‘Americanization’ Bleeding into Every Faction of Australian Sport, Including Team Ownership
‘Americanization’ Bleeding into Every Faction of Australian Sport, Including Team Ownership
The National Hockey League played a pair of sold-out exhibition games in Melbourne, Australia back in late September. It was the first time the NHL played games in the Southern Hemisphere.
That same week, TKO Group Holdings (NYSE: TKO) announced World Wrestling Entertainment would be making its first return to Australia since 2018 in 2024 with a globally televised premium live event (WWE Elimination Chamber: Perth).
Earlier in September, WWE’s sister company UFC hosted its first PPV card in Sydney in more than a decade (‘11). The event came as part of a deal that will see the MMA promotion bring three fight cards to New South Wales over a four-year period.
“The appetite for U.S. sports in Australia has surely increased in an age of social media and with greater access to [American] content through streaming,” Rhys Lenarduzzi (head of sports & entertainment, capital & advisory, Prime Financial Group) said.
But the ‘Americanization of Australian sport’ extends beyond the increasingly crowded live events calendar.
“It’s bleeding into every faction of the sports investment and business sphere over here,” Lenarduzzi said. “Ownership levels of teams, the sports tech ecosystem, and even league structures.”
And the trend is expected to continue as American investors increasingly learn of the opportunity to back sports properties with familiar constructs.
“As leagues restructure to look more like American leagues, or at least behave like them, we can reasonably predict more U.S. investor interest,” Lenarduzzi said.
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U.S. sports properties are financially incentivized to make the nearly day-long trek to Australia. The UFC’s three-year pact will net the company a $16 million payday from the New South Wales state government.
WWE’s deal is in partnership with the Western Australian Government through Tourism Western Australia. Visit Victoria supplied the NHL with ‘significant marketing and financial support’.
Australian governments are willing to pay significant sums for international properties to visit for several reasons. For starters, sports fanaticism exists in the country and the Aussie population wants to experience the world’s best.
“People [have] comparatively more disposable income to deploy on entertainment than in other parts of the world and need things to do,” Lenarduzzi said. “If there is a way the government can bring top tier content to a world class venue, and it reflects well on them, they’re going to do it.”
According to Credit Suisse’s annual global wealth report, Australia has the highest median wealth per adult (think: typical net worth) among the 20 countries it tracks.
Political pressure also exists to bring high-profile talent to newly constructed or renovated venues.
“A lot of the state governments in Australia own the venues that hold these events, and their coffers are full from the COVID period,” Lenarduzzi said. “Those tasked with venue and event management have a responsibility to justify the [investment].”
But these overseas excursions are not solely about revenue. There is an opportunity for the U.S. properties to grow their fan base in the country.
“We’ve discovered there is a real interest in American and European sport [in the country],” David Proper (senior EVP, media and international strategy, National Hockey League) said.
Upwards of 50,000 fans turned out for the NHL’s weekend long visit.
While U.S. sports properties are increasingly showing up in Oceania, U.S. based investors are buying into National Basketball League and National Rugby League teams.
Former NBA player Matt Walsh (New Zealand Breakers), D.C. United co-chairman and CEO Jason Levien (Brisbane Bullets), and Los Angles based entrepreneur Romie Chaudhari (South East Melbourne Phoenix) are among those who have invested in NBL teams over the last decade. The Penn family owns the Manly-Warringah Sea Eagles of the NRL.
There are several reasons why Americans are coming to Australia in pursuit of sports-centric opportunities. For starters, the country offers a familiarity that makes it easier to dip a toe into the waters.
“English speaking. Politically stable compared to other parts of the world. Closed leagues. These are often the kinds of features U.S. investors get some comfort from,” Lenarduzzi said.
U.S. investors also like the high participation rates associated with basketball and rugby in the country, and are generally enthusiastic about the growth opportunities that remain inside the two domestic leagues.
Many believe the leagues’ traditional commercial revenue streams, including media rights, are still undervalued.
“We [continue to be] fascinated by how truly global the NBL product can be,” Lenarduzzi said. “It’ll never be the NBA, but it doesn’t need to be, and the NBL has an asymmetric growth story.”
While Americans have been buying up NBL teams, they are also increasingly interested in rugby codes down under. Silver Lake has invested in New Zealand Rugby and there are said to be a host of Yankees close to ongoing ‘Super Rugby’ club sales processes.
The ’31 rugby World Cup is going to be played in the U.S. and a new professional rugby league exists stateside (Major League Rugby). Those invested in the sport here presumably see the high-profile Australian properties as a means of bringing credibility to their nascent domestic endeavors.
The checks required to buy an Australian basketball or rugby club are much smaller than what is necessary to get into a big five league team.
“A lot of the NBL teams at the moment have $30-40 million valuations, less than 1% of what the Phoenix Suns sold for,” Lenarduzzi said. “So, [the opportunity] brings in a whole different class of capital.”
Of course, these Australian teams remain a much different business opportunity than their American counterparts–at least for now.
The expectation is as ‘Americanization’ bleeds further into team ownership, clubs will push to take control of their own venues (and presumably build larger real estate projects around them).
“You will start to see the big AFL and NRL clubs build the massive multi-use real estate developments around the stadiums like in the US.,” Walsh said. “As the media rights deals continue to grow globally, you will see owners continue to invest in the clubs and explore the opportunities to do more locally.”
The Breakers are currently engaged in discussions with the NZ government about developing a larger headquarters facility.
American investors are exploring opportunities in Australian sport beyond just the pro teams and leagues.
“If you look at the cap tables of some of the interesting esports, gaming, and wagering technologies over here, it’s often U.S. capital,” Lenarduzzi said.
Investors can often get into Australian businesses cheap (at least relative to U.S. based startups), and the country serves as an affordable sandpit for sports tech development (because of the tax incentives that exist).
It’s also viewed as a lily pad to Asia.
“[Australia] is a toehold in the region over here,” Lenarduzzi said. “Particularly when they talk about gaming and wagering, [U.S. investors] all have their eyes on the likes of Indonesia and India; enormously populated countries with a growing middle class.”
The ‘Americanization of Australian sport’ has started bleeding into league governance too. The A-League recently pivoted from a traditional European soccer model (think: clubs licensed to play in league by governing body) to what the locals refer to as the ‘American model’.
“It’s a single entity model. The owners of the teams are owners of the league,” Lenarduzzi said.
As league structures increasingly look more familiar/attractive to U.S. investors, it’s only logical to believe the investment trend will continue to gain momentum.
“There’s going to be some transactions that will be completed soon, where the cap table will be predominantly American,” Lenarduzzi said.
Earlier this month, Bill Foley's group was named the ‘preferred bidder’ for a new Auckland-based A-League franchise.
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