Private Equity Investments in Support of Professional Athletes: Developing and Testing a Cross-Country Framework of Sporting and Venture Creation Performances in Countries With a Strong Long-Term Orientation

Abstract

Overseas financial direct investments (ODIs) have been investigated with explanations of how investors generate a return on investment (ROI) and enable entries to new markets via sports club investments. However, investments in athletes have garnered less attention. This study explores private equity (PE) funds that could support professional athletes’ sporting performance and their second careers as entrepreneurs, actions that require a long-term approach. First, this study builds a sports entrepreneurship framework. Second, this study analyses secondary data on exceptionally strong sporting performance (Olympic Games medals), venture creation performance (the number of unicorns), and long-term orientation. As its theoretical contribution, this paper suggests that the tested framework could help future studies detail theories concerning sports startup ecosystems and agency problems. A managerial implication of the article is that sports club investments could be combined with PE fund investments to athletes in contexts dominated by funding types other than PE.

Keywords:

• Exceptionally strong sporting performance
• exceptionally strong venture creation performance
• olympic games
• unicorn
• sport entrepreneurship
• agency problem

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1 One example of such a private equity (PE) fund supporting athletes’ intentions to become professional and create ventures for their second careers is ‘Sport Fund’ of which headquarters is in Finland: https://www.sportfund.fi.

2 Well-known example of such an individual person includes Roman Abramovich who bought Premier League’s Chelsea Football Club (Sims, 2018).

3 Well-known examples of such professional investment companies include Arctos Sports Partners, Dyal Capital Partners, and RedBird Capital Partners, who have actively been byers of sports club franchises (Koba, 2021).

4 A well-known example of such a private company includes Rastar Group that acquired Espanyol with a purpose of trying to improve its international operations in the sports market (Lee & No, 2022).

5 Comcast is a sports tech accelerator that interviewed retired athletes who started own ventures and reported the results on their website at https://www.comcastsportstech.com/inside-track/the-rise-of-athlete-tech-investor/.

6 The Paris Olympic Games’ official incubator is called ‘impact 2024-athletes entrepreneurs,’ indicating that the athletes need to consider their second careers (e.g. as social entrepreneurs) before their sports careers end. Information on the incubator is available at https://www.paris2024.org/en/the-impact-2024-athletes-entrepreneurs-incubator-launched-by-paris-2024-and-the-afd/.

7 Competitive balance in sports relates to the structure of potential success of competing athletes and teams. A competition is imbalanced if one or some of the competitors are always expected to win, likely decreasing the fans’ interest in such competition (Plumley et al., 2018).

8 The platforms where one can invest in favorite athletes include Finlete (see https://finlete.com/index.html).

9 See TRUiC Team’s list of venture capital companies interested in sport ventures at https://startupsavant.com/top-venture-capital-firms/sports.

10 The Olympic Medal data available at (retrieved on December 15, 2022): https://olympics.com/en/olympic-games/olympic-results.

11 The unicorn data available at (retrieved on December 15, 2022): https://www.cbinsights.com/research-unicorn-companies.

12 The Hofstede’s data available at (retrieved on December 15, 2022): https://geerthofstede.com/research-and-vsm/dimension-data-matrix/.

Additional information

Notes on contributors

Antti Kauppinen

Dr. Antti Kauppinen works as a visiting professor at SolBridge International School of Business in South Korea. At SolBridge, Dr. Kauppinen teaches entrepreneurship and sport management courses and conducts research on private equity (PE) funds as sport ventures’ funding sources. He is also a career advisor, helping students to build successful careers after their studies. In the past, Dr. Kauppinen has been working in various countries as a lecturer, researcher, and firm founder. He has some voluntary work experience at sport clubs as well.