Why Climate Risk Is A Threat To The Sports Investment Boom
NEW YORK, NEW YORK - JUNE 06: General view of hazy conditions resulting from Canadian wildfires as ... More Anthony Rizzo #48 of the New York Yankees jogs to the dugout during the second inning against the Chicago White Sox at Yankee Stadium on June 06, 2023 in the Bronx borough of New York City. (Photo by)
As sport transforms into a dynamic and lucrative asset class, the environmental crisis is accelerating. Savvy sports investors are increasingly factoring in growing climate risks, recognizing their potential to disrupt operations and erode returns.
The global appeal of sport, lucrative media rights, and the potential for substantial returns is attracting private equity firms, sovereign wealth funds, institutional investors, celebrities and athletes. No longer just "trophy assets," men's and women's sports now present viable investment opportunities.
Even with economic headwinds, investors are bullish on sports. Mark Cuban, Rashaun Williams, and Steve Cannon have launched a sports-focused private equity fund, looking to raise $750 million to target minority investments in NBA, MLB, and NFL teams. Rory McIlroy has teamed up with TPG to launch a sports investment fund, and Standard Chartered have launched a fund focused on sports for high net worth clients. These are just announcements from the past several weeks.
DALLAS, TEXAS - APRIL 11: Mark Cuban reacts after the Dallas Mavericks score during the first half ... More against the Toronto Raptors at American Airlines Center on April 11, 2025 in Dallas, Texas. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, user is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by)
Financial prospects are enticing, but the escalating climate crisis creates risk for sport investments. By 2050, corporate exposure to climate risks is expected to triple, putting more than $1.14 trillion in market value at risk for companies on the world's largest stock exchanges.
This includes sports organizations, which are particularly vulnerable due to their reliance on physical infrastructure and scheduled events. Investors in sport need to 'consider how exposed their investment portfolios are to physical climate risks," confirms Daniel Keir, climate resilience specialist at Zurich Resilience Solutions. Hazards differ according to geography, but include flooding, wildfires, extreme heat, storm surges, and other severe weather events. NFL stadiums could face an estimated $11 billion in climate-related losses by 2050.
TOPSHOT - A panoramic view shows the Imola racetrack on May 18, 2023 after heavy rains caused ... More flooding across Italy's northern Emilia Romagna region, killing nine people. The flooding caused the cancellation of Sunday's Formula One Emilia Romagna Grand Prix scheduled in Imola, with organisers saying they could not guarantee the safety of fans, teams and staff. (Photo by STRINGER / AFP) (Photo by STRINGER/AFP via Getty Images)
As well as physical threats to infrastructure, such as extreme weather causing roofs to come off stadiums, or golf courses disappearing due to coastal erosion, sports face additional financial risks stemming from the climate crisis. Organisers may face rising insurance premiums and revenue disruption from ticketing, sponsorship or broadcast if events are cancelled or altered. If values aren't aligned, revenue can be missed from potential sponsors with a strong sustainability ethos, and conversely, partnering with unethical or polluting organisations can cause reputational risks.
QUEENS, NEW YORK, UNITED STATES - 2023/04/07: Participants seen holding a banner at the protest. ... More Mets fans and climate activists targeted the Mets' opening day to send a strong message about climate change and the teams sponsors role in it. After the third inning, activists dropped one large banner that read Mets Drop Citi. (Photo by Erik McGregor/LightRocket via Getty Images)
It's worth noting that direct climate impacts on a stadium can have broader investment ramifications too. 'Stadiums often act as economic anchors and catalysts for broader urban development," Austin Clack, Climate X's physical risk solutions lead for North America told me. 'Climate risks that endanger these assets can reduce investor confidence and stall development plans in the surrounding area, leading to stranded project investment and overall lowered investment inflow into communities.'
Despite growing awareness and risk, these considerations are not yet central to all investment decisions in the sports sector. 'If the internal rate of return doesn't stack up, ESG won't save the deal and if the IRR is strong but there are climate risks, the investment can still go ahead,' Michael Broughton, founder of Sports Investment Partners LLP told me.
Climate risks may currently only filter as a priority for investors when they create the potential for a tangible impact on forecasted cash flow, but they are a consideration. The United Nations-supported Principles for Responsible Investment encourage investors to always incorporate ESG issues into investment analysis and decision-making processes.
This photograph shows a view of a building of the SK Moelingen football club surrounded by water ... More after heavy rain in Fourons-Voeren on May 18, 2024. The Liege region in eastern Belgium was hit by flooding, with some 550 requests for assistance recorded on May 17, 2024, night, in the province of Liege, and 150 firefighters mobilized, caused by torrential rain, also hitting France and Germany. (Photo by BRUNO FAHY / Belga / AFP) / Belgium OUT (Photo by BRUNO FAHY/Belga/AFP via Getty Images)
Climate risks are likely to be a larger consideration for investment in smaller sports clubs, where a more direct line can be drawn between issues such as flooding and core revenue drivers such as match-day viability and income.
It's not only financial risk, which naturally sits at the heart of investments, that needs to be considered. Reputational risk carries greater weight in sports due to heightened media attention and public scrutiny. This includes 'changing consumer preferences regarding transparency and ethical behaviour,' says Philip Cronje, business unit manager of Aon South Africa's sports, recreation and entertainment division.
Beyond mitigating risk, climate action presents a commercial upside for investors. There is a lot of opportunity for fan and sponsor engagement on this topic. Broughton believes 'the fan comes first,' and that a better understanding of fans leads to better business outcomes. With sports fans increasingly engaging on climate issues, climate-positive initiatives can enhance the appeal of a sports organisation seeking investment. Sustainability is a strong selling point as part of a pitch. It enhances the story even if it's not the core proposition.
The integration of climate risk and ESG considerations into sports investments is evolving rapidly. As the financial implications of climate change become increasingly apparent, investors are likely to place greater emphasis on sustainability, and look more intently at risk. Although climate risk or sustainability may not yet be deal breakers in many sports investments, investors should consistently engage on these issues when considering any opportunity in the sector.
Aligning investment strategies with this engagement will not just safeguard and future-proof assets, but also unlock upsides through fan trust and sponsorship appeal. In the melting pot of an evolving sports investment landscape and accelerating climate crisis, prioritizing climate risk and sustainability isn't just a tick-box exercise. It is a strategic imperative that is fundamental for success. Austin Clack sums it up well, saying 'investors should recognize that climate risk is not a distant concern but an imminent financial reality that must be factored into investment strategies immediately."
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Entrepreneur
31 minutes ago
- Entrepreneur
Researchers develop more efficient language model control method
A team of researchers has successfully developed a more efficient method to control the outputs of large language models (LLMs), addressing one of the key challenges in artificial intelligence text... This story originally appeared on Calendar A team of researchers has successfully developed a more efficient method to control the outputs of large language models (LLMs), addressing one of the key challenges in artificial intelligence text generation. The breakthrough enables more effective guidance of LLMs to produce text that adheres to specific structures while maintaining accuracy. The new approach focuses on controlling language model outputs to adhere to predetermined structures, such as programming languages, while eliminating errors that commonly plague AI-generated content. This advancement represents a significant step forward in making AI language tools more reliable for specialized applications. Improving Structural Adherence in AI Text Generation The research addresses a fundamental issue with large language models: their tendency to generate text that deviates from required formats or contains errors when tasked with producing structured content. By implementing more effective control mechanisms, the researchers have developed a system that maintains structural integrity throughout the generation process. For programming languages specifically, this advancement could reduce the frequency of syntax errors and logical flaws that often appear in code generated by AI systems. The method ensures that the language model adheres to the programming language's rules while generating functional code. Technical Approach and Implementation While specific technical details of the method were not fully outlined, the approach appears to involve guiding the language model's generation process more precisely than previous methods. Rather than simply prompting the model and hoping for correctly structured output, the new system actively steers the generation process to maintain compliance with predefined rules. This control mechanism works by: Monitoring the model's outputs in real-time Applying constraints that keep text generation within acceptable parameters Correcting potential errors before they appear in the final output Practical Applications The improved control method opens up new possibilities for utilizing large language models in fields that require strict adherence to specific formats. Some potential applications include: Software Development: Generating error-free code that adheres to the syntax rules of specific programming languages can make AI coding assistants more reliable for developers. Data Formatting: Creating structured data outputs like JSON, XML, or CSV files with perfect adherence to format specifications. Technical Documentation: Producing documentation that follows industry-standard formats without introducing structural errors. Scientific Research: Generating properly formatted research papers or reports that adhere to publication guidelines. Future Research Directions This advancement likely represents an early step in a broader effort to make large language models more controllable and reliable. Future research may expand on this work by: Developing more sophisticated control mechanisms that can handle increasingly complex structural requirements. Reducing the computational overhead associated with implementing these controls, making them more accessible for wider use. Extending the approach to handle multiple types of structured outputs simultaneously. The research highlights the growing focus on not just making AI language models more powerful, but also more precise and controllable. As these systems become increasingly integrated into professional workflows, the ability to guarantee structured, error-free outputs becomes critical. For industries that rely on structured data and formatted text, this development may signal a shift toward more practical and reliable AI assistance tools that can consistently follow rules while maintaining the creative and analytical capabilities that make large language models valuable. The post Researchers develop more efficient language model control method appeared first on Calendar.
Entrepreneur
31 minutes ago
- Entrepreneur
Zscaler Will Hit $360 Soon: Here's the How and Why
Zscaler's FQ3 results and outlook make it a standout winner compared to its competitors, and analysts are raising their price targets as a result. This story originally appeared on MarketBeat [content-module:CompanyOverview|NASDAQ:ZS] Zscaler's (NASDAQ: ZS) share price is expected to reach $360 due to technical price action, favorable analyst sentiment, and the results driving it. The latest price action has this market breaking out to new highs, confirming not only the near-term uptrend but also breaking the market out of a long-term trading range. The trading range was in place due to valuation concerns and risks of slowing growth. The breakout occurred because the business fundamentals are catching up to the valuation, leading to an improved outlook. That is for sustainable 20% growth, free cash flow, and improving shareholder value. Regarding the soon in this forecast, the technical action suggests this move could be completed by late this year or by early 2026. The target is due to the magnitude of the trading range, which, in this case, is a minimum target. The price action has broken to new highs robustly and may consolidate well above the critical support target, indicating that a bull-case scenario is in place. The market could rise to a new all-time high in that scenario due to the magnitude of the recovery rally currently underway. Using it to project targets puts this market in the range of $375 to $403, sufficient for a new high and a likely precursor to even higher highs. Here's why. Zscaler Wows the Analysts With Fiscal Q2 Results Analyst activity in Zscaler was tepid for more than a year, with price target reductions and generally poor responses to results hampering the price action. Then Bam! Zscaler reports its FQ3 2025 results, and the analyst's attitude shifts. MarketBeat reported 24 revisions from the 36 analysts tracked by its platform, including a few reiterated price targets but more increases than decreases. There were no decreases tracked. The result is a 17% increase in the consensus price target within days of the release, a 25% increase relative to last year, and most revisions leading to the high-end range. The consensus assumes that fair value is near the June opening price levels, but the high-end range adds 15% to it. At $320, it is still well below the $375 to $400 high-end technical target, but a step in the right direction that could easily turn into a trend, assuming upcoming reports are equally good. The takeaway from the analysts' reports is that the results are solid despite macroeconomic uncertainties that negatively impacted guidance for competitors. The strength in Q3 is expected to carry over into Q4, leaving the company with momentum heading into the next fiscal year. New products help the platform carry momentum, and the new Z-Flex is expected to do the same. Z-Flex is a new purchasing model that allows businesses to streamline adjustments to their security stack, reducing costs while improving flexibility and scalability. Zscaler Had a Solid Q3 Despite Slowing Growth The only bad news coming out of Zscaler's Q3 report is that growth slowed to the low 20% range. However, the revenue exceeded the analysts' forecasts, growth topped 20% for another quarter, and was further bolstered by accelerated gains in billings and deferred revenue. [content-module:Forecast|NASDAQ:ZS] Other key highlights for investors to focus on include the 21% increase in net income, an 18% free cash flow margin, and a 25% cash build-up on the balance sheet. Regarding the balance sheet, Zscaler has more than $3 billion in cash and equivalents, and equity is rising, up 41% year-to-date in F2025. Regarding the guidance, the company forecasts billings in alignment with the analysts' consensus forecast, leaving the Q3 strength to carry through to the full-year result, and it may be cautious. The final piece of the puzzle is the sell-side interest, including short-sellers and institutional investors. The institutions, as a group, own a solid but still small 41% of the stock as of early June, but have been buying it on balance throughout the year. That provides a solid support base and tailwind for price action now amplified by short-covering. The short interest ahead of the release wasn't astronomically high at 9%, but it had risen in previous reports and was at a long-term high, setting the market up for a short-covering rally if not a short-squeeze. Before you make your next trade, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list. They believe these five stocks are the five best companies for investors to buy now... See The Five Stocks Here
Washington Post
33 minutes ago
- Washington Post
Trump, pushing for Ciattarelli, says New Jersey 'ready to pop out of blue horror show'
TRENTON, N.J. — President Donald Trump on Monday implored voters in New Jersey's primary for governor to support Republican Jack Ciattarelli when early in-person voting begins Tuesday and said the state was ready for a change after years of Democratic control. The president, who has golf clubs around the state and frequently stays at his Bedminster property, announced his endorsement for Ciattarelli last month .
