because the Partnership's portfolio may include the use of margin trading and other leverage and is not as diversified as the Standard and Poor's 500 Index or other indices. Due to the differences between the Partnership's investment strategy and the methodology used to compute most indices, we caution potential investors that no indices are directly comparable to the results of the Partnership. Statements made herein that are not attributed to a third-party source reflect the views, beliefs and opinions of Hudson Square Investment Management LLC and should not be taken as factual statements. This article was drafted with the assistance of AI technology.