The Tampa Bay Lightning have a new minority owner.
Arctos Sports Partners, a private equity firm based in New York and Dallas, purchased an undisclosed stake in the team, Lightning owner Jeff Vinik announced Tuesday. The transaction was approved by the NHL and finalized Dec. 31.
The sale gives Arctos a share of Vinik Sports Group, which owns the Lightning and its lease on Amalie Arena, manages the Yuengling Center at the University of South Florida and holds multimedia rights for USF athletics.
Vinik, who remains the team’s controlling partner, said the sale would cause “zero notable ripples” within the organization — there will be no new directors or executives at Amalie Arena or elsewhere, and the new owners’ influence will be “severely limited.”
“I just really liked the people, and we clicked,” Vinik said. “What they’re doing combines three things that I love, which is sports, business and investments. It’s kind of my life. I just really wanted to have a small part in what they’re doing, and they have a small part in what we’re doing here.”
Vinik, who paid a reported $170 million for the Lightning in 2010, declined to say what percentage of the team Arctos now owns, how much they paid, or how they paid it. NHL rules passed in December prohibit institutional investment groups from owning more than 20 percent of a team.
“I bought into the team at a time where the franchise wasn’t doing well and the value was depressed,” said Vinik, a former hedge fund manager. “I invested a considerable amount of money into the team over time, including during COVID. The team has always been financially very strong, both before and after this transaction. We’ve always provided all the resources for us to spend to the cap, and to invest appropriately, strongly, in all our activities, including the community. That was true over the last 12 years before this transaction closed, and it’s true today.”
Founded in 2019, Arctos has become a leader in the burgeoning field of institutional sports investments, with $3 billion in assets under management as of October. That includes stakes in more than a dozen pro teams, including the Golden State Warriors, Sacramento Kings and, through Fenway Sports Group, the Boston Red Sox and Liverpool FC.
Sports franchises tend to rise in value over time, with many now worth more than $1 billion, according to Forbes. The magazine recently valued the Bolts at $670 million. That has made them attractive targets for investors who have little interest in running a team, but plenty of liquid capital.
“In every other asset class that exists, you’ve seen private equity move itself, and investment managers moving themselves, into those asset classes — call it real estate, call it venture, call it telecommunications,” said Will Weatherford, a partner in Tampa investment firm Weatherford Capital and chairperson of USF’s board of trustees. “What you’re seeing here is going to happen in just about every professional sports franchise in every league across the United States and across the world.”
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Arctos co-founders Ian Charles and David O’Conner first approached Vinik at his downtown Tampa office a couple of years ago, before the team’s back-to-back Stanley Cup wins. Vinik said he was “blown away” by their strategic vision, leading to an “ongoing dialogue” with NHL commissioner Gary Bettman about changing league ownership rules to allow institutional investors to buy in. That finally happened last month, paving the way for this deal.
“We believe the Lightning is a best-in-class organization and that Jeff Vinik and his management team are exceptional leaders and operators,” Arctos founder and managing partner Ian Charles said in a statement. “We are excited to be partnering with Jeff and the Lightning as they continue executing on their vision of providing a world-class fan experience, pursuing growth opportunities that expand the business, and serving as stewards of the community asset that is the Lightning.”
While Arctos doesn’t make its individual investors publicly known, industry publication Private Equity International has reported they include the New Mexico Educational Retirement Board and Employees Retirement System of Texas. In 2021, the publication named Arctos its mid-market firm of the year.
The fact that sports franchises not only held their value during the pandemic, but in many cases became more valuable, has helped broaden the appeal of such investments, said Earl Clukies, a financial services manager with tax, accountancy and financial services advisory group EisnerAmper.
“I’m not saying it’s recession-proof or pandemic-proof, but that was probably a really good sign for investors in general, and that’s probably another reason why they’re looing into this type of thing,” Clukies said. “Everything seems to be going in a positive direction.”
Weatherford called Arctos a “very, very reputable group” that matches well with Vinik.
“He does things very methodically and very thoughtfully, and so I have no doubt in my mind that him doing this is going to have a net benefit to this community,” he said. “It’ll work, because everything that he does generally works.”
Bemetra Simmons, CEO of the Tampa Bay Partnership — a coalition of regional business leaders whose goal is advocating for better quality of life in Tampa Bay, and whose leadership council includes Lightning CEO Steve Griggs — called the sale “just good business.”
“He’s still going to be the majority partner, and is still going to be very involved in our community,” Simmons said. “I’ve talked to our partners over at the Lightning and Vinik family office, (and) they’ve reassured that that’s going to continue to be the case. He’s an amazing community advocate for a lot of issues the partnership cares about, and I don’t see that changing with him selling a portion of the team.”
Along with the Lightning, Arctos also recently bought minority stakes in the Pittsburgh Penguins and Minnesota Wild. Owning parts of three different NHL teams was “appropriately an important concern” for the league, Vinik said, but there will be strict guidelines on what Arctos will and won’t have access to as it relates to each team. That includes limited annual financial audits and access to franchise personnel, and zero voting rights on team or league matters.
As for whether Arctos’ investors would receive perks like game tickets or future championship rings, Vinik said: “We’ve been partners now for three days. I can’t tell you we know every detail.”
That said, Vinik said he’d be likely pick the brains of Arctos’ stable of advisors on topics not directly related to Lightning management, such as sports media or NFTs. He’s already invited his new partners to sit in his box at the Lightning’s Stadium Series game against the Nashville Predators in February.
“Frankly, I think it’s going to be fun to have them involved,” Vinik said.
He then corrected himself with a laugh: “Or not involved.”