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Investors want to harness the power of sport to build up a business or brand

Date: 09 Jun 2016

Citywealth

Katherine Brace, director in Rothschild’s Wealth Management business and former HSBC Private Bank sports, entertainment specialist, says streaming platforms, on-line betting and gaming, and wearable technology, are key investment trends in sports.

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You’d expect UHNW investors to flock to sports business due to their long establishment, dominance in the industry and strong brand loyalty. However, such businesses are often riskier than more traditional corporate establishments and can be far too reliant on individual stars who can misbehave, affecting performance and stability of the business. For that reason, UHNW investment has traditionally avoided the sports industry and focused more on ancillary businesses which support them like equipment manufacturers, clothing companies, or media. Aside from those seeking to own football clubs which is not always the most sound investment decision, there has been no real change in this investment trend and it’s hard to see where any changes may come.

What trends do you see?

Key investment trends starting to emerge are streaming platforms, on-line betting and gaming, stadiums and infrastructure, and wearable technology. Investors in sports increasingly want to harness the power of sport to build up a business and brands, rather than put direct investment in to sport.

Property has also traditionally been the dominant investment preference for sports stars and continues to pose the biggest challenge for investment managers. Whilst the asset class has performed very well over recent years, I always try and counsel my clients that investing in property is fine but they need to diversify both across the industry, as well as in other asset classes. If they only invest in villas on golf courses and those markets collapse, all their wealth will go with it. With the headwinds affecting property particularly uncertainty over Brexit, government action against foreign nationals and their ownership of UK property, stamp duty hikes, reduction on tax benefits for Buy To Let’s and reduction in CGT for assets aside from property, there is some movement away from it.

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