Mark Cuban outlines investment strategy for Harbinger Sports Partners in an exclusive Q&A with PE Hub; PEI Group’s Private Markets 2030 to debut next week
Good morning, Hubsters. MK Flynn here with the US Wire from the New York newsroom.
We’ve got a special treat for you today.
Mark Cuban shares his sports investment strategy in an exclusive Q&A with PE Hub reporter Rafael Canton.
Earlier this year, Cuban teamed up with Steve Cannon, former CEO of AMB Sports and Entertainment (the parent company of the Atlanta Falcons and soccer club Atlanta United), to launch private equity firm Harbinger Sports Partners.
“Financial engineering has been a tool of private equity to unlock value for decades, but with sports I’m a fan experience guy first,” Cuban told Rafael. I’ll share excerpts from the exchange, below.
I’ll also preview Private Markets 2030, a project we’re working on at PEI Group that will debut next week.
Fans first
Sports investing is taking off this year, and Mark Cuban is among those launching new initiatives. The former Dallas Mavericks principal owner launched Harbinger Sports Partners alongside Steve Cannon (the former CEO of AMB Sports and Entertainment, the parent company of the Atlanta Falcons and soccer club Atlanta United) and Rashaun Williams (a venture investor and limited partner in the Atlanta Falcons). In July, Jonathan Mariner, former Major League Baseball CFO), joined Harbinger as a general partner.
Harbinger launched its first fund, a $750 million private equity vehicle, in May. The fund is dedicated to acquiring minority stakes in professional sports franchises across all US major leagues. Harbinger’s strategy will center on acquiring 1-5 percent minority stakes in pro sports teams. Deal sizes are expected to range from $50 million to $150 million.
Cuban’s track record in sports investing is impressive. He bought the Dallas Mavericks for $285 million in 2000 and agreed in late 2023 to sell his majority stake in the team to the Adelson family for $3.5 billion. He retains a minority stake in the Mavericks.
That deal wasn’t Cuban’s first blockbuster. His rise in business began in tech, when he founded IT consulting firm MicroSolutions in 1983 and sold the business to H&R Block subsidiary CompuServe for approximately $6 million in 1990. After selling MicroSolutions, Cuban co-founded AudioNet in 1995, a streaming company that became Broadcast.com. The business went public in 1998 and was later sold to Yahoo for $5.7 billion in 1999.
Cuban has offered his opinions on recent sports podcasts about how private equity’s increasing interest could affect the sports ecosystem and its relationship with fans. That caught the ear of PE Hub reporter Rafael Canton, who reached out to Cuban to dive further into the topic. Cuban agreed to answer questions from PE Hub over email.
Here’s their exchange:
How do you pick the teams that you invest in, and what are you looking to invest in with the Harbinger Sports Partners fund?
We have a proprietary underwriting process that includes over 50 combined years of owning and operating sports teams and leagues that gives us a unique perspective. We include using predictive analytics, unique insights into how team owners and operators differ, financial analysis and whether we can bring strategic value to their value-creation strategic plans. We are focused on North American profitable sports leagues.
You’ve said that private equity is overly focused on valuations rather than on the fan experience and making tickets affordable. What made you decide to launch a private equity firm?
Financial engineering has been a tool of private equity to unlock value for decades but with sports I’m a fan experience guy first. Partnering with Steve Cannon, Jonathan Mariner and Rashaun Williams, who share that perspective, allowed me to start something where I can bring that fan-first mentality and use that as one of the tools to value creation within a franchise. That’s what I’ve done over two decades personally. Our partners have built stadiums, been the CFO of teams and leagues and have helped create liquidity in other illiquid markets like tech. So combining it all made a lot of sense for sports PE right now. It definitely separates us from the rest and is a compelling liquidity partner to owners.
How has your experience as a majority owner of the Dallas Mavericks shaped your investing strategy?
I learned the challenges for minority investors. I think Harbinger will be able to create a unique marketplace for them.
How do you think private equity will change the sports business over the long term?
There are the PE firms that are trying to influence operations of teams. We will be the opposite. We are a great partner for majority owners. Knowing you have minority ownership that understands how operations and economics work makes a big difference. It allows majority ownership to focus on what is best for the team, knowing they have us to help when asked.
Harbinger Sports’ fund comes at a time of serious activity in the sports sector. In June, PE Hub highlighted several sports PE funds launching. The sports investor scene has only seen more activity since, with firms like Apollo launching a sports-focused investment business in September.
What to watch
The alternatives industry has navigated a rapidly shifting landscape and macro headwinds on all fronts over the last five years. As we approach the second half of the decade, it’s time to take stock of the challenges and opportunities facing private markets managers and assess the route forward to 2030.
PEI Group’s upcoming project Private Markets 2030 will explore how the industry can position itself for growth. We’ll take a deep dive into six key trends that private markets managers will need to consider when looking to attract capital and deliver portfolio performance over the next five years.
Starting next week, each week for six weeks, we’ll tackle a new theme and suggest what developments private market managers should monitor closely over the next five years. Along the way, we’ll share insights from thought leaders and provide data analysis.
For PE Hub readers, Private Markets 2030 will reveal how the themes are playing out in the world of dealmaking, including what the trends mean for the future of private equity mergers and acquisitions, deal sourcing, valuations, value creation and exit routes.
I’m looking forward to bringing you the first installment or Private Markets 2030 next week!
Tomorrow, Craig McGlashan will write the Europe edition of the Wire, and Obey Martin Manayiti will bring you the US edition.
Cheers,
MK
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