When the Buss family sold a majority stake in the legendary Los Angeles Lakers last year to billionaire Mark Walter at a staggering $10 billion valuation, it was heralded as a mind-boggling financial triumph. After all, the late Jerry Buss had purchased the franchise in 1979 for a seemingly modest $67.5 million. Yet, if you strip away the glamour of courtside seats and eleven championship rings, the cold reality of the transaction tells a different story. According to billionaire wealth advisor Peter Mallouk, when measured against the broader economy over that forty-six-year span, the Lakers’ annualized return of 11.5% actually lagged behind the S&P 500’s 12.4% return. Had that same $67.5 million been quietly parked in a standard index fund, it would have blossomed into $16 billion today. For Mallouk, the 56-year-old CEO of Creative Planning, the lesson is clear: if pure wealth maximization is your goal, you can achieve better results with far less drama, public scrutiny, and hassle by simply placing a trade through a basic brokerage account.
This pragmatic perspective is particularly interesting coming from a man who has recently emerged as a significant player in the sports world. Mallouk, a newly minted member of the global billionaire list with a net worth of $16.1 billion, recently spent hundreds of millions of his own dollars to acquire a majority stake in Major League Soccer’s Sporting Kansas City at a $700 million valuation. But Mallouk is quick to admit that his sports investments are driven by a deep love for his hometown and the game itself, rather than strict economic calculation. As the son of Lebanese and Egyptian immigrants who grew up cheering for the Kansas City Royals during their legendary George Brett era in the 1970s and 1980s, the chance to own a piece of his childhood teams was emotional, not financial. It is a luxury he can easily afford, but it is not necessarily the strategy he champions for the clients who trust his firm with their hard-earned capital.
Over the past two decades, Mallouk has built Creative Planning from a quiet, local firm with just $30 million in assets into a Midwestern powerhouse. Today, the company manages or advises on a staggering $700 billion across more than a hundred offices nationwide. Mallouk, who famously prefers comfortable collegiate sweatshirts to the stiff, formal suits of Wall Street, succeeded by transforming Creative Planning into a comprehensive, one-stop shop offering investment management, tax strategies, and estate planning. High-profile acquisitions, including the purchase of Goldman Sachs’ investment advisory division, and strategic partnerships with private equity giants like TPG have catapulted the firm into the top tier of American wealth management. Even as his personal wealth has soared, Mallouk has maintained a grounded, plain-spoken approach, particularly when advising clients who are increasingly tempted by the newly accessible world of sports investing.
The allure of owning a sports franchise has reached a fever pitch, fueled by recent rule changes across major leagues—including the NFL—that now allow institutional private equity to buy minority stakes. For many multi-millionaires, pooling money into sports-focused funds seems like a foolproof bet, especially given the eye-popping appreciation of sports assets over the last quarter-century. Since 2000, NFL franchises have risen in value by an average of seventeen times, while NBA teams have skyrocketed by a factor of twenty-six, comfortably outpacing the stock market during a period marked by the dot-com crash and the Great Recession. Because sports team valuations are driven by unique cultural forces, they have historically remained insulated from broader economic downturns, offering an appealing hedge against Wall Street volatility. Additionally, the explosion of multi-billion-dollar media rights deals with traditional networks and streaming giants like Amazon and Disney ensures a steady, rising river of revenue that continues to inflate these team valuations.
Despite these glittering statistics, Mallouk urges his high-net-worth clients to approach sports investments with extreme caution. He points out that sports franchises operate in an entirely different universe than traditional businesses, where every shareholder is aligned toward maximizing profit. In sports, you are often competing against ultra-wealthy owners who have already made their fortunes and are entirely comfortable running a team as an expensive, trophy-collecting hobby. Furthermore, the steep fee structures associated with specialized private equity funds—often featuring 2% annual management fees and a 20% cut of profits—can quickly erode gains. For those determined to enter the space, Mallouk recommends sticking to established institutional giants like Arctos, RedBird, TPG, or Apollo, which possess the institutional leverage to secure favorable terms. He also warns of the long-term dangers of private equity’s recent push into college athletics, comparing the quick cash infusions universities are accepting in exchange for future media rights to running up a high-interest credit card balance that will eventually come due.
Ultimately, Mallouk’s acquisition of Sporting Kansas City serves as a perfect example of what happens when passion takes precedence over profit. Paying 8.6 times the team’s projected revenue, he bought into a struggling franchise that has languished near the bottom of the MLS standings with one of the lowest payrolls in the league. For Mallouk, however, this is a labor of love rather than a quest for yield. Armed with a massive personal fortune and a deep commitment to his community, he has already signaled to team leadership that his checkbook is open to revitalize the roster. While valuation experts like NYU’s Aswath Damodaran warn that sports teams are “trophy assets” priced entirely at the unpredictable whims of the super-rich, Mallouk represents the rare owner who is perfectly comfortable with that reality. He is proving that while Wall Street index funds might be the smartest place to grow your wealth, some dreams are worth more than a percentage point of annualized return.
