Artificial intelligence is poised to significantly increase the value of sports teams and media rights, according to Ian Charles, managing partner at Arctos Partners. In a recent conversation with CNBC’s Inside Alts newsletter, Charles argued that as AI generates more digital content, live sports will become even more valuable as a rare form of must-see, appointment-viewing entertainment. He emphasized that live sports offer something irreplaceable: a shared, communal experience that fosters emotional connection and tribal belonging. In a world where people feel increasingly isolated, the collective joy, tension, and camaraderie of watching a game in person or with others gives sports a unique and growing appeal. Charles highlighted two key assets that make sports teams powerful investments: enduring intellectual property and local live entertainment. These qualities have made professional sports a standout asset class, consistently outperforming public equities over three-, five-, and ten-year periods, with minimal volatility. Unlike stocks, sports team valuations are largely uncorrelated with broader market movements, offering investors the rare benefit of alpha. Once viewed as luxury purchases for billionaires, sports franchises are now run as disciplined, data-driven businesses. The entry of private equity has made them more accessible to institutional investors. In 2024, the NFL became the final major U.S. league to allow private equity firms to own minority stakes, following the lead of the NBA, MLB, and NHL. According to JPMorgan, nearly one in five professional sports teams now has private equity involvement. Since 2014, the combined returns of the four major U.S. leagues have surpassed those of the S&P 500. Charles attributes this success to the stability of revenue streams—70% to 80% of premium sports income comes from long-term, contracted deals with media rights and sponsorships, often with guaranteed payments and built-in escalators. This makes sports teams resilient during economic downturns, effectively making them anti-cyclical investments. That said, not all sports are equally promising. Charles noted that Arctos focuses only on the five major leagues and remains cautious about emerging sports like padel, pickleball, and the E1 Series electric powerboat racing. He admitted uncertainty about which of these new leagues will endure, but expressed confidence that the Super Bowl in 2045 will still draw global attention. Among emerging opportunities, he sees women’s sports as the most likely to break out. While he can’t predict which league will rise to prominence, he believes one will eventually capture worldwide fandom and become a major commercial force.