Spurs v Juventus. Kane v Ronaldo | Anthony S Casey Singapore

Spurs v Juventus. Kane v Ronaldo | Anthony S Casey Singapore

 

How football clubs can cash in on the game’s changing investment landscape | Anthony S Casey Singapore

  • Nature of investment in football is evolving as it attracts more private equity
  • Clubs can leverage new investment, both on and off the pitch
  • Risks and rewards vary across different leagues

According to KPMG’s ‘The European Elite 2019’ report, published in May, the combined enterprise value of the 32 most prominent European football clubs increased nine per cent in 2018, and has grown 35 per cent over the past three years.

This growth rate contrasts with the fortunes of European stocks in the same period – notably the STOXX Europe 50 Index, whose value fell 13 per cent in 2018, the report notes. It says this demonstrates “the different pace at which the football industry is evolving.

Charles Baker, co-chair of New York-based O’Melveny’s sports industry group, which advises on a broad array of transactions, including M&A, tells SportBusiness that “an investment into a football club currently offers investors the potential for significant return on their initial investment, as the CAGR for sports team ownership is better than almost every other asset class over the last five, 10 and 20 years”.

He adds: “Given the current levels of growth in the sports market, an investment in a football club may be a smart portfolio choice. A lot of investors see this asset class as the new frontier for sports investment, especially when compared to the NFL and MLB, which are seen as more mature properties.”

Baker also notes that due to financial fair play regulations and other factors such as stable sponsorship revenues driven by global appeal, the profitability of European clubs is growing.

Stephen Duval, co-founder of London-based 23 Capital, which provides finance to the sports and entertainment sectors, tells SportBusiness that a new wave of investors has entered football and is changing the landscape.

“Football clubs are definitely being seen far less as trophy assets for rich people,” he says.

“They are now run like proper businesses. Even Manchester City – you may say Abu Dhabi are throwing money at it, but they’ve turned it into a business.”

His co-founder at 23 Capital, Jason Traub adds: “We are seeing more institutional financial interest in football now.”

Examples of US private equity investors buying into European clubs include Jason Levien and Steve Kaplan (Swansea City), John Henry (Liverpool), Harris Blitzer Sports & Entertainment (Crystal Palace), The Tornante Company (Portsmouth), Joe DaGrosa (Bordeaux), and James Pallotta (AS Roma).

John W. Henry the owner of Liverpool FC during the Premier League match between Liverpool FC and Huddersfield Town at Anfield on April 26, 2019 in Liverpool, United Kingdom. (Robbie Jay Barratt – AMA/Getty Images)

Challenges for clubs

Baker says that the influx of private equity “cannot be understated because it significantly increases competition for clubs, driving up prices”.

He adds: “I think we will also see more clubs changing hands, due to the focus on short-term returns and exits, which could create instability at certain clubs. These short-term turnarounds could lead clubs to take actions that are riskier from a regulation or operational perspective, and that a long-term investor would not otherwise take.”

However, he adds: “Private equity firms can be savvy financial investors focused on buying underappreciated assets and making certain operational and financial changes to unlock value.”

Duval notes that “there are a lot of principles to private equity, so the rules about getting out in a managed timeframe are less relevant”. Such principles include alignment of interest, governance and transparency. “Particularly in the Premier League a lot of these principles of private equity are getting involved.”

Comparing the influx of private equity to previous waves of owners, Traub adds: “I think the financial community coming in is potentially a healthier one. Most private equity investors come with a challenging mindset, a smart mindset.

“A lot of them will have a financial driver but what is clear from the Premier League, for example, is that an individual investor will learn quickly how to balance financial performance with stakeholder interest – and by that I mean the fans and the local community.”

Attracting PE investment

Baker stresses that a club “must be appropriately priced to provide an acceptable risk/return from a capital cost perspective. Without that, all of the operational changes will not provide much upside”.

He explains that investors are more wary of buying stakes in European clubs, especially in the Premier League, because of the risk of relegation and its effect on club value.

“There is definitely an increased sense of caution when buying a Premier League club,” he says.

To overcome some of that risk his group recommends structured deals with a contingency, with a certain portion of the purchase price – typically 20-to-30 per cent – held back and provided only if the club meets certain “relegation/promotion metrics”.

Last year’s sale of Aston Villa was an example of such a deal. The NSWE group purchased a controlling 55-per-cent stake in the club, which won promotion back to the Premier League in May, triggering the remainder of the purchase price to be paid. “This type of structure in a deal is becoming increasingly common,” says Baker.

Challenges for investors

At the FT Business of Football Summit, held in London on May 31, Goldman Sachs managing director Gregory Carey said it is still extremely challenging for investors in English clubs outside of the elite to grow the value of their investments.

“There is a lot of competition for very few spots,” he said. “Some teams that you think should be playing in the Premier League have been relegated, so it’s very tough. People think they understand the space, but they are realising how hard it is.”

Carey pointed to the example of Swansea City, who were relegated from the Premier League in 2017-18 after seven consecutive seasons in the top flight. A consortium of American businessmen had acquired a controlling 68-per-cent stake in the club in July 2016.

Swansea owners Steve Kaplan ( left) and Jason Levien (r) look on before the Premier League match between Swansea City and West Bromwich Albion at Liberty Stadium on May 21, 2017 in Swansea, Wales (Stu Forster/Getty Images)

“It’s a lot easier to buy a mid-level club in Italy than an English Championship club because you have a much better chance of staying up,” Carey said.

However, Traub observes that other challenges exist in Italy and elsewhere in Europe, and points to the chronic delays in the building of AS Roma’s new stadium as a prime example.

James Pallotta, Roma’s American owner and president, presented plans for the new ground in March 2014 and targeted the 2016-17 season for its opening. Construction has still not started, with the project suffering a number of setbacks including the arrest of nine people linked to the building of the stadium.

Traub said that owners of Premier League clubs are likely to find fewer obstacles to driving growth and will “feel like the destiny is in their own hands”.

Leveraging investment

Traub adds that multiple ownership of clubs is a way for additional value can be unlocked, with the City Football Group, which along with Manchester City owns parts of clubs in the US, Australia, Japan, Spain, Uruguay and China, leading the way.

Traub notes that City are formalising the multiple ownership of clubs done already elsewhere, for instance by the Pozzo family. “Manchester City have a thesis to institutionalise football ownership under one umbrella,” he explains.

Other similar developments are likely to emerge soon. “We are seeing a much healthier want by new investors to look at consolidating a number of clubs,” Traub reveals. “We know of three or four parties that are looking to drive that same thesis.”

President of Olympique Lyonnais Jean-Michel Aulas attends the 2019 FIFA Women’s World Cup France Round Of 16 match between France and Brazil at Stade Oceane on June 23, 2019 in Le Havre, France (Jean Catuffe/Getty Images)

Ebru Köksal, senior advisor at investment management firm J. Stern & Co. and former chief executive at the Galatasaray Group, says that women’s football also represents a valuable opportunity for clubs, pointing to Lyon, whose women’s side has won six Uefa Women’s Champions League titles, including the last four in a row. Lyon is owned by French businessman Jean-Michel Aulas, and Köksal says the club’s women’s side “has been one of the best investments of his life”.

Köksal adds: “If I had €10m I would definitely go for a women’s club because the growth potential there is tremendous. Also, there is less competition and it’s easier as you are starting with a blank page.”

Amazon to show four Premier League matches on TV in one day | Anthony S Casey Singapore

Amazon Prime is planning a Boxing Day marathon over ten hours
Amazon Prime is planning a Boxing Day marathon over ten hoursBEN STANSALL/AFP/GETTY IMAGES

Armchair fans will be able to watch four Premier League matches back to back for the first time next season with Amazon Prime planning a Boxing Day marathon of programming from midday until 10pm.

The streaming service has won the rights to broadcast two entire rounds of fixtures for the next three seasons and reached an agreement with the Premier League to schedule four different kick-off times for the Boxing Day programme, including a televised match at 3pm for the first time.

Amazon Prime will make all ten matches available via the red button on both of their packages, with the first being a midweek round on December 3 and 4.

Manchester United’s shock transfer war chest revealed | Anthony S Casey Singapore

Solskjaer Glazers TEAMtalk

Manchester United boss Ole Gunnar Solskjaer has been given just £100million to strengthen his squad this summer, claims a report.

It was widely expected that Norwegian boss Solskjaer was planning a major overhaul to his ailing squad, but ESPN report that United’s war chest is not as considerable as many thought.

The report claims United will have just £100million to spend on new recruits, plus any money they receive from player sales.

United have already added Dan James for an initial £15million, while the Daily Recordyesterday claimed the United had agreed a fee of around £55million for Crystal Palace defender Aaron Wan-Bissaka.

United did receive £10.5million from the sale of Marouane Fellaini to Shandong Luneng earlier this year.

However, based on the figure reported by ESPN, United’s summer overhaul will depend on sales – with Romelu Lukaku, David De Gea and Paul Pogba’s futures all up in the air.

Lukaku looks like being the player most likely sold this summer with Inter Milan heavily linked with his services with United hoping for a fee of around £70million.

Earlier this month, Lukaku said: “I am going to enjoy my holidays with my family now. I know what I’ll do, but won’t say it. We’ll see. Do I expect a busy summer? Yes.”

The Belgium striker has also been urged to move by his national team boss Roberto Martinez, but the exits of Pogba and De Gea are not guaranteed and likely to prove complicated.

And the report suggests that the “view within the club” is that if they retain Pogba and De Gea, in particular they will be able to recruit enough emerging talent to compete for a top-four finish.

Juventus step up interest in €140m Pogba but expect stiff competition from Real Madrid | Anthony S Casey Singapore

The Serie A champions are hopeful that they can take the Frenchman back to Turin although Zinedine Zidane’s side are also interested in the midfielder

 

Juventus are stepping up their efforts to sign Paul Pogba but accept that they will face stiff competition from Real Madrid for the Manchester Unitedmidfielder.

According to sources close to the Serie A champions, the club’s sporting director Fabio Paratici met with United officials to discuss a potential deal for the FranceWorld Cup winner while he was in the UK finalising a move for Maurizio Sarri.

And Juve are now planning to put together an official offer for the 26-year-old, who left them to rejoin United in 2016, expected to be in the region of €130 million to €140m (£116m/$145m to £125m/$157m).

They do, however, accept that Madrid will also be at the front of the queue to sign Pogba.

He is considered a top target for head coach Zinedine Zidane and the Liga side would very much be interested in taking him to the Bernabeu.

The ABC newspaper in Spain goes as far as saying that Real are willing to bid €125m (£112m/$140m) for Pogba and offer him a salary that would see him paid the equivalent of Eden Hazard, just short of the amount earned by club captain Sergio Ramos.

That said, Juve, who appointed former Chelsea manager Sarri as their new head coach on Sunday, are still ready to go toe-to-toe with Madrid in the race to sign the midfielder, with the deal to take Cristiano Ronaldo to Turin proving that nothing is impossible.

United, meanwhile, remain determined to keep Pogba and do not want to sell him in a move that would undermine manager Ole Gunnar Solskjaer, who has always been adamant that he wants to build his team around the Frenchman.

That puts the Red Devils in a stronger position over negotiating a potential sale, whereby they would demand as much money as possible should talks progress, and interest from Juve and Madrid be followed up with concrete offers.

Juve have continued to dominate domestically in Italy, winning their eighth league title in a row under former boss Massimiliano Allegri, although Champions League progress has been more of a struggle.

There was hope that the signing of Ronaldo would help end their 23-year wait to win Europe’s biggest prize, although they came unstuck against Ajax in the quarter-finals of the 2018-19 version of the competition.

A move for Pogba would further show their ambition to finally conquer Europe, with Aaron Ramsey having joined on a free transfer from Arsenal and Paris Saint-Germain midfielder Adrien Rabiot having also been linked.

Sources: Chelsea to offer Lampard 3-year deal | Anthony S Casey Singapore

LONDON — Chelsea will make a formal approach to Derby County for manager Frank Lampard this week and want to offer their former midfielder a three-year contract to succeed Maurizio Sarri, sources have told ESPN FC.

Sarri’s departure to take over at Juventus was confirmed Sunday, with Chelsea director Marina Granovskaia having said the 60-year-old had asked to be allowed to return to Italy to be closer to his family and friends.

Lampard has been identified as the preferred choice to take over, with former Chelsea academy coach Jody Morris and fitness coach Chris Jones expected to join him in returning to Stamford Bridge.

Derby want to keep Lampard after a positive first season in which he led a vibrant young team to the Championship playoff final, and they are understood to have offered him a contract extension to underline how highly he is valued at Pride Park.

Chelsea would be required to pay £4 million to release Lampard from his Derby deal, but they are well placed to do so after Granovskaia secured around £5m from Juventus in the agreement that took Sarri to Turin.

“There’s no change in the situation at present, except for the fact that Chelsea no longer have a manager,” Derby owner Mel Morris said in a statement to talkSPORT radio Monday. “We have made it clear to everyone, but most importantly to Frank himself, that we want to retain him at the club for the long term.

“If Chelsea want to hire Frank, then it is in their gift to make an offer in pursuit of that. In the meantime, we will continue to put our best foot forward to continue with our plans for the coming season.

“We will work closely with Frank in that regard, so that he knows how much he is wanted by everyone associated with the club.”

Rugby tournament in Australia May 2019 | Anthony S Casey Singapore

TikTok Is the New Music Kingmaker, and Labels Want to Get Paid – Bloomberg | Anthony S Casey Singapore

They’re seeking a better deal after they missed the rise of the social video platform and sold music rights for a flat fee.

May 10, 2019, 4:00 PM GMT+8
Lil Nas X performs onstage during the 2019 Stagecoach Festival at Empire Polo Field in Indio, Calif., on April 28, 2019. 
Lil Nas X performs onstage during the 2019 Stagecoach Festival at Empire Polo Field in Indio, Calif., on April 28, 2019. PHOTOGRAPHER: MATT WINKELMEYER/GETTY IMAGES

Fitz and the Tantrums were wrapping up the tour for their third album last year when their label, Atlantic Records, told them that their song HandClapwas climbing the charts in South Korea. “We were shocked,” says Lisa Nupoff, one of the group’s managers. The Los Angeles-based pop band had never been there, or anywhere in Asia for that matter. But by April of 2018, HandClap had topped the international charts in the world’s sixth-largest music market, outperforming Camilla Cabello’s Havana, the most popular song in the world last year. A couple months later, the song surpassed 1 billion streams in China—even more than it had received in the U.S.

Nupoff credits much of the song’s success in Asia to TikTok, a social video app that allows users to record and share short clips of pranks, dance routines, and skits set to music. The song took off in South Korea after the 1Million Dance Studio troupe recorded a video set to the song, which other users replicated in their own videos. It went viral in China after a player of the video game PlayerUnknown’s Battlegroundsuploaded a film combining gunshots of a weapon from the game with HandClap to Douyin, TikTok’s China-only equivalent. “It was just fans listening to the song, posting videos, and doing dances in their homes,” Nupoff says.

TikTok and Douyin, both owned by the Chinese startup Bytedance Ltd., are propelling songs from obscurity to ubiquity overnight, rewriting the path to stardom for some acts. While Fitz and the Tantrums had already experienced success at home, the burst of fame on TikTok persuaded the band to focus on Asia as it rolls out its new album.

The list of acts that owe sudden success to TikTok grows by the day. Lil Nas X just scored a No. 1 song on the Billboard charts—and a record deal—after his song Old Town Road went viral on TikTok. And Supa Dupa Humble, a producer from Brooklyn, doubled his daily streams. “If you can get a song on Douyin, you suddenly get a viral impact,” says Simon Robson, the head of Warner Music’s Asian operations.

relates to TikTok Is the New Music Kingmaker, and Labels Want to Get Paid
Videos of web users dancing to HandClap became a phenomenon across much of Asia.

Musicians first met TikTok as musical.ly, a lip-syncing app founded in California and Shanghai in 2014 that had amassed more than 10 million daily users—mostly teens—by the middle of 2016. Music writers labeled it the new Vine, the now defunct short-form video app owned by Twitter Inc. Bytedance, which also operates one of China’s most popular news apps, saw enough potential in short music-enhanced video that it created its own service, Douyin, later that year. Douyin attracted 100 million users in less than 12 months; a separate app, TikTok, was created for outside the mainland.

Bytedance swooped in to acquire Musical.ly in November 2017 and folded it into TikTok, centralizing the pranks—and the music licensing—under one company. The app’s popularity has since surged. TikTok has been downloaded more than 1 billion times worldwide, and is available in more than 150 markets. It was the most downloaded free app in the world for a time last year.

The app’s sudden rise caught record labels off-guard and revived an old debate in the music industry: Is this new internet service giving artists free promotion, or simply getting rich off their work? Record labels have resisted hundreds of companies, including MTV and YouTube, that wanted to offer music for free and pay little in return. As paid streaming services Spotify and Apple Music have revived record sales in recent years, labels have tried to squelch any app that offers music for free.

TikTok, however, presented a new way to promote songs. Unlike YouTube, which features full songs, TikTok lets its users include only snippets of music in their 15-second clips. So record labels licensed TikTok the rights to music for a flat fee of only tens of millions of dollars, comparable to what record labels get from Spotify each week, to test what would happen. The growth of TikTok and the news app Toutiao has boosted the valuation of Bytedance to about $75 billion, making it one of the world’s most-valuable startups. That rankles the music labels, which are still being paid under the original low-priced deal. “When I left [last year], the industry said these deals are not going to work anymore,” says John Bolton, a music executive who helped Bytedance strike its previous deals with music companies. “It sounds like that still has not been figured out.”

Labels are now asking Bytedance for hundreds of millions of dollars in guaranteed licensing payments, and they’ve threatened to pull their music from the app’s library if they aren’t rewarded.

TikTok would be rather boring without music, says Yang Lu, the general manger of music for Bytedance, which is now planning its own paid music service. But he’s quick to add that the app has been beneficial to the music industry, by creating programs to support independent artists in China, Japan, and South Korea, and has teamed up with labels around the world to help promote releases. And there’s little question that Bytedance’s apps motivate music lovers: On any given day, as many as half the songs in the top 10 on Chinese music services have been made popular by TikTok or Douyin. “We are not a music promotion app,” Lu says. “But we did happen to have a huge impact on music promotion. We are a very positive force.”

Many artists agree. Supa Dupa Humble promoted his song Steppin on Instagram when he first released it in 2017. The track garnered more than 3 million streams, enough to earn Supa, whose real name is Tarique St. Juste, a deal with Roc Nation, an entertainment company founded by hip-hop mogul Jay-Z. Supa had never heard of TikTok when he first learned his song was going viral, but daily streams of Steppin on music services more than doubled as soon as people started including it on videos on the app. The song has since been streamed more than 19 million times. “It’s a meme world,” he says. “TikTok exposed us to a whole new set of fans.”

The challenge for artists like Supa is figuring out how to capitalize on that growth. HandClap was a hit before it got to China, reaching the top five on the alternative and rock charts in the U.S. in July 2016; it’s Fitz and the Tantrums’ first song to go double platinum. But it didn’t start to gather fans in South Korea until almost two years after its U.S. release. Listeners in South Korea and China know HandClapfrom watching app clips, but many have never heard of Fitz and the Tantrums.

The band will now travel to Asia in conjunction with the release of its fourth album. Nupoff has been working closely with Warner’s labels in South Korea and China to build relationships with streaming services in the region. “2018 was the year China and Korea exploded,” she says, “and 2019 is when we hope to harness it.”

Premier League Inks Global Sports Betting-Data Deal With Genius | Anthony S Casey Singapore

Liverpool's Dutch defender Virgil van Dijk.
Liverpool’s Dutch defender Virgil van Dijk. Photographer: Christof Stache/AFP via Getty Images

The English Premier League, which features global soccer brands such as Manchester United, Chelsea and Liverpool, has selected Genius Sports Group to exclusively collect and distribute its data to betting companies worldwide.

Next season, Genius will replace Perform Group, which agreed last month to be sold to Vista Equity Partners by billionaire Len Blavatnik’s DAZN Group. Financial terms of the multiyear deal with Genius weren’t disclosed.

Through Betgenius, its sports-betting division, Genius will collect live data from inside stadiums at more than 4,000 games and distribute it in less than a second to hundreds of licensed gambling houses. The deal includes games in the EPL, English Football League and Scottish Professional Football League.

Fast, reliable data is at the heart of what drives sports betting. It’s an essential component of what’s called in-game or live betting — point-by-point, play-by-play gambles that drive most of the wagering. That same data may be used by media companies to improve programming and engagement, both of which makes the content more valuable.

“English and Scottish football is vital to any sportsbook,” said Adrian Ford, general manager of football at Dataco, the data rights holder of all competitions covered by the agreement.

Soccer’s Share

According to the U.K. Gambling Commission, soccer accounts for 46 percent of online betting revenue. The breakdown isn’t league specific, though the EPL is widely considered the most popular in the world. The wagering also helps expand the league’s presence in Asia, where the vast majority of gambling happens illegally.

Getting exclusive rights to the EPL is a coup for Genius, which was sold last year to private equity firm Apax Partners LLP. Genius Chief Executive Officer Mark Locke called the contract “transformational” for the company.

“This deal gives Genius Sports exclusive access to the most valuable sports-betting content in the world and reinforces our commitment to delivering the most competitive products and services for our customers,” he said.

Ajax Shares Fall 21% as Spurs Snatch Final Spot With Late Winner – Bloomberg | Anthony S Casey Singapore

Shares of AFC Ajax NV tumbled after the Dutch soccer team missed out on its first Champions League final since 1996 following an agonizing last-gasp defeat to England’s Tottenham Hotspur.

Brazilian Lucas Moura completed a sensational hat-trick in the ninety-sixth minute of play in Amsterdam to wipe out two first half Ajax goals and send the English Premier League side to the final by virtue of scoring more away goals, with the teams tied 3-3 across two games.

Ajax’s stock fell as much as 21% in early Amsterdam trading, erasing a rally of about the same amount that followed the team’s 1-0 win in London last week. Defeat cost the club at least an extra 15 million euros ($16.8 million) in prize money, equal to about 16% of its 2018 adjusted revenue.

But despite crashing out of the competition in the cruelest manner, Ajax shares remain up about 52% over the past year. In addition to an increased share of tournament revenue awarded by European governing body UEFA, the unexpected run to the semi-finals has put the side back among European soccer’s elite, which will likely give it added leverage when negotiating commercial deals with sponsors.

Stock pares recent gain as team misses out on Champions League final
It’s also fueled speculation of big transfer payments as other teams come scouting for Ajax’s young stars. FC Barcelona have already snapped up 21-year-old midfielder Frenkie de Jong for 75 million euros.