Yahoo Finance Tony Robbins: This Game-Changing Investment Can Beat the Stock Market
The latest book from Tony Robbins, titled “The Holy Grail of Investing,” shares insights that Robbins garnered from speaking with “the world’s greatest investors” about how to beat the stock market.
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According to Robbins, these types of investments have previously only been available to pensions, investment funds and very wealthy individuals, but now even the average investor can gain access to market-beating alternatives. One of the ideas Robbins endorses is investing in professional sports teams. But how is that possible, and what types of returns are really available? Read on to learn more.
How You Can Invest in a Sports Team
Traditionally, the only way you could invest in a sports team was via a private equity fund. However, as CBS News reported, you’ll need “a high net worth of at least a million dollars, and you need about $200,000 in income in order to invest.” Also, if you go with private equity, you don’t really get to have a say of what you’re investing in.
But in his book, Robbins points out that there is legislation moving through Congress that would allow investors to become accredited by simply passing a test, rather than having to have a seven-digit net worth and at least $200,000 in annual income. This could potentially provide greater access to private equity for the average investor.
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Beyond private equity, however, a few teams now actually have publicly available shares that trade on the open stock market, specifically:
Atlanta Braves Holdings (NASDAQ – BATRA)
Madison Square Garden Sports Corporation (NYSE – MSGS)
Manchester United (NYSE – MANU)
You can buy or sell shares in any of these sports teams as easily as if you were buying Apple, Microsoft or Tesla.
How Do Sports Teams Make Money for Investors?
According to Robbins, if you invest in a sports team, you’re often getting much more than simply a portion of ticket sales or general revenue. These days, sports teams are empires, with huge ancillary revenue streams from things like broadcast rights. They also generally own real estate, giving them a bit of diversification.
Robbins notes that inflation doesn’t generally harm revenue because teams can simply raise the price of a hot dog, for example, and the captive audience will usually still pay for it. Overall, Robbins states in his book that sports teams have a long-term average annual return of 18%, or nearly double that of the S&P 500. However, here’s a look at the return that the Atlanta Braves, Manchester United and Madison Square Garden Sports have provided investors over the past five years:
BATRA: 49.64%
MSGS: -13.43%
MANU: -28.52%
Caveats and Cautions
In the intro to the new Tony Robbins book, he mentions that he is a minority shareholder of CAZ Investments, which is a private equity firm. Not only that, the private equity firm is one that Robbins directs readers to via links in his book, selling the firm as an access point for investors into private equity and/or sports teams. This certainly doesn’t discredit the validity of those investments, but it’s important for readers to understand that Robbins has a financial interest in directing them to his gatekeeper firm.
Regardless of Robbins’ affiliations, another important thing to note is that investing in sports teams is not like simply buying an S&P index fund, or even a big-name stock like Apple. Sports teams can be more volatile than your average investment, and it can be harder to predict what their earnings stream will look like. If you’re investing in a sports team via a private equity fund, you may have to lock up your money for a five- or even 10-year period during which you can’t have access to it.
Should You Invest in a Sports Team?
Whether or not you should invest in a sports team depends on a lot of personal characteristics. On one hand, an investment in a sports team can provide a level of diversification, as it’s a non-correlated asset with the stock market. If you pick the right teams, you’ll be able to participate in a rising revenue stream, which should drive your investment higher. It can also be fun to say you own a part of your favorite sports team.
However, as with any investment, it should match your investment objectives and risk tolerance and fit into your overall portfolio. As you can see above, while the Atlanta Braves have provided a decent return over the past five years, both Madison Square Sports and Manchester United have actually lost money for investors.
As an individual investor, you’ll have to do the research and make the determination of whether this is a buying opportunity or simply a demonstration that these are poor investments for the long run.
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This article originally appeared on GOBankingRates.com: Tony Robbins: This Game-Changing Investment Can Beat the Stock Market
