In a new note addressing the recent market tumult from the Trump taxes on foreign goods that went into effect last week, Arctos Partners says sports franchises are well-shielded from tariff volatility.
“Should the tariffs remain in place, we would expect a jump in inflation for many consumer goods, especially household durables, apparel, and electronics. Otherwise, the impact should follow what one would expect from a sudden fiscal contraction of approximately 2% of national income, which is what the tariffs announced on April 2 would represent,” Arctos said in the note to investors. “We believe franchises enjoy minimal tariff exposure and are well-positioned. … The underlying business model of sports benefits from exceptional stability due to long-term, contracted revenues across media rights, sponsorship and ticketing and enjoys sticky, largely domestic demand.”
The private equity fund notes that sports teams in MLB, NBA, NFL and NHL have sustained their values through past economic downcycles including the dotcom bust, mortgage crisis and the pandemic. Sports team values as measured by RAFSI, a proprietary index of team values created by Arctos and the University of Michigan, grew more than 7% in each of the first two economic shocks of this century.
Arctos declined to comment for this article through a spokesperson. But in its note, the company says franchises are positioned to escape most tariff ramifications because of the nature of sports teams’ costs, with player salaries largely locked in through collective bargaining agreements and local staff wages—for arena workers, executives and the like—not influenced by taxes on imports. Arctos also says most revenue sources are locked in for future years, such as the NFL’s media deals running through 2033 and the NHL’s Canadian broadcasting rights just inked through 2038 with Rogers Corp.
The long-term nature of media rights as well as sponsorships and stadium naming deals gives the industry plenty of financial cushion to ride out short-term turmoil. “This embedded revenue visibility acts as a buffer, even if broader advertising budgets contract in an economic downturn,” the note adds.
There are some risks to the trade wars, however. Canadian franchises face the problem of exchange rates affecting business, especially if the U.S. dollar strengthens, which would marginally erode profitability of Canadian teams, the firm notes. So far this year, the loonie has strengthened slightly against the greenback. Stadium construction is another area that could see costs increase from tariffs, though recent stadium projects have relied overwhelmingly on domestically produced materials, especially steel, one of the more tariff-prone products in world trade.
“While trade wars and macro volatility will likely disrupt many sectors of the economy, North America’s professional sports franchises are likely to emerge largely unscathed,” Arctos says. “With long-term contracts, domestic supply chains, and a uniquely loyal customer base, the business of sport continues to offer something that is in short supply elsewhere: predictability, resiliency and a lack of correlation.”
Of course, Arctos has a thriving investment strategy in buying minority stakes in sports teams, so it’s not a surprise the firm is bullish on franchise values.
Sales in the major leagues only support the firm’s conclusion, seen with the Boston Celtics under agreement to sell for $6.1 billion, the most ever paid for a sports franchise.
However, the stock market does offer some evidence team values are less stable: The five sports organizations traded on a U.S. stock market—the Atlanta Braves, Formula 1, Manchester United, Madison Square Garden Sports and TKO Group—are down 7.6% as a group since the start of the year. The S&P 500 is down 8.3% year-to-date.
Stock prices of teams could be lower for reasons unconnected to expectations of team values, such as widespread selling of ETFs or mutual funds that hold the shares in their portfolio. That can force prices lower generally as fund managers need to sell to fund redemptions.
Sports teams have been good business for Arctos. Entering 2025, the firm had $11.3 billion in sports-related funds (it has another $2.7 billion in a separate strategy to provide liquidity to the investment community.) In April 2024, Arctos had about $7 billion in sports-related assets.
Much of that asset growth probably comes from new fundraising. Comparing an April regulatory filing called Form ADV, which details assets, and comparing it to Arctos’ regulatory filing to the same one two years ago shows some growth in existing funds. Assets reported in both sets of disclosures and which appear to be closed to new money show growth between 12% and 15% over the two years, or 6% to 7.5% annually.
Arctos Sports Partners Fund I, for example, reported $3.58 billion in assets as of March 31. Two years ago it reported $3.21 billion in assets. It’s important to note that Form ADV regulatory disclosure is used by regulators to evaluate systemic risk to the financial system, rather than provide information meant for public consumption, such as whether funds within Arctos’ sports strategy are closed to new money or have seen withdrawals. Because of that, it is possible the performance estimate is incorrect.
Arctos is probably the largest institutional investor in North American sports. Through its funds it has ownership stakes in at least 15 teams in the four largest American sports leagues, including, most recently, the Buffalo Bills.
