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With the recent democratization of the financial markets, more and more retail traders have dipped their toes into the water. But while professionals may use various types of analysis to make their trading decisions, many of these retail traders have taken different approaches.
There’s a whole host of different routes they can go down. Some are rather novel, like taking financial advice from random TikTokers who dance while pointing at stocks “going to the moon”. Others, on the other hand, have taken more traditional approaches, such as buying index-tracking mutual funds and ETFs or working with a financial advisor to adjust their exposure as they approach retirement.
Another way that retail traders have taken to picking stocks is to purchase companies that they know a lot about. This may, on the surface, seem somewhat immature that just because you like to take Uber rides everywhere, you should invest in the ride-sharing company.
However, if your regular use of the company allows you to see its value and gives you an opportunity to speak to other users of the service that are also high spenders and passionate, it may provide you with insight that other investors may not see.
The same can apply to a sport. For many people, a sports league and/or team is their first and deepest passion. It may be a relationship that they’ve inherited in a multi-generational chain.
For that reason, sports teams, leagues, and other related businesses can become attractive to these retail investors. That’s not to say they’re not good investments or that professional traders wouldn’t spot value in them using technical analysis or discounted cash flow analysis, but just that retail investors may be making these decisions for different reasons.
Regardless of how you arrived at the decision to invest in sport, here are of the different ways you can gain exposure for your portfolio.
Sportsbooks
Sportsbooks may not be the first area you think of when looking to invest in sports, but it may actually be one of the most attractive areas at present. This is because the sector continues to grow and, in many markets, has a lot more room to keep expanding for the foreseeable future.
This is especially true in the United States where sportsbooks are currently locked in a race for market share. Their efforts in this pursuit include sponsoring major league teams, giant TV ad campaigns, and offering juicy promotions like free bets to encourage new customers to sign up.
For punters, this is a great time to get into sports betting because there are so many offers available. So many, in fact, that sites like OddsChecker have sprung up to help bettors find the best deals for them.
Many of the biggest bookies are publicly traded, so finding stocks to acquire won’t take very long.
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Teams
Teams are some of the most obvious options for fans when they’re looking for a business to back. This comes back to their intimate knowledge of the club and their emotional connection to it. That said, in many cases, sports teams are highly profitable enterprises thanks to their entitlement to a share of the lucrative TV rights deals and their huge sponsorship contracts.
However, investing in them isn’t always easy or possible. In the US, most major league teams are privately owned, so their shares aren’t traded on the open market.
In Europe, there are more opportunities. Manchester United, Juventus, Celtic, Borussia Dortmund, Benfica, and Porto are all public companies.
Leagues
Investing in leagues is even harder than teams. Almost all major leagues are private entities, often collectively owned by the clubs that compete in them and/or their national regulator.
For example, the English Premier League is owned entirely by the 20 teams that compete in it. Ownership does, however, change hands because of the league’s promotion and relegation mechanism.
No shares in any US major league are available on any exchange, the same is true in Europe, and in the case of international competitions like the FIFA World Cup and the Olympics.
The biggest tradable sports league is Formula 1. Through its FWONA and FWONK share classes, it’s possible to gain some exposure to the world’s most-watched motorsport.
In summary, those interested in gaining exposure to professional sports have only a few options in the wake of the fact that most entities remain in private ownership. There are, however some stocks that may prove to be attractive under the right circumstances.
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