Why investors are betting big on sports

As investors look beyond traditional markets to diversify, sport is gaining ground as a credible asset class. Investing in sport not only offers new sources of return, but also the opportunity for investors to back something they genuinely care about. This was the starting point for Thematic Investing in Sport: Family Offices on the Global Playing Field, a London Business School panel chaired by Professor of Finance, Narayan Naik.

Bringing together esports investor Chester King, former Formula One driver and second-generation family member Nicholas Latifi, and third-generation investor Ruchir Grandhi of the GMR Group, the discussion explored what “sport as a theme” really means in practice – from the economics of media rights and franchise valuations to the emerging infrastructure taking shape around Esports. The message was clear: sport is no longer simply a passion project or branding exercise for those with deep pockets, but a broad, increasingly professionalised ecosystem with multiple entry points for investors.

Beyond the pitch

As an investment proposition, sport is far broader than team ownership alone, Narayan argues – and it offers exposure to an asset class that doesn’t tend to move in step with public markets. “You don’t get much lower correlation with the rest of the market than sports,” he observes.

But the opportunities extend well beyond buying a club. Investors can look at leagues, stadium real estate and even the surrounding infrastructure that benefits from matchday footfall – from parking and retail to hospitality and fan experience. There’s also a wealth of roles – from physiotherapists to doctors to coaches – that support teams and their players, Narayan adds, which for the next generation provide both career pathways and investment opportunities.

It’s critical, though, to understand both the sport itself and the geographical markets in which you’re operating. The panel discussed how in cricket franchise models in India, media rights – not merchandise – are the primary revenue driver. While sponsorship and ticketing matter, valuations are largely underpinned by broadcasting income and the way it is distributed between leagues and teams. In emerging markets especially, merchandise revenues remain far more modest than in long-established ecosystems such as football.

The online arena

As traditional sports have evolved into structured commercial ecosystems, esports represents their digital counterpart – competitive, professionalised and increasingly institutionalised. For those unfamiliar with this category, esports investor Chester begins by drawing the distinction between esports and gaming more generally. “There’s hundreds and thousands of video games – there’s only 40 recognised esports,” he explains. “This isn’t video games. This is competitive play – always human v human.”

As with cricket’s media-rights economics, the real value in esports may not be in the headline-grabbing tournaments. “One of the great stories I love is about the gold rush,” Chester reflects. It wasn’t the miners unearthing the gold that made the most money, he explains; “It was the guy selling the pickaxes and the Levi jeans.” Esports already encompasses education platforms, coaching standards, safeguarding frameworks and student leagues. Universities now offer dedicated programmes, and federations are emerging across multiple markets. Chester’s own fund has invested in a coaching platform designed to professionalise standards across federations, as well as in student competitions: “We now own and operate the largest student esports league in Europe,” he says. “We’ve got 20,000 students in the UK playing in 2,200 teams.”

The rationale is both commercial and strategic. Brands are keen to access young, technically literate audiences – particularly those studying STEM subjects – and structured grassroots systems help build sustainable pyramids, rather than speculative peaks.

On track and online

Meanwhile, the convergence between digital and physical sport is already underway. Nicholas – a former Formula One driver, second-generation family member and LBS alumnus – offers a case in point. His first season in Formula One coincided with the pandemic. When racing was paused for months on end, Esports became an unexpected outlet.

“It was very interesting to see the switch,” he observes, describing his five-month hiatus. He was one of a small group of F1 drivers who competed in virtual races during that period. The experience challenged assumptions. “People always say playing a video game isn’t intense – it’s not the real thing,” he says. “At times, the mental intensity and pressure was actually more… playing the simulator.”

The crossover runs both ways: Esports can maintain fan engagement when live sport is disrupted, while simulation technology now plays a central role in professional driver training. For investors, this underscores how digital formats can increase, rather than replace, the overall value of a traditional sport.

The live advantage

If digital manifestations are expanding the reach of sport, they are not replacing their core appeal. At the heart of both traditional competition and its Esport counterparts lies something uniquely human that cannot be manufactured: the unpredictability of a live result.

While artificial intelligence is playing a growing role in content creation, this is an area in which it cannot compete. “AI can’t replicate Manchester United equalising in the last minute,” Chester argues. Now more than ever, authenticity matters – and for investors, it gives sport a distinctive form of intellectual property – live competition that retains cultural and commercial value precisely because of its unscripted nature.

Ways to play

So if sport is now a credible asset class – professionalised and increasingly institutional – this raises a practical question: how can investors participate?

Of course, many private investors will never be able to buy a team outright, but according to the panel, there are plenty of alternative routes. These include specialist funds investing in sports infrastructure or Esports ecosystems, co-investments alongside experienced operators, and exposure to adjacent assets such as facilities or digital platforms. For Chester, collaboration is key. “What’s interesting is you meet other LPs who are doing mostly sports or esports as well,” he observes. “You collect brains.” Venture-style structures allow investors to share due diligence and expertise, lowering barriers to entry.

Meanwhile, participation sports such as padel and pickleball are professionalising rapidly, creating investment openings in facilities, booking technology and league structures.

Changing the playbook

If sport was once viewed as a vanity investment, the key takeaway from the panel is that it has matured into something much more structured, with opportunities that are far broader – and deeper – than in the past. From sophisticated media-rights structures in established leagues to the rapid professionalisation of esports federations and grassroots academies, the ecosystem around sport is expanding in both scale and sophistication.

Investing in sport offers a rare combination: commercial logic, emotional connection and a widening set of entry points – on and off the field. “In the sports world we only see the tip of the iceberg,” Narayan states. “There is an entire ecosystem… that goes on to support a team that you never see.” For investors willing to look beyond the obvious, that unseen layer may be where the real opportunity lies.