Sports Investment Banking League Tables Heating Up

Photo Credit: Stan HONDASTAN HONDA/AFP/Getty Images

Bloomberg reports that Canada’s own Bank of Montreal (BMO) is making a concerted push into the sports U.S. mergers and acquisitions (M&A) market–a move that will add pressure to an already competitive league for sports deals.

The firm’s investment banking division, BMO Capital Markets, is set to target opportunities within the MLB, NFL, NBA and NHL according to Lyle Wilpon, head of U.S. M&A for BMO.

BMO Capital Markets has enjoyed success in advising some of Canada’s largest sports deals over the past few years, from an ownership-stake sale of Maple Leaf Sports & Entertainment (owners of the Toronto Maple Leafs and Toronto Raptors) to the outright sale of the Montreal Canadiens.

Lyle Wilpon’s father is a cousin to New York Mets owner Fred Wilpon.

Investment Banking League Tables

While there are no specific league tables for the sports advisory industry, the entire M&A industry ranks its investment banks top-to-bottom much like you’d see in the NBA Western Conference or MLB American League East standings.

These ‘league tables’ are based on completed deals and are continuously measured by financial data outfits such as Dealogicthe Financial Times, and the Wall Street Journal.

Battles are hard fought in the sports advisory landscape given the limited, smaller deal flow compared to traditional sectors like energy of healthcare.

According to Sal Galatioto of Sports M&A industry leader Galatioto Sports Partners:

“There’s only a handful of deals. If you don’t get 30 or 40 percent of those deals and [sports is] the only thing you do, then you’re not going to be a viable business.”

Bulge bracket banks like JP Morgan & Chase, Goldman Sachs, Lazard and Blackstone all compete in the space as well as specialized boutique banks such as Inner Circle Sports, Game Plan, Park Lane, and the aforementioned Galatioto Sports Partners.

Photo Credit: Photographer: Jin Lee/Bloomberg/Getty
(Jin Lee/Bloomberg/Getty)

Sports Advisory is Unique

Mergers & Inquisitions (M&I)—an industry-leading source for investment banking coaching resources—has a comprehensive guide to breaking into sports advisory and gives details on the landscape (well worth a read).

Sports advisory deals include, but are not limited to, transactions in the following domains:

  • Sports teams
  • Sports leagues
  • Media companies with sports interests (e.g. YES Network)
  • Stadium and arena financing (municipalities)

Per M&I, bankers should approach sports advisory transactions understanding the following:

  • Sports franchises are typically worth anywhere from a few hundred million to $1 billion so bulge bracket banks (e.g. Goldman Sachs, Lazard, Blackstone) don’t always put their best dealmakers on these opportunities
  • Buying a team is really buying a stake in an entire league
  • Many teams have negative earnings and/or cash flows, so the preferred valuation multiple is Price/Revenue
  • Debt can introduce far more limitations into a deal compared to leveraged buyouts (LBOs) or other traditional M&A transactions

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