Wall Street law firms are muscling into the booming sports deals market, seeking share from entrenched rivals that serve billionaire buyers and sellers.
Sky-high franchise values are attracting super-wealthy investors chasing a fixed number of teams. The invading law firms are bringing new competition to a short list of rival firms that long ago built specialties in the sales of professional sports franchises and still dominate the work.
The National Football League’s Washington Commanders sale last year shows how the new-entrant firms are gaining traction. Josh Harris, the billionaire founder of Apollo Global Management, turned to his counsel at Davis Polk & Wardwell, including firm chair and managing partner Neil Barr, to help with his record-setting $6.05 billion bid.
“As the deal sizes have grown and institutional capital has become more prominent, there is clearly a natural migration to firms like ours in the sports industry,” Barr said in an interview. “It is a strategic focus for our firm. They’re big, complicated, high-profile deals.”
The sports work has been a respite for law firms seeing a drop in traditional mergers and acquisitions work. While 2023 was the worst year for M&A in a decade, the sports-related niche reached a third consecutive year of record-breaking values, hitting about $25 billion, Bloomberg-compiled data shows.
Cravath, Swaine & Moore, a newer competitor for sports transactions even though it has past experience on team financings, represented the family of selling owner Daniel Snyder in the Commanders transaction. Sports deals are an increasing focus for the firm, driven by their complexity and size, said Mark Greene, head of the corporate department at Cravath.
The transactions require negotiation skills, and the league rules—spelling out things such as how many investors can own each team and how much debt each franchise can carry—aren’t a barrier to entry, he said.
“The rules are written in English,” Greene said. “We did not have an expert and we figured them out just fine.”
Wachtell, Lipton, Rosen & Katz and the other new entrants bring into the sports arena their reputations for handling the largest public company deals. Wachtell guided ConocoPhillips in its plan announced last month to acquire Marathon Oil Corp. for $17 billion—among the 10 largest transactions revealed this year.
In the sports space, Wachtell advised the PGA Tour on its $3 billion investment from a consortium of sports team owners. The most profitable law firm also represented private equity titan David Rubenstein in his purchase of Major League Baseball’s Baltimore Orioles for more than $1.7 billion.
Holding Their Own
The incumbent sports-deal law firms are defending their turf. Those firms, including Hogan Lovells, Covington & Burling, Proskauer Rose, DLA Piper and Sidley Austin, remain involved in almost every sports transaction.
The incumbent firms boast of knowing best the intricacies of league rules that serve as the regulators for this niche of dealmaking. They remain the odds-on favorites to cash in on the sports boom.
While the Harris group last year tapped new entrant Davis Polk for the Commanders transaction, it also brought on one of the incumbents, Hogan Lovells, as a specialty “sports” counsel. Hogan Lovells represented the Walton-Penner family on its $4.65 billion acquisition of the Denver Broncos in 2022, and has a long list of deals in the space.
Matt Eisler, a longstanding player on major sports team sales at Hogan Lovells, said his group has developed an understanding of the league’s rules and can quickly determine if proposed ownership structures will run afoul of them. “That’s really our competitive advantage,” he said.
He acknowledged that competition for the growing sports business is ratcheting up. “Our biggest challenge” is fighting for an edge to stay on top, Eisler said. “As the other players get smarter, we become less scarce. And then it’s really more about how do we maintain that pole position?”
Richard Rubano, a DLA Piper partner, got his start on sports deals more than a decade ago alongside partner Mark Whitaker, who’s known for his experience on sports stadium financings. Rubano has since become a go-to lawyer for big deals, advising on the sale of the Houston Rockets in 2017 and Phoenix Suns in 2023.
He’s been growing his team by hiring lawyers with traditional private equity and M&A backgrounds as sports deals now more closely resemble transactions in those markets.
He tells the new recruits who haven’t previously worked on sports transactions that 85% of the deal work is like what they’d see in a traditional M&A purchase agreement. The rest is specific to sports, where they must understand clients’ goals and know how to work within the leagues’ rules to achieve them.
“It’s the 15% that makes or breaks whether you’ll be successful,” Rubano said.
Private Equity
Private equity’s growing role investing in American sports leagues is also adding competition to the tight-knit, high-profile market. The law’s private equity giants, including Kirkland & Ellis, have carved out a space advising the growing number of funds purchasing slices of America’s teams.
The MLB was the first North American sports league to allow private equity ownership, starting in 2019. Since then, the National Basketball Association, National Hockey League, and Major League Soccer have followed suit.
The business is expected to boom as the NFL moves toward allowing private equity firms to purchase stakes in its teams, which are the highest-valued of any American sport. The NFL pushed a vote on private equity ownership to later this year, Bloomberg News has reported, with the league considering pre-approval of a handful of institutional investors.
Arctos Capital is one of the groups being considered for that pre-approval, Bloomberg reported. The fund is an example of how new law firms have gained a foothold in the sports world.
Arctos chose Kirkland to advise it on raising an initial fund, worth over $2.1 billion, in 2021. The group hired a Kirkland partner as general counsel in 2023 and used the firm again to raise its second fund, worth over $4.1 billion, in April.
Kirkland, which is the leading firm for private equity fund formation, has also advised on the fund’s investments in sports teams. Arctos did not respond to a message seeking comment.
Lateral Hires
Proskauer Rose partner Joe Leccese, among the most active and influential sports lawyers in the country, said the rise of private equity investing in the industry has invariably widened the list of law firms with sports deal credentials.
But the broader effect has been positive for firms like his, which, he noted, boasts more private equity lawyers than sports lawyers. The volume of deals in the so-called “limited partner” market—offering slices of team ownership—has risen dramatically. Most are done by the incumbent firms, he said.
“When private equity came to sports it played even more to the overall expertise of our firm,” Leccese said. “We understood sports and we represented private equity firms.”
While the broader Big Law landscape has been defined by lateral hiring, there so far have been relatively few moves among preeminent sports industry lawyers.
One exception was Sidley Austin’s move in 2022 to bring in Irwin Raij and Charles Baker, formerly the leaders of the sports practice at O’Melveny & Myers.
Between the two, last year they advised Gabe Plotkin in purchasing the controlling stake of the NBA’s Charlotte Hornets from Michael Jordan. They were also involved in the Commanders deal, representing minority investors.
Being at a global firm with a European presence has helped the pair grow its business across the pond, where private equity investing in soccer clubs has been booming. Shortly after joining Sidley, the pair represented Clearlake Capital Group in its acquisition of the Premier League’s Chelsea Football Club.
“It’s really been accretive given the global nature of this business now, and also the rise of private equity investing,” Baker said.
— With reporting by David Hellier