Apollo Fund Touts NY Yankees Financing as ‘AI-Resilient Leisure’

To understand just how much private-credit managers want to distance themselves from software loans, consider this description of the New York Yankees: “AI-resilient leisure.”

Apollo Global Management Inc. highlighted its recent $2.6 billion financing to the owners of the New York Yankees as such in a letter Wednesday to investors in its flagship private credit fund. Apollo Debt Solutions BDC said it sees “attractive value” in areas such as leisure that are protected from the rapid advancements of generative artificial intelligence.

The $1.8 trillion direct-lending market has come under fire this year, as heightened fears about credit quality, largely centered around AI’s impact on the business models of software companies, spurred investors to ask to pull tens of billions of dollars of capital. Apollo’s fund, a non-traded business development company, moved to limit redemptions like its peers in the face of this pressure.

Still, Apollo said it “proactively” curbed software exposure during the second half of last year by about $750 million, as it “anticipated the disruptive potential of AI.” Software makes up about 10.5% of its BDC’s portfolio as of Sept. 30, about half the share of a broader peer group, which it defines as funds with net asset values exceeding $4 billion.

The firm launched its sports capital business with a $5 billion initiative last year, around the time it was limiting its exposure to software investments, looking to both provide financing and take ownership stakes in the sports and media ecosystem. The Yankees deal was the alternative asset manager’s largest investment yet in US sports.

Read more: Apollo Inks $2.6 Billion Financing Deal With NY Yankees

Apollo said it’s also looking to benefit from AI-related tailwinds and the expansive opportunity around the digital infrastructure buildout, including data centers, power generation, and semiconductor manufacturing.