The 13% Asset Class With Only 30 Seats
Pro sports franchises have quietly outrun almost everything. The reason is simpler, and more fragile, than it looks.
In 1994, Glen Taylor bought the Minnesota Timberwolves for $88 million. This month, after a long and ugly dispute, the team changed hands at a $1.5 billion valuation. That’s not a typo, and it’s not an outlier. The Los Angeles Lakers sold for $10 billion in 2025.
Here’s the number behind the headlines. Franchises in the big four U.S. leagues, the NBA, NFL, MLB, and NHL, have returned about 13.2% annualized over the past two decades, according to the Ross-Arctos Sports Franchise Index. Over the past year, 16.9%, which reportedly outpaced nearly every other asset class. The capital noticed. KKR is reportedly buying sports-focused PE firm Arctos in a roughly $1 billion deal, sovereign wealth funds are forming consortiums to get in, and minority stakes now make up close to half of all global sports transactions.
So why does a basketball team beat almost everything? It isn’t magic. It’s supply and demand.
The mental model: Supply and Demand
The most basic model in economics is still the most ignored. Price sits where supply meets demand. Move either curve and price moves with it.
Look at the supply side of sports. There are 30 NBA teams. By rule, not by accident. The league decides if and when it ever adds more, and it does so rarely. Supply is close to fixed, frozen by the people who benefit most from keeping it that way.
Now look at demand. A new $77 billion media-rights cycle. Private equity, newly cleared to take minority stakes across every major league. Sovereign wealth funds with patient capital and national agendas. Billionaires who treat a team as the trophy that takes up 90% of their attention even when it’s a sliver of their net worth. Fixed supply, surging demand, one direction for price.
That’s the whole engine. Not a secret sauce. A frozen supply curve meeting a wall of new money.
Spence’s take
Two things are true at once, and you have to hold both. The scarcity is real and durable. The leagues aren’t printing new franchises. But “this asset always goes up” is exactly the story people tell at the top, right when the last buyer is paying for the narrative instead of the cash flows. Past performance doesn’t predict future results, and fixed supply cuts both ways: nothing relieves the pressure on the way up, and there’s very little liquidity on the way down.
Here’s the part that interests me most. For two decades, returns like those sat behind a velvet rope. You needed a nine or ten-figure check to get near that kind of asset. What’s shifting across finance now isn’t any single number, it’s who the rules let participate at all. That’s the problem /mkt works on in its own corner of regulated markets, building on Reg A+ with tZERO’s infrastructure, where access runs through a compliance framework rather than net worth alone.
When something looks like a sure thing, find the fixed supply. Then ask who set it, and who’s still buying. None of this is investment advice.
——————————————————————————————————————
If this was useful, share it with someone who builds things. And if you want the full toolkit of 50 mental models, you can grab my book, Mental Models: How to Think, Act, and Win, on Amazon right now.
This post is for informational and educational purposes only. It is not investment advice, an offer to sell, or a solicitation of an offer to buy any security.