Wall Street law firms are making significant inroads into the booming sports deals market, competing with established rivals that have long served billionaire buyers and sellers. The increasing value of sports franchises is drawing high-net-worth investors to a limited number of available teams. This has led to new competition among firms traditionally dominated by incumbent players skilled in negotiating the sales of professional sports franchises.
The sale of the National Football League’s Washington Commanders highlights this trend. Billionaire Josh Harris turned to Davis Polk & Wardwell, including firm chair and managing partner Neil Barr, to facilitate his record-setting $6.05 billion bid. Barr remarked, “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. It is a strategic focus for our firm. They’re big, complicated, high-profile deals.”
This shift comes at a time when law firms are experiencing a decrease in traditional mergers and acquisitions work. Despite 2023 marking the worst year for M&A in a decade, sports-related deals have reached record-breaking values for the third consecutive year, totalling approximately $25 billion, according to data compiled by Bloomberg. Cravath, Swaine & Moore, although a newer player in sports transactions, represented the family of Daniel Snyder, the selling owner of the Commanders. The firm’s head of the corporate department, Mark Greene, noted that the transactions’ complexity and size make it an attractive focus for the firm.
Firms like Wachtell, Lipton, Rosen & Katz are also entering the sports arena, capitalizing on their experience with high-profile public company deals. Wachtell recently advised the PGA Tour on a $3 billion investment from a consortium of sports team owners. The firm’s reputation has also been bolstered by advising private equity titan David Rubenstein in his acquisition of Major League Baseball’s Baltimore Orioles for more than $1.7 billion.
Holding Their Own
Incumbent firms, such as Hogan Lovells, Covington & Burling, Proskauer Rose, DLA Piper, and Sidley Austin, remain key players in almost every major sports transaction. These firms pride themselves on their intimate knowledge of league rules, which serve as regulatory guidelines for these unique deals. For instance, Hogan Lovells played a crucial role as specialty “sports” counsel alongside Davis Polk in the Commanders transaction and represented the Walton-Penner family in their $4.65 billion acquisition of the Denver Broncos.
Matt Eisler, a seasoned sports dealmaker at Hogan Lovells, emphasized the competitive edge his firm has due to its thorough understanding of league regulations: “That’s really our competitive advantage.” However, he acknowledged the increasing competition: “Our biggest challenge is fighting for an edge to stay on top. As the other players get smarter, we become less scarce. And then it’s really more about how do we maintain that pole position?”
Meanwhile, DLA Piper’s Richard Rubano and his team have been expanding their expertise to include lawyers with traditional private equity and M&A backgrounds, given the similarities between sports deals and these markets. Rubano, who has advised on the sale of the Houston Rockets and Phoenix Suns, underscored the importance of understanding clients’ goals and league rules to succeed in the niche market.
Private Equity
The growth of private equity investments in American sports leagues has introduced additional competition in this close-knit, high-profile market. Firms like Kirkland & Ellis have secured a foothold by advising private equity funds purchasing stakes in sports teams. Notably, Kirkland advised Arctos Capital on raising an initial fund worth over $2.1 billion in 2021 and a second fund of $4.1 billion in April 2023. The NFL is considering pre-approving a handful of institutional investors for private equity ownership, a move that Bloomberg reported is expected to expand the market significantly.
Lateral Hires
Proskauer Rose partner Joe Leccese remarked that the influx of private equity in sports has broadened the list of law firms with sports deal credentials. However, the effect has been positive for incumbent firms, which typically have an abundance of private equity expertise. Most of the deals in the “limited partner” market, offering slices of team ownership, are still handled by the established players.
Although lateral hiring has defined the broader Big Law landscape, there have been few moves amongst top sports industry lawyers. An exception was Sidley Austin’s 2022 acquisition of Irwin Raij and Charles Baker from O’Melveny & Myers. The pair have managed high-profile deals, such as advising Gabe Plotkin on the purchase of the NBA’s Charlotte Hornets and representing minority investors in the Commanders deal. Their move to Sidley has facilitated the expansion of their business into European markets, where private equity investments in soccer clubs are thriving.
For more details on this ongoing shift in the legal landscape, Bloomberg Law provides an in-depth report on Wall Street law firms’ increasing involvement in sports deals.