WASHINGTON – The recently enacted law that restricts large investors from gobbling up single-family homes isn’t the only way some in Congress are trying to keep private equity from pinching family budgets.
A growing number of lawmakers have been looking at the skyrocketing costs of youth sports and trying to figure out ways to regulate private equity’s role in the industry, where rising costs have priced out many young athletes.
According to Project Play, an Aspen Institute initiative, families paid an average of $693 per child per sport in 2019 for registration fees, equipment, travel and other expenses, sometimes even including fees for tryouts. By 2024, registration fees alone had jumped from $125 to $197, while the average cost of playing a single sport climbed to $1,016.
Families with children playing more than one sport spent an average of $1,500 a year.
American families now spend more than $40 billion annually on youth sports. That’s nearly twice the revenue the NFL generates. The estimate comes not only from registration fees but also from travel and lodging, additional lessons, equipment, uniforms and fees from camps or schools.
Private equity-backed 3STEP Sports operates over 2,500 programs in seven sports, with more than 2 million athlete participants in every state. Many of the events are sanctioned by the Amateur Athletic Union.
Families pay $3,000 to $5,000 annually for their kids to compete in travel leagues and AAU year-round sports, some of them hoping for a shot at a college scholarship or even a pro career.
It’s a major shift from local recreational leagues.
And when a team travels to a tournament, they are sometimes met with “stay-to-play” rules imposed by organizers – meaning they have to fill a certain number of rooms at the official hotel or forfeit games for noncompliance.
Stay-to-play rules are not illegal, though that could change under certain proposals. In May, Democrats in the House and Senate introduced a bill called the Let Kids Play Act that would protect youth sports from so-called “vulture investors” that Democrats accuse of exploiting youth sports.
The bill would ban junk fees, loosely defined as fees that are hidden, offer little or nothing in return or are added only after an initial price is disclosed or paid; and hold private equity firms liable for certain violations.
Some of the largest youth sports groups acknowledge a need for regulation but defend the role of private capital in expanding access and meeting demand.
“I agree that there is a problem with youth sports,” said Matt Kanne, CEO of Open Gym Premier, a youth basketball operator with leagues, tournaments, camps and facilities. “The infrastructure of youth sports is underfunded and ill-equipped nationally.”
But, he added, “Why block investments?”
In the Senate, the bill was introduced by Sen. Chris Murphy, D-Connecticut, and sponsored by Democratic Sens. Cory Booker of New Jersey and Jeff Merkley of Oregon and Bernie Sanders, I-Vermont. A House version introduced the same day by Rep. Chris Deluzio, D-Pennsylvania, has 13 co-sponsors, all Democrats.
The bill’s definition of “vulture” investors includes those with a record of stripping assets from businesses they buy, cutting jobs, declaring bankruptcy, adding junk fees or loading up the acquisitions with debt.
In an unusually assertive element, the bill designates any private equity fund that buys a sports league or facility, or any company owned by such a fund, as a presumptive “vulture” unless it can certify otherwise to the Federal Trade Commission.
Although lawmakers have expressed concern about rising costs in youth sports, there is little consensus on what Congress should regulate, if anything, and what federal oversight should entail.
The lack of consensus was on display last month at a House Education and Workforce subcommittee hearing, titled Field of Fees: Private Equity’s Role in the Commercialization of American Youth Sports.
The chairman, Rep. Kevin Kiley of California, who left the Republican Party early this year and is now unaffiliated with either party, said at the outset that he doesn’t view commercialization itself as a problem. He credited private investment with helping expand access to youth sports and improve facilities in places where public parks and recreation funding has declined.
But he agreed that some profit-seeking entities are driving up costs and limiting access for some families.
“Too many children are being priced out,” Kiley said. “It’s not that they lack talent or determination. It’s that their families simply cannot afford the rising costs.”
Rep. Adelita Grijalva, D-Tucson, agreed.
“We all indicated a concern,” she said after the hearing. “My issue is how we solve the concern.”
Grijalva said she wants to cap the number of reservations any single travel or club team could make on public fields to prevent well-funded teams from crowding out local recreational groups – a policy she implemented locally as a Pima County supervisor. But that would also require an upfront notice of when private equity firms are backing teams.
Such regulation of community facilities would be unusual for Congress to assert and is not included in the Let Kids Play Act.
“We need mandatory reporting for youth sports acquisitions and heightened antitrust inspections to stop these monopolies from forming,” Grijalva said.
Rep. Mike Rulli, R-Ohio, rejected the characterization of private investors preying on vulnerable areas and families. He cited the Covelli Centre in Youngstown, in his district, which received more than $1.2 million for renovations from Black Bear Sports Group.
“There are communities all around the country that need outside investments like poor rural towns,” Rulli said while praising Black Bear for its funding and support of projects that help youth sports groups.
Murphy called Black Bear a vulture investor at a May 13 news conference for the Let Kids Play Act. Black Bear was founded in 2015 by Florida-based investor Murry Gunty and his firm, Blackstreet Capital Holdings.
Murphy recounted an incident involving the hockey team his 14-year-old son, Rider, plays on. Black Bear, which owns the Atlantic Hockey Federation that Rider plays in, has exclusive rights to record games in that facility. Another parent was unable to get close to the ice to record, fearing the team could be penalized for violating Black Bear’s rights.
His only option would be to pay for a copy of Black Bear’s footage, and sharing it with others would require a Black Bear TV premium subscription.
The AHF is not a stay-to-play league and has been expanding, which has minimized the need for travel. But Defender Hockey Tournaments, also owned by Black Bear, does hold stay-to-play tournaments, which the company calls “standard practice in the sports tournament industry.”
Teams that don’t comply face removal from the tournament and would forfeit both their tournament fees and games.
“Congress can fix this,” said Katherine Van Dyck, a senior legal fellow at the American Economic Liberties Project and one of the witnesses at the hearing. “You can ban extractive practices like vertical integration, stay-to-play and junk fees as the Let Kids Play Act does.”
A.J. Rudowitz, a Philadelphia-based partner at Duane Morris, a nationwide law firm with clients on both sides of the private equity debate in youth sports, said he doubts Congress will adopt the Murphy-Deluzio bill because of some especially aggressive provisions.
For instance, the bill would force a designated “vulture” investor to divest from any youth sports assets within two years, including arenas and leagues.
But, he said, “Even if this bill doesn’t pass, it’s still a stake in the ground that other enforcement agencies might be looking at to start going after some of these ‘vulture practices.’”
Grijalva lauded the discussions as a step toward resolution but said Republicans, who control both houses of Congress, need to push harder to blunt rising prices in youth sports. Expanding community sports programs would be one way to provide affordable alternatives, she said.
“Families deserve itemized upfront pricing,” Grijalva said. “You don’t have these hidden fees halfway through the season that, if you don’t pay your fees, your kids don’t play.”
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