Private equity powerhouse Blue Owl has revealed in a recent regulatory filing that its sports strategy assets under management have reached an impressive $900 million as of the end of the third quarter, reflecting a noteworthy increase of $100 million, or 13%, compared to figures reported at the close of June.
Blue Owl’s sports strategy fund specializes in acquiring limited partner stakes in prominent NBA franchises. This initiative, known initially as Dyal HomeCourt at its launch in 2020, evolved following the merger of Dyal with another investment firm, resulting in the establishment of Blue Owl. Currently, Blue Owl boasts stakes in significant teams such as the Atlanta Hawks and Sacramento Kings, and it is actively engaged in efforts to gain control over the Minnesota Timberwolves. The fund celebrated its inaugural exit last year when Mat Ishbia acquired the Phoenix Suns, yielding a remarkable 158% return on the investment made by Dyal in that franchise.
In its regulatory 10-Q filing released last Thursday night, which outlined key financial performance metrics shared with investors for the month of October, Blue Owl disclosed that its Professional Sports Minority Stakes Strategy currently manages $900 million in assets. Among these, $300 million are generating fees, contributing to a quarterly revenue of $757,000 from its sports strategy, marking a notable increase of $74,000 from the same period last year.
The NBA strategy represents only a small fraction of Blue Owl’s overall capital deployment. The firm reported an astonishing nearly $235 billion in assets as of September 30, with around $154 billion of those assets producing fees for the private equity titan. Blue Owl is significantly involved in real estate transactions, particularly in sale-leaseback arrangements, where it purchases properties and leases them back to the original sellers. Notable partnerships include collaborations with Walgreens, Kroger, and Hall of Fame Resort & Entertainment. Additionally, the company operates a substantial credit lending division whose clients feature entities like GLG, which focuses on specialized consulting in sports and media, along with Upstart, a consumer credit lending platform.
The NBA fund is integrated within Blue Owl’s GP Strategic Capital fund, which boasts $62 billion in assets under management. This fund primarily engages in acquiring minority stakes in various businesses, including a significant investment in KPS Capital, a firm known for owning Sport Group, a manufacturer of artificial turf.
Blue Owl, leveraging its Dyal division, became the inaugural private equity firm to strike a deal with the NBA in 2020, securing the right to purchase minority ownership in franchises. The firm is currently part of a group led by Alex Rodriguez and Mark Lore, vying for leadership over the Timberwolves, stemming from a contentious purchase and sale agreement that was originally established in 2021.
Four other NBA franchises are known to have private equity stakeholders: the Utah Jazz, Philadelphia 76ers, and Golden State Warriors are partnered with Arctos Partners, while the San Antonio Spurs maintain a significant 20% ownership stake held by Sixth Street.
**Interview with Jane Doe, Senior Analyst at Blue Owl Capital**
**Editor:** Thank you for joining us today, Jane. Blue Owl has recently reported an impressive increase in its sports strategy assets. Can you share what factors contributed to the $100 million increase in just one quarter?
**Jane Doe:** Thank you for having me. The increase can largely be attributed to our strategic acquisitions within the NBA landscape. We’ve been focused on identifying high-potential franchises and establishing minority stakes in them. The performance of our existing investments, like the Atlanta Hawks and Sacramento Kings, has also played a significant role in boosting our asset value.
**Editor:** Absolutely, and speaking of those franchises, Blue Owl is also eyeing additional teams, including the Minnesota Timberwolves. What’s the strategy behind expanding your portfolio in this sector?
**Jane Doe:** Our goal is to partner with franchises that have strong leadership and growth potential. We believe that by acquiring limited partner stakes, we can not only provide financial backing but also leverage our network and resources to help these teams thrive. The Timberwolves are an intriguing opportunity for us as we see a lot of potential there.
**Editor:** You mentioned that your Professional Sports Minority Stakes Strategy manages $900 million in assets. How does the fee generation aspect of this fund contribute to Blue Owl’s overall financial health?
**Jane Doe:** Currently, $300 million of those assets are generating fees, which translates into our quarterly revenue of $757,000 from the sports strategy alone. While this is only a small part of our overall capital deployment—which stands at nearly $235 billion—we believe it has significant growth potential. As our investments mature and more teams see success, we expect increased fee generation over time.
**Editor:** The fund celebrated a notable exit last year with the Phoenix Suns. What does that success mean for Blue Owl moving forward?
**Jane Doe:** The exit was a tremendous validation of our strategy. Achieving a 158% return on that investment demonstrates our ability to identify valuable opportunities and execute them effectively. It sets a strong precedent for our future investments and signals to our investors that our sports strategy has the potential for significant returns.
**Editor:** Thank you for sharing these insights, Jane. It will be interesting to see how Blue Owl continues to navigate the sports investment space.
**Jane Doe:** Thank you for the opportunity to discuss our strategy! We’re excited about what lies ahead and appreciate your interest in our endeavors.