The Liquidity Gap Creating the Next Market in Sports Investing

With sports investing continuing to institutionalize, a functioning secondary market for team ownership has developed over the past year. A second, less visible liquidity problem is forming one level down, in the operating companies functioning around the industry, and it hasn’t drawn the same attention yet.

The team-stakes problem is well documented at this point. League rules restrict who can buy a stake and how, qualified-buyer requirements narrow the pool further, and hold periods routinely run decades past a standard ten-year fund. That mismatch between asset duration and fund duration is what forces the issue, and it falls squarely on GPs to solve, since returning capital back to LPs is the goal, after all. Arctos built a solution directly, launching Arctos Capital Markets to match qualified buyers with team ownership positions, and it entered 2025 with $11.3 billion across its sports-related funds, plus a separate $2.7 billion vehicle explicitly built to provide liquidity to the investment community, according to Sportico. When KKR acquired Arctos, KKR’s own stated rationale leaned on this directly, citing the broader secondaries market, which Evercore measured at approximately $226 billion for 2025, as part of the justification. That’s an unusually direct acknowledgment that the liquidity mechanism itself carried real value, separate from the league relationships.

The operating-company problem shares the same root cause, a GP’s obligation to return capital to its own LPs, but it plays out a little differently. Data providers, streaming infrastructure, agency platforms, and betting technology – the companies teams and leagues actually run on – were largely funded by a wave of dedicated sports venture and growth capital raised between roughly 2018 and 2021. Those funds are aging into a normal distribution window at a moment when M&A and IPO activity across private markets broadly have both slowed, which strains a GP’s ability to return capital the conventional way. Evercore’s full-year 2025 report put total secondaries volume up 41% over 2024, split between $120 billion in LP-led transactions and $106 billion in GP-led transactions, where a manager moves a portfolio company into a new vehicle rather than selling it. GP-led activity alone grew 51% year over year, now sitting close to half of total secondary volume.

There’s a second, separate pool of illiquidity sitting inside the same companies, one that doesn’t belong to the GP to solve. Concentrated cap tables mean founders, early employees, and first-check investors often hold a large share of the equity directly, and none of that is a fund manager’s problem to fix unless the manager is the one buying it. A GP’s fiduciary duty runs to its own LPs, not to a founder’s personal liquidity or an employee’s vested shares. What’s changing is that dedicated secondaries capital is increasingly choosing to step into that gap on purpose, buying equity directly from the people who hold it rather than waiting for a fund-level transaction to surface it.

The demand side of this is well documented, even outside sports. Michael Bego, managing partner of secondaries firm Kline Hill Partners, put a number on the shift: distributions that once returned 20% to 25% of a fund’s net asset value to LPs in a typical year have dropped to roughly 11%, leaving LPs effectively cash-flow negative for close to five years running. His read is that this isn’t cyclical. “The pressure on exits and the resulting demand for secondary solutions will drive long-term, structural growth for the secondary industry,” he said. That pressure is exactly what’s pulling capital toward both halves of the sports ecosystem at once, team stakes and the companies operating within their orbit, even though the two are structurally distinct problems.

A simple way to hold the two problems side by side.

That bottom row is the piece worth sitting with. On the operating-company side, the clearest signal so far is fresh capital positioning ahead of the exit wave rather than reacting to it. Bruin Capital raised its fourth and largest vehicle in January 2026, $1 billion, led by Josh Harris’s 26North and by TJC, aimed at what Bruin calls second-level enablers, companies that support teams and leagues without owning a piece of them. Bruin’s own portfolio has already produced one realized exit in the conventional sense, with the sale of golf technology company Full Swing to Versant, expected to close in the second half of this year. (Worth noting that this was a traditional sale, so it shouldn’t be read as a proof point that a formal secondaries market for sports operating companies has arrived.)

Multiple liquidity mechanisms are emerging in parallel here. Direct matching for team stakes, GP-led vehicles, and direct secondary purchases on the opco side. Betting on all of it converging into one dominant structure misreads how different the underlying holders and their constraints actually are. A GP managing their own fund’s distributions is solving a different problem than a firm built specifically to buy out a founder or an early employee.

Both strategies are real, but they’re not the same business.

The distinction worth drawing from all of this: liquidity pressure inside a fund is a GP’s job by definition, and liquidity pressure sitting with the people who hold equity outside the fund structure is not, until a firm deliberately builds capital to go get it. Arctos did that on the team-stakes side before most of the market had a name for it. The comparable opportunity on the operating-company side is still mostly unclaimed.

This is purely informational and should not be seen as investment advice.