In 2023, Josh Harris wrote a check for $6.05 billion to buy the Washington Commanders. Harris co-founded Apollo Global Management, one of the largest private equity firms in the world. A year later, David Rubenstein, co-founder of The Carlyle Group, bought the Baltimore Orioles for $1.725 billion. Bill Chisholm, who built Symphony Technology Group from the ground up, paid $6.1 billion for the Boston Celtics in 2025. That was a record. It lasted about four months before the Lakers sold for $10 billion.
They're not alone. Rick Schnall of Clayton, Dubilier & Rice became co-owner of the Charlotte Hornets. Gerry Cardinale of RedBird Capital took a controlling stake in AC Milan and a piece of Fenway Sports Group, which owns the Red Sox and Liverpool FC. Tom Dundon of Dundon Capital Partners owns the Carolina Hurricanes and recently bought the Portland Trail Blazers. The late David Bonderman, founding partner of TPG, co-owned the Seattle Kraken and held a stake in the Celtics for over twenty years.
Professional sports ownership is the ultimate club. The supply of teams is fixed, the demand keeps growing, and the media rights deals keep getting richer. The average NFL franchise is worth north of $7 billion. These assets almost never come to market, and when they do, the bidding is ferocious.
So where did all these buyers get their money? The same place. They built private equity firms.
The Fee Machine
A private equity fund is a pool of capital raised from big institutional investors. Pension funds, endowments, sovereign wealth funds, family offices. These investors are the limited partners, or LPs. The firm running the fund is the general partner, or GP. The GP buys companies, often using significant amounts of borrowed money to amplify returns, improves them, and sells them years later for a profit. The GP gets paid two ways.
First: management fees. The standard is around 2% of committed capital per year during the investment period, typically the first five years. After that it steps down to about 1% of invested capital. On a $1 billion fund, that works out to roughly $140 million over a ten-year fund life.
Here's the thing about management fees. They get paid no matter what. If the fund doubles investors' money, the GP collects. If every deal falls apart, the GP still collects. Management fees are not performance compensation. They are an operating cost that investors pay regardless of outcome.
Now consider that the biggest firms run multiple funds at once. Blackstone and Brookfield have each crossed $1 trillion in assets under management. Apollo isn't far behind. Even a much smaller firm running three overlapping $2 billion funds is pulling in over $100 million a year in management fees. That's a very comfortable business before a single deal generates a dollar of profit.
Where the Real Money Lives
The second revenue stream is carried interest, or carry. This is where the math gets wild.
Carry is the GP's cut of investment profits, but it only kicks in after investors earn a minimum return called the hurdle rate, usually 8%. Once LPs get their money back plus that hurdle, the GP takes 20% of everything above it.
On a $1 billion fund that returns 1.5 times investors' capital, the GP earns roughly $64 million in carry. Add the management fees and the GP has made over $200 million. Respectable, but not sports-team money.
At 2 times capital, carry jumps to around $164 million. Total GP revenue: over $300 million.
At 3 times capital, carry hits roughly $364 million. Add the management fees and the GP has earned over half a billion dollars from a single fund. Now multiply that across several funds running simultaneously, each one larger than the last, and you start to see how private equity produces the kind of wealth that buys NFL franchises.
A bad fund still generates $140 million in fees. Even one that merely returns investors' original capital, zero profit, still collects that nine-figure paycheck. A great fund generates half a billion on top of that. The asymmetry is the whole game.
A Great Investment, If
When it goes well, private equity can be an outstanding investment. The best funds have historically outperformed public markets over full cycles. Active ownership, operational improvements, and patient capital deployed in complex situations can create real value that public market investors simply can't access. For investors with a long time horizon, plenty of liquidity elsewhere, and genuine excess capital, PE has earned its place in a portfolio.
Private equity serves an important role in the economy. PE firms provide capital and operational expertise to businesses that might not thrive in the public markets. Many of the companies you interact with every day were built, restructured, or scaled with private equity backing. This isn't an indictment of the industry. It's a call for caution.
Because those enormous GP economics have attracted an enormous number of players. The industry manages over $8 trillion globally. In recent years, the largest firms have captured a growing share of total fundraising. Bigger doesn't necessarily mean better. Many of the strongest-performing funds are mid-market firms that most people have never heard of. The gap between the best managers and the mediocre ones is vast, and picking the wrong fund means paying management fees for a decade while watching your capital go sideways.
A Relationship Business
Sorting the good from the bad is where things get complicated. Private equity is still, at its core, a relationship business, and the relationships run in both directions.
LPs need relationships to access the best GPs. Top-performing funds are oversubscribed, and they choose their investors. Getting an allocation isn't a matter of writing a check. It requires a track record as a reliable, long-term partner.
GPs need relationships to access the best deals. The most attractive investments come through proprietary networks, not auction processes. The firms that consistently outperform have spent decades building connections with founders, management teams, and intermediaries that give them an edge before they even start due diligence.
Experienced institutional investors understand this deeply. Pension plans, endowments, and family offices employ dedicated teams of professionals, often supported by outside consultants, whose entire job is sourcing, evaluating, and monitoring PE managers. They dig into track records, team stability, deal attribution, fee structures. They maintain relationships across dozens of GP organizations. That infrastructure isn't decorative. It's essential.
The Coming Wave
Which brings us to a development worth watching. On March 30, 2026, the Department of Labor proposed a rule that would make it significantly easier for employers to include private equity in 401(k) plans. The rule creates a safe harbor for plan fiduciaries, reducing the litigation risk that has kept alternatives out of retirement accounts for decades.
Platforms like iCapital and CAIS have already built the infrastructure to bring institutional PE down to minimums as low as $25,000. The plumbing exists. The regulatory framework is being built. American retirement accounts hold trillions of dollars, and the PE industry would very much like access to some of it.
For investors with expert teams, deep relationships, and sophisticated evaluation frameworks, private equity has earned its reputation. But for a 401(k) participant choosing from a menu of fund options without any of that infrastructure, the landscape looks very different. No relationship advantage. No team of analysts. No negotiating leverage on fees. Just a fund option on a screen next to the target-date fund and the S&P 500 index.
The difference between a top-quartile PE fund and a bottom-quartile one is not like the difference between two index funds. It's the difference between a genuinely great investment and an expensive, illiquid disappointment. Without the tools to tell them apart, caution isn't pessimism. It's common sense.