Chart of the Week (July 19) - Introduction to RASFI and the Long-Term Performance of Sports

In June, we launched the Ross-Arctos Sports Franchise Index (“RASFI”) in partnership with the 美国密歇根大学 - 罗斯商学院 . Our goal was to produce the first-ever purely data-driven benchmark of investment performance of North American sports franchise assets. RASFI serves sports industry investors, asset owners, league and team executives, and the wider sports business community as a universal standard for investment performance in the largest North American leagues: Major League Baseball (MLB) , National Basketball Association (NBA) , National Football League (NFL) , and the National Hockey League (NHL) .

RASFI comprises over 425+ transactions within the Big Four beginning in 1923. The predominant valuation methodology is private transaction comps, weighted to more recent data, on a revenue multiple basis to produce its estimate of the average franchise value.

In this week’s Chart of the Week, we wanted to highlight the strong performance of RASFI over the long-term. From 1960 to the present day, RASFI has produced a CAGR of ~13% with a sub-0.2 correlation relative to other asset allocation options (e.g., stocks, bonds, commodities, and cash). More recently, Sports has returned ~12% annually since 1992 with 1/3 the volatility of traditional U.S. equities. ?

A major theme in our prior research about the asset class is what we’ve labeled the ‘resilience of sports’. What we observe in the data is that spending by consumers on premium sports – whether directly on tickets, advertising spending on sponsorships, and media companies’ demand for content rights – is a particularly sticky form of demand. The result is low volatility of the asset class given their historical return. This is especially true during times of distress. In addition, RASFI has produced low market betas, due to the fact that they are scarce, supply-constrained assets with consistent demand from the wealthy and are businesses with strong underlying fundamentals (i.e., growing in revenue and EBITDA).