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Smith Entertainment Group — the parent company of the Utah Jazz and Vivint Arena, as well as a shareholder in entities including Real Salt Lake and Rio Tinto Stadium — added private equity firm Arctos Sports Partners on Friday as a minority investor with the stated goal of bringing The third professional sports team was brought to Utah.
Arctos’ investment in SEG will include stakes in the Jazz (pending NBA Board approval), RSL and Vivint Arena.
Still, SEG’s press release clarified the headlines, stating that the group “intends to bring a third professional sports franchise to the state.”
“We are excited to partner with Arctos. They are committed to Utah and invested in this community and our sports teams and facilities,” Smith Entertainment Group chairman Ryan Smith said in a statement. “As SEG continues to build the professional sports landscape in the state, the Arctos partnership brings a strong commitment to Utah Sports and deep ties to all major sports leagues.”
What is Arctos Sports Partners?
These bears are models “partner”[ing] Work with owners and leagues to increase liquidity and financial flexibility for ownership groups” which “acquires passive minority stakes in professional sports franchises and provides bespoke liquidity for sports franchise control owners and managers and passive growth capital solutions. “
The company has invested in more than 20 sports groupsand is the first company of its kind to own a stake in a team in the NBA, NHL, MLB and MLS.
It currently owns 17% of the Sacramento Kings and recently increased its ownership of the Golden State Warriors from 5% to 13%. It directly owns five Major League Baseball teams (Dodgers, Cubs, Giants, Astros, Padres), two NHL teams (Tampa Bay Chargers, Minnesota Wilds), several European football clubs and the Premier League Hockey League. Arctos has also invested in Fenway Sports Group, the parent company of Premier League football club Liverpool FC, MLB Boston Red Sox and NHL Pittsburgh Penguins.
It already owns a minority stake in local Major League Soccer club RSL, which SEG invests in January this year.
according to Sportico report last December“The NBA, MLB, MLS and NHL have all changed their ownership charters over the past 18 months to allow private equity funds to invest in franchises. The eased restrictions give owners a new way to access capital and enable It becomes easier to sell minority stakes that have become difficult to sell.”
However, the same report details the restrictions on such deals, noting that in the NBA’s charter, “institutional investors cannot own more than 30% of a team, and no single fund can own more than 20% of the franchise.” rights. Most funds, including Arctos, can only own equity in up to five teams.”
What does this mean for sports in Utah?
SEG’s press release noted that it and Arctos are “bullish about Utah’s sports and entertainment market” and that the two companies are “aligned” on the idea of bringing another professional sports team to Utah.
SEG sources say the third team will play a unique sport that the state does not currently have. That means the discussion is centered on the four major North American sports leagues, which seem to boil down the options to the NFL, MLB and NHL.
The NFL seems particularly unlikely, especially since the league “still prohibits professional investment in teams,” As pointed out by the Financial Times. Beyond that, the cost seems prohibitive. Even with Smith selling Qualtrics, the experience management company he co-founded, and a “substantial financial investment” from Arctos, the NFL’s costs remain staggeringly high. The Houston Texans (the league’s newest new team, returning for their first season in 2002) are spending $700 million on expansion.
at the same time, Denver Broncos sold to new owners in June for a staggering $4.65 billion.
Given the growing foothold of professional football in the sports arena, the price tag is exorbitant.
So what about professional baseball and hockey? Can an existing MLB team move here? Can the NHL expand west again, given the strong support for its two newest teams, the Vegas Golden Knights and Seattle Krakens?
Even if that happens, it doesn’t seem to happen right away.
Indeed, in baseball, the Oakland Athletics have struggled with local government officials to find a solution A new stadium to replace the dilapidated Oakland Coliseum, and has been seen as a candidate for relocation.However, there are A new waterfront pitch proposal This seems to have some support.If this is unsuccessful, the team has seriously Discussion of moving the franchise to Las Vegas. The Tampa Bay Rays also have ongoing stadium issues.
Beyond that, it’s hard to see Salt Lake City overtake Portland, Oregon, as the next viable MLB area because of the long-standing grassroots movement known as Portland Diamond Projectit has a well-established plan to bring another MLB team to the Pacific Northwest.
But what if the league expanded to 32 teams?Although Major League Baseball has not added new franchises since the Arizona Diamondbacks and Tampa Bay in 1998, and the stadium issues in Oakland and Tampa appear to offer arguments against expansion, Commissioner Rob Manfred and Players Association executive Tony Clark recently say they want to play 32 teams.
Still, there are countless cities competing for a team (including Portland, Vegas, Charlotte, Montreal, and Nashville), and they’re not cheap: Manfred suggested last year that MLB could look to expand the franchise The cost per team is more than $2 billion.
Utah Gov. Spencer Cox said last month, “Utah wants a baseball team.”
“There’s definitely a day when, as the fastest growing state in the country, I think one day we’re going to get MLB here,” Cox continued. “I don’t know if it’s this round or the next one, but we’d love to have a baseball team.”
But might the NHL make the most logical sense?
While the ECHL’s local Utah Grizzlies are not particularly attractivewhen the NHL plays Preseason Exhibition at Vivint Arenawhich usually features the Los Angeles Kings, who have a high attendance rate.
Still, after adding Las Vegas in 2016 and Seattle in 2021, the league now has 32 teams (though doing so costs less than other sports, with the Golden Knights reportedly paying $500 million for the expansion) fee, while the Kraken $750 million).
However, given the league’s last expansion was in 2000 (the Columbus Blue Jackets), it may not be keen to have the most franchises in the Big Four. Even if the NHL does want to add more, Salt Lake City will again face stiff competition.
Quebec City has dreamed of bringing a team back since the Nordiques were released on bail to become the Colorado Avalanche in 1995. The city already has state-of-the-art, NHL Stadium at the Videotron Center. Meanwhile, Texas billionaire Tillman Fertitta, who bought the NBA Rockets and Toyota Center in 2017, said he would love to Add Houston’s first hockey team Old Eros from the Old World Hockey Association.
An NHL relocation could be an option, though, with the Blue Jackets, Arizona Coyotes, Florida Panthers and New York Islanders all apparently suffering some level of financial distress and attendance issues.
Still, this is all in the realm of theory, and that’s a question for the future.
But that’s a question, and SEG and Arctos say they’ll answer.
“We believe in Utah and all the amazing things happening in the state, and we believe SEG has the potential to be the next big sports and entertainment conglomerate,” said Chad Hutchinson, partner at Arctos Sports Partners. “…Arctos works with forward-thinking ownership groups, and Utah has experience with this at SEG. Their commitment to giving back to their communities and building world-class franchises aligns perfectly with Arctos’ mission. We’re delighted Working with Ryan and the team to explore more sports-related opportunities across the state and the opportunity to build a premier sports and recreation center here.”
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