Basketball idol Michael Jordan played hardball with carmelo anthony at the negotiating table in 2011. It inspired the young NBA star on a business trip that led him this week to set up a $750 million private equity fund, ISO7 Growth equity.
“We’re fighting for a deal, and Michael is coming,” Anthony said in an interview with VarietySportico’s sister publication, chronicling his time as a player representative during the 2011 NBA lockout. Jordan was a legendary player, but when he sat across from Anthony he was an owner team, firmly focused on dollars and cents. “We had to look at MJ like, ‘You’re not the player anymore. You look at it from a business perspective; I look at it as if I have to protect my players.
Even though Anthony and his fellow players had to endure a five-month lockout before getting the deal that led to more than a decade of NBA peace, he isn’t bitter about the experience. On the contrary, it inspired respect for the other side of the sports industry.
“Seeing the landscape of the sports industry from the inside, hearing that information as a player, sitting across from the owners and being able to operate within the ABC deal and the rights agreements media…many of us [players] didn’t understand, as athletes, how to approach it,” said the 10-time star player.
Fast forward to today, and the formation of Isos7, with Isos Capital co-founders and WWE veterans George Barrios and Michelle Wilson, pushes Anthony further down the path he envisioned becoming. team owner. Isos7’s main objective, as Sportico first reported on Thursday, is equity participation in the major leagues’ first division teams. In the short term, this means taking equity stakes from sponsors in the four major North American leagues – MLB, MLS, NBA and NHL – which allow institutional investors to hold passive minority stakes. Isos7 will also look for shares in top teams and leagues outside of the United States that have been more open to ownership control from pooled sources of capital, such as European soccer.
In total, Isos7 is seeking to raise $750 million to make investments of $50 million to $100 million each, according to a press release from Isos Capital on Friday morning. All three partners declined to discuss potential fundraising activity, sources of capital or their target assets, citing regulatory bans on marketing to unaccredited investors.
“It’s not a venture capital fund,” Wilson said in an interview. “We are looking for companies, teams, leagues, sports betting and adjacent companies that are profitable or have a short-term path to profitability. Strong trading fundamentals are always the first thing we look for. Beyond that, the ability to build things like a global fanbase, global appeal, and fan engagement – like what we did in WWE – is really important to us.
Wilson and Barrios are best known for their long stints as WWE executives, capped off by managing the company under Vince McMahon as co-chairmen from 2018 to 2020. (The pair have since returned to WWE as board members with the reappointment of McMahon as chairman). During their time at the wrestling giant, WWE’s enterprise value increased by almost 400%, while revenue increased by around 90% to $960 million. The executives said their experience in helping to grow the business at scale while expanding its appeal to women, minorities and in non-U.S. markets like India will not only allow them to invest in sports ventures, but will help them grow as partners in what they see as a growing global market for sport.
“You’re going to have 2.5 billion more people in the content ecosystem over the next five to six years,” Barrios said in an interview, citing the expansion of internet access around the world. “Global GDP will grow by 30 to 40%, especially in India, Africa and China. We believe that sports rights holders will benefit.
As Isos7 seeks to invest, in part, in top-tier sports leagues, the gains for sports assets will be widespread, Barrios added. “It’s not just driven by the trophy asset.”
Each of the three sees its trading journey culminate in the new fund, which jumps into a sector recently uncovered by Wall Street. Anthony, shortly after helping lock down the social peace of the NBA, formed Melo7 Tech with his friend Stuart Goldfarb, a venture capital investment arm focused on consumer technology. Melo7 has invested at least $73 million in more than 20 deals, according to data compiled by S&P Capital IQ. They include everything from an early stake in DraftKings to taking a position in African news and data provider Stears News in October.
But Melo7 and its seed investments were only halfway down the path it wanted, Anthony said. When Goldfarb introduced him to Michelle Wilson and George Barrios, it became clear what the next step should be. “There are a lot of similarities in how we think, how we operate and what we want to achieve,” Anthony said.
The timing was fortuitous. Barrios and Wilson had just struck a deal that took bowling tour operator and venue owner Bowlero public through their $225 million SPAC. Their successful deal in an otherwise depressed market paved the way for Isos7’s even more ambitious project.
And the opportunity in global sport is enormous. Teams in the world’s top sports leagues are worth some $400 billion, while the leagues themselves are worth $150 billion. (These numbers include the NFL, which does not allow institutional investments.) The growth in the valuation of sports teams over the past 25 years has far exceeded that of the stock market. Part of Isos7’s strategy is similar to that of peer funds Arctos Sports and Dyal Homecourt: buy minority stakes in major league teams at a typical limited partner discount (often 35% off a sell valuation of control) and benefit from the appreciation of team evaluations. These funds can liquidate positions over time by selling to other buyers interested in a minority stake, or in a control sale, in which limited partners have the option of being bought out at full valuation, such as Dyal Homecourt did it with the Phoenix Suns. .
However, like most general private equity funds, Isos7 likely finds greater growth opportunities outside of the limited partner strategy. These include cultivating portfolio companies to fully realize their market potential, buying controlling stakes in entities and managing them for growth, and making potentially fast-growing investments in sports and technology. emerging, driven by the global economic and demographic factors described by Barrios. Isos7 aims for around 80% of the fund to be invested in blue chip properties, with around 10% dedicated to emerging sports and the remainder to sports-adjacent investments, such as technology or consumer products.
To unearth promising prospects, the trio has set up an experienced management team. Brian Flinn, who joined Isos Capital last year after leading various WWE business units including as chief marketing officer, is a partner in the new fund, overseeing the investment and operations teams. Rob Pietroforte, who has experience at Genius Sports and Raine Group, is managing director, while Goldfarb, Anthony’s venture capital partner, takes on the role of senior strategic advisor to Isos7. Sheetesh Srivastava, who has helped grow WWE’s presence in Asia, is the fund’s managing director for India and Southeast Asia.
Isos considers the diversity of its leaders as a strength. Data from the Knight Foundation shows that only 1.6% of private equity assets are managed by women and only 4.5% by minorities. Additionally, Isos7 says it will direct 1% of its stake to support underserved populations and communities. Deferred interest is the accumulated profits of portfolio investments that fund managers receive as part of their compensation. This means that if the Isos7 fund does well, so will some of those traditionally left out of Wall Street’s wealth-building engine.
Additional reporting by Eben Novy-Williams.