Who the heck is Giants owner Arctos Sports Partners anyway?
You might be able to guess an answer to this one
This is the twelfth installment in our series on who exactly owns the Giants. So far, we have covered real estate mogul Scott Seligman, private equity guy Phil Halperin, real estate mogul Jed Walentas, medical technology investor David Schnell, radio station owner/former Yahoo board member Arthur Kern (now no longer listed as an owner), lady of mystery Nancy Olsen, Republican super-donor Charles Johnson, Manila business mogul George Drysdale, charter school supporter Paul Wythes, Jr., Hong Kong real estate guy Philip Morais, former professional athlete Buster Posey, and Rich Tech Guy Aneel Bhusri.
Someday I’ll put that prologue in a separate place, because otherwise it’ll be half the article by the time I’m done.
Anyway, let’s look at the big board!
It’s so full you can barely find a name I haven’t done yet!
Today, our victim is Arctos Sports Partners, a private equity fund. Or are we…their victim? Huh? Huh? Makes you think!
Arctos Sports Partners was founded in 2019 by Ian Charles, formerly a co-founder of Cogent Partners and a Partner at Landmark Partners. If you don’t know either of those names, boy, you just don’t know finance (I personally do not know either of those names, and just don’t know finance). Charles is currently a co-Managing Partner of Arctos along with David J. O’Connor, formerly the President and CEO of Madison Square Garden Company, James Dolan’s company which owns the Knicks and the New York Rangers, among other assets. O’Connor had previously been at CAA, the “worldwide entertainment and sports agency,” where he had worked his way up to Managing Partner.
So Arctos Sports Partners has some firepower. Charles and O’Connor were introduced in 2019 and hit it off, officially starting their company that year, and launching to the investing public in April 2020. Their first fund closed in October 2021, with $2.1 billion in investments, and they launched a second fund shortly thereafter, with the most recent reporting on that (from May) saying they had raised half of their goal, $1.1 billion, and that all their assets totaled up to around $5 billion.
So why do they do this? To put it simply, Arctos sees an opportunity in sports. They see professional sports franchises as scarce resources which protect against inflation and already have stable monetization. Add on top that over the last 20 years, the returns on sports franchises have beaten the returns on private markets and on most investment strategies, and the strategy of investing on sports becomes almost obvious. At that point, all you need is the money.
And because of all that fundraising, Arctos certainly has the money. They’ve used it to buy minority stakes in six major league teams: Not just the Giants, but also the Red Sox, Dodgers, Cubs, Astros, and Padres (the Red Sox one, since it comes through Fenway Sports Management, also includes a part of the PIttsburgh Penguins and Liverpool FC). They also have stakes in the Warriors and Kings in the NBA, the Lightning and Wild in the NHL, some more soccer teams, and the Premier Lacrosse League.
They are, in other words, minority share moguls. They would likely own pieces of several NFL games too if the NFL allowed private equity to buy into their franchises; they don’t allow that, and even MLB, the first major American sports league to okay it, only finalized that change in 2019. There are no limits on how many MLB teams a corporation can own, though both the NBA and NHL do have a limit.
Arctos is the logical endpoint of sports, because it view the Giants as purely a vehicle for its own profit. Baseball itself is not the goal; winning is largely irrelevant, beyond the financial impact of a winning team. But that only incentivizes a team to be in the playoff hunt, to spend exactly enough money to win 86 games because anything more than that is an inefficient use of resources. A private equity fund is after ROI and only ROI, and their vote will be against spending lots of money to make your team as good as possible, and for introducing gambling kiosks .every 20 feet on the arcade, in case you’d like to lose some money today.
Now, I should be fair: as a private equity fund, Arctos is not allowed to own more than 15% of any major league team, and they are not allowed to control a franchise. But that’s all for now. The rules have changed recently, and they can change again. Perhaps, a few years from now, Arctos will be able to own 25% of a team, and then more and then more, and eventually they’ll be running a team. We already know they’re soulless enough to own stock in both the Giants and Dodgers, so there’s no perversion of virtue too sordid for Arctos to embrace.
So who the heck is Arctos Sports Management? Just a company buying up as many sports teams as they can. They are also a company that marks publicly viewable documents on their website as “privileged and confidential,” which isn’t important, but is pretty funny. Most importantly, they are the wave of the future, for good or ill. There’s more of this coming, and it’s hard to imagine that they’ll stay silent partners forever.