Private equity continues its incursion into the world of sports.
Otro Capital (New York City) has closed its inaugural sports fund, Otro Capital Fund I, with $1.2 billion in committed capital, affiliated investment vehicles included. The goal had been $500 million. As of this past Dec. 31 the firm has about $1.3 billion in assets under management.
Otro is calling Fund I “the largest first-time, dedicated sports buyout fund ever raised globally.” Among the investors are pension plans and retirement systems, wealth platforms, endowments, foundations, family offices and individual investors. One of the retirement systems is known: the California Public Employees’ Retirement System (CalPERS) has put in $50 million.
The story so far
According to Sports Business Journal (SBJ), about one-third of the inaugural fund is already invested – in three deals:
- Alpine Racing Ltd.
- Two Circles
- FlexWork
Otro’s first deal, struck in 2023, was with Renault for the purchase of a 24 percent stake in Alpine Racing, parent of the Alpine Formula 1 Team. The price was €200 million, which Otro raised in tandem with RedBird Capital (New York City) and Maximum Effort Investments (Oakwell Hall Farm, UK; co-founded by movie star Ryan Reynolds).
The individual investors include Kansas City Chiefs teammates Patrick Mahomes (quarterback) and Travis Kelce (tight end), PGA golfer Rory McIlroy, and heavyweight boxer Anthony Joshua.
Otro’s deals with Two Circles and FlexWork followed in 2024 and 2025 respectively. Two Circles (London) is a marketing agency specializing in sports and serving such clients as the NFL, the Premier League, UEFA, FIFA, Formula 1, the IOC, Nike and EA Sports. FlexWork (Canton, Connecticut) is both a marketing company and the organizer of youth sports camps led by professional athletes. The terms of these two deals are undisclosed.
What’s next
Sportico, citing “a person familiar with the situation,” reports that Otro is now planning to make ten investments in sports teams or middle-market companies. It would be hewing to its usual practice of about $75 million per deal unless circumstances warrant more.
One of the co-founders, Alec Scheiner, lays out the firm’s strategy in an interview that ran in SBJ early this month. In short, Otro seeks control. This rules out the big leagues in North America, all of which require PE funds to be passive investors.
“Since we will avoid minority stakes in the four major leagues in the U.S., what gets us excited is those small- to medium-sized businesses that have carved out a really unique niche for themselves,” Scheiner explains to SBJ. “You can see that in youth sports, you can see that in college athletics, you can see it in niche sports, you can see it in spinoffs from pro sports. And you can see it in ancillary businesses that support all of those sports.”
The deal with Two Circles, which serves budding athletes 5 to 18 years of age, fits within youth sports. As for slightly older athletes: “It’s obvious that collegiate sports is going through a transformation, and we believe that groups that have operational experience and backgrounds could be able to help universities and colleges navigate this new terrain.”
Tanish Arora, author of the Substack called 365247 Sports (i.e., 365-24-7), sums it up thus: “The firm’s thesis hinges on a blunt but accurate view of the market: most sports assets aren’t run well enough to maximize the power of the IP they control. Otro steps in where others can’t or won’t roll up their sleeves.”
A deal in the works
Hence Otro’s interest in, no doubt among others, the University of Utah, which finds itself strapped for cash while competing with schools in such well-endowed conferences as the Big Ten and SEC.
Utah’s financial straits have brought Otro within striking distance of the world’s first PE deal with a member of the National Collegiate Athletic Association (NCAA), the non-profit that oversees university athletics in the US, Puerto Rico and some of Canada.
The NCAA steers the competitive lives of some 500,000 university athletes at 1,100 member schools, and those schools award about $4 billion in athletic scholarships every year.
More on this story in a separate article.
About Otro
Otro Capital was founded in 2023 by Brent Stehlik, Niraj Shah, Isaac Halyard and the aforementioned Alec Scheiner. Three of them hail from RedBird Capital, one of Otro’s partners in the Alpine deal.
Scheiner served as a partner at RedBird, Shah and Halyard as Vice Presidents focused on sports, media and entertainment. They were involved in deals with AC Milan, Toulouse FC, Fenway Sports Group (FSG; Boston Red Sox, Liverpool FC), OneTeam Partners (collectibles and NFTs), On Location Experiences, Dream Sports, Rajasthan Royals (IPL cricket), Skydance Media, SpringHill Company (LeBron James), Wasserman and YES Network (cricket).
RedBird’s FSG deal was for the purchase of a $750 million minority stake. The firm soon thereafter helped SpringHill acquire a stake of its own in FSG and sell a stake in itself to Nike and others.
Before joining RedBird Scheiner was in the NFL, serving as President of the Cleveland Browns and, earlier still, as SVP/General Counsel for the Dallas Cowboys, where he helped develop AT&T Stadium and find sponsorships for it. Through Otro he is now serving on the board of Alpine Racing.
Shah was previously an Associate at Apax Partners and an Analyst at Goldman Sachs IBD; Halyard, an Investment Banking Analyst at Goldman Sachs TMT.
