Pensions
North Carolina Pension Decides Against NHL Investment, Still Sees Prospects in Sports
While the North Carolina Retirement Systems passed on the opportunity to invest in the Carolina Hurricanes, the system is exploring opportunities in the sector, according to State Treasurer Brad Briner.
Reported by Matt Toledo
The North Carolina Retirement Systems had the opportunity to purchase a stake in the Carolina Hurricanes National Hockey League team but turned down the offer last year, according to North Carolina State Treasurer Brad Briner, chairman of the state’s investment authority board.
Briner discussed the potential investment at the monthly North Carolina Council of State meeting on June 2. The council includes the state’s 10 elected executive branch leaders. While the pension fund had an opportunity to invest in the Raleigh, North Carolina-based franchise, Briner said it was determined that the investment did not meet the fund’s risk-and-return objectives.
“We were flattered to give it a look, but what we’re trying to do here is become an absolute return investor, deliver on the actuarily assumed rate of return, because I think that’s what gives us political legitimacy as a pension system,” Briner told CIO in an interview. “6.5% is the actuarial return, we’ve got a deficit, so we’d like to make it 7% to 7.5%, and if we could do that in as predictable and consistent a way as possible, that’s what we’re going to do.”
Hurricanes Owner Tom Dundon sold 12.5% of the franchise to three new minority owners in March in a deal that valued the team at $2.66 billion. Dundon had purchased the team—now competing in the Stanley Cup finals for the first time since 2006—for $420 million in 2018.
“We’re seeing opportunities not just in sports franchises, but in the adjacent real estate,” Briner says. “I think it’s more likely we invest in the adjacent real estate—if you can develop office buildings for retail districts, or even multi-family-adjacent, that will ensure demand for a long time.”
North Carolina is not the only public pension fund that has expressed an interest in investing in sports. Last September, the Connecticut Retirement Plans and Trust Funds explored the purchase of a stake in the Connecticut Sun, a Women’s National Basketball Association team, as part of an effort to prevent the team from moving. The team was ultimately sold in March to Tilman Fertitta, owner of the NBA’s Houston Rockets, and it will move to Houston in 2027.
The proposal for the Connecticut funds to invest drew backlash from Republican lawmakers, as well as state employee unions and taxpayer watchdogs, due to concerns about how appropriate it would be to use public funds to purchase the team and whether such an investment would satisfy fund managers’ fiduciary responsibilities.
Briner says he is aware that there could be opposition to a sports-related investment. “That adds another layer of scrutiny that is appropriate,” Briner says. “It is public money.”
As team valuations have increased, so has the interest in investing in sports. Several asset managers have launched sports investing platforms and have acquired sports-focused managers. Last September, Apollo Global Management announced the launch of its dedicated sports investing platform, Apollo Sports Capital, and KKR & Co. finalized its acquisition of sports investment manager Arctos Partners in May.
Briner says he sees an opportunity to gain exposure to sports through external managers.
“We will probably end up having a relationship with someone who’s more on the credit side of that conversation, but we’re working on that now,” Briner says. “The equity needs [are] not exactly supported by a fundamental valuation exercise of cash flow, and I think everyone understands that the prevailing valuation multiples of sports franchises are extraordinary. That does not mean they get more extraordinary right? They might, but that’s not the kind of investing that we seek to do around here.”