Another pro team in Utah? Smith Entertainment Group brings in new investors with that plan in mind.

Parent company of the Utah Jazz and Real Salt Lake has sold a minority stake to Arctos Sports Partners, which holds shares in more than 20 pro sports teams, and wants to bring another to the Beehive State.

(Chris Samuels | The Salt Lake Tribune) Utah Jazz owner Ryan Smith speaks to media at Vivint Arena, Tuesday, June 21, 2022.

Smith Entertainment Group — the parent company of the Utah Jazz and Vivint Arena, and a shareholder in Real Salt Lake and Rio Tinto Stadium, among other entities — added private equity firm Arctos Sports Partners as a minority investor on Friday, with the expressed goal of bringing a third professional sports team to Utah.

Arctos’ investment in SEG will include stakes in the Jazz (pending approval from the NBA’s Board of Governors), RSL, and Vivint Arena.

Still, the headline news was spelled out in a news release from SEG, which noted the group’s “intention to bring a third professional sports franchise to the state.”

“We are excited to partner with Arctos. They are committed to Utah and to investing in this community and our sports teams and facilities,” Ryan Smith, chairman of Smith Entertainment Group, said in a statement. “As SEG continues to build out the professional sports landscape in the state, the Arctos partnership brings strong commitment to Utah sports and a deep connection across all major sports leagues.”

What is Arctos Sports Partners?

Arctos has a model of “partner[ing] with owners and leagues to increase liquidity and financial flexibility for ownership groups,” wherein it “acquires passive minority stakes in professional sports franchises and provides customized liquidity and passive growth capital solutions to sports franchise control owners and governors.”

The company has invested in more than 20 sports groups, and was the first firm of its kind to have shares in teams in each of the NBA, NHL, MLB, and MLS.

It currently has a 17% ownership stake in the Sacramento Kings, recently increased its ownership stake in the Golden State Warriors from 5% to 13%, and has an undisclosed stake in the Philadelphia 76ers. It has direct shares in five Major League Baseball teams (Dodgers, Cubs, Giants, Astros, Padres), two NHL teams (Tampa Bay Lightning, Minnesota Wild), several European soccer clubs, and the Premier Lacrosse League. Arctos also has an investment in Fenway Sports Group — the parent company of Premier League soccer club Liverpool FC, MLB’s Boston Red Sox, and the NHL’s Pittsburgh Penguins.

It already had a minority stake in local Major League Soccer club RSL, which SEG invested in this past January.

According to a Sportico report from this past December, “The NBA, MLB, MLS and NHL have all changed their ownership bylaws in the past 18 months to let private equity funds invest in franchises. The loosened restrictions give owners a new way to access capital, and make it easier to sell minority stakes that were becoming difficult to unload.”

The same report spells out the restrictions of such deals, though, noting that in the NBA bylaws, “teams can have no more than 30% of their equity owned by institutional investors, and no single fund can own more than 20% of any one franchise. Most funds, including Arctos, can only own equity in a maximum of five teams.”

What does this mean for sports in Utah?

The SEG release noted that it and Arctos “are bullish on the Utah sports and entertainment market,” and that the two companies are “aligned” on the idea of bringing another professional sports team to Utah.

An SEG source said that the third team would be in a unique sport, one the state does not currently have. With the implication that discussions have been centered on the four major North American sports leagues, that would seemingly put the options down to the NFL, MLB, and NHL.

The NFL seems especially unlikely, particularly because that league “still bars professional investment in teams,” as noted by the Financial Times. Beyond that, the cost would seem prohibitive. Even with Smith’s sale of Qualtrics, the experience management company he co-founded, and the “substantial financial investment” from Arctos, the NFL remains staggeringly expensive. The expansion fee for the Houston Texans — the league’s most recent new franchise, with their first season coming back in 2002 — was $700 million.

Meanwhile, the Denver Broncos were sold to new ownership in June for an eye-popping $4.65 billion.

Given professional football’s ever-growing foothold in the sports landscape, the price tag is exorbitant.

What then, of professional baseball and hockey? Could an existing MLB team relocate here? Could the NHL expand out West once again, given the incredible support shown to its two newest teams, the Vegas Golden Knights and Seattle Kraken?

Even if that were to happen, it would not appear to be an imminent occurrence.

It’s true that, in baseball, the Oakland Athletics have struggled to find a solution with local government officials for a new stadium to replace the decrepit Oakland Coliseum, and have been considered candidates for relocation. However, there is a new waterfront ballpark proposal that seems to have some support behind it. And if that doesn’t work out, the team has had serious discussions about moving the franchise to Las Vegas. The Tampa Bay Rays also have ongoing stadium issues.

Beyond that, it’s difficult to see Salt Lake City leapfrogging Portland, Ore., as the next viable MLB locale, given the longstanding grassroots movement there known as the Portland Diamond Project, which has a well-developed plan to bring another MLB team to the Pacific Northwest.

But, what if the league expanded to 32 teams? Though MLB has not added new franchises since the Arizona Diamondbacks and Tampa Bay in 1998, and the stadium issues in Oakland and Tampa would seem to provide an argument against expansion, both commissioner Rob Manfred and Players Association executive Tony Clark recently said they’d like to get to 32 teams.

Again, though, there are myriad cities vying for a team (including Portland, Vegas, Charlotte, Montreal, and Nashville), and again also, the price tag won’t be cheap: Manfred suggested last year that MLB could seek an expansion franchise fee north of $2 billion per team.

Utah Gov. Spencer Cox said last month that “the state of Utah wants a baseball team.”

“Certainly someday as the fastest-growing state in the nation, I think someday we’ll get Major League Baseball here,” Cox continued. “I don’t know if it will be this round or for a future round, but we would love to have a baseball team.”

Might the NHL, though, make the most logistical sense?

While the local Utah Grizzlies of the ECHL are not a particularly huge draw, when the NHL has staged preseason exhibition games at Vivint Arena, usually featuring the Los Angeles Kings, they have been well-attended.

Still, the league now stands at 32 teams, after adding Vegas in 2016 and Seattle in 2021 (though the cost to do so was less than in other sports, with the Golden Knights paying a reported $500 million expansion fee, and the Kraken a reported $750 million).

However, given the league previously last expanded in 2000 (Columbus Blue Jackets), it may not be keen to have the most franchises of the big four leagues. Even if the NHL did want to add more, Salt Lake City would again have tough competition.

Quebec City has been dreaming of bringing a team back ever since the Nordiques bailed in 1995 to become the Colorado Avalanche. And the city already has a state-of-the-art, NHL-ready stadium in the Videotron Centre. Meanwhile, Texas billionaire Tilman Fertitta said upon buying the NBA’s Rockets and the Toyota Center in 2017 that he’d love to add Houston’s first hockey team since the old Aeros of the old World Hockey Association.

NHL relocation could be an option, though, with each of the Blue Jackets, Arizona Coyotes, Florida Panthers, and New York Islanders all apparently suffering some degree of financial woes and attendance problems.

That’s all in the realm of the theoretical, though, a question for down the road.

But it’s a question SEG and Arctos say they will answer.

“We believe in Utah and all the amazing things happening in the state and we believe SEG is poised to be the next big sports and entertainment group,” said Chad Hutchinson, partner of Arctos Sports Partners. “… Arctos works with visionary ownership groups, and Utah has that in SEG. Their commitment to giving back to the community and building world-class franchises align perfectly with Arctos’ mission. We are excited to work with Ryan and the team to explore more sports-related opportunities around the state and the opportunity to build a premier sports and entertainment center here.”