CNBC Sport: Pro sports team valuations are in a 'bubble,' says Redbird’s Gerry Cardinale

RedBird Capital's Gerry Cardinale believes professional sports team valuations are excessively high. Cardinale, controlling owner of AC Milan, also commented on MLB's media rights approach and the UFL, in which RedBird holds an interest. Potential impacts to PBS funding under the Trump administration could affect the broadcasting of high school sports nationwide.

Analysis

Gerry Cardinale of RedBird Capital Partners, a significant figure in sports investment as controlling owner of AC Milan, has voiced strong concerns regarding what he perceives as excessively high valuations for professional sports teams. This cautionary stance from an experienced private markets investor, reflected in a moderately negative sentiment signal and cautious tone, suggests a potential overheating in this asset class. Despite these valuation concerns, Cardinale's engagement with MLB's media rights strategy and RedBird's investment in the UFL indicate continued selective activity and pursuit of opportunities within the broader sports and media landscape. A distinct issue highlighted is the potential impact on high school sports broadcasting due to threatened cuts to PBS federal funding under a Trump administration, representing a specific risk pertinent to that segment of the media market, although the overall market impact of these statements is currently assessed as low.

Key Decisions for Investors

• Investors with existing or prospective direct investments in professional sports teams should critically reassess current valuations and future return expectations in light of Cardinale's explicit concerns about market frothiness.
• Consider exploring ancillary or developing segments within the sports industry, such as emerging leagues like the UFL or evolving media rights strategies, which may offer different risk-return profiles compared to top-tier team acquisitions.
• Stakeholders in sports broadcasting, particularly those with exposure to publicly funded channels or high school sports content, should monitor potential US federal funding changes for PBS and consider the implications for programming and revenue.