4 days ago
Six Nations rugby courts Gulf sovereign wealth
The Six Nations Championship is being lined up for new investment as part of a multibillion-pound attempt to cash in on the global growth of sport.
The private equity giant CVC Capital has called in bankers to review options for its sporting portfolio, which include stakes in Europe's top rugby competition, Spanish and French top-flight football and women's tennis.
A full squad of bankers from Goldman Sachs and the boutique advisers PJT Partners and Raine Group have been called up to help package up the disparate collection of sports and examine opportunities for refinancing and more acquisitions.
The collection of assets, being brought together under an umbrella company with the working title SportsCo, is also being prepared for refinancing.
City sources said the plans could include the sale of minority stakes in the overall business, which is valued at more than £10bn.
CVC has appointed Marc Allera, the former head of BT's consumer division, to spearhead the discussions as chief executive of SportsCo.
The private equity firm is said to believe its portfolio could attract investment from Gulf sovereign wealth funds or fellow heavyweight buyout specialists. It is understood that a string of meetings have been lined up in the coming months with bankers hopeful of securing investment before the end of the year.
No decisions on the final financial structure of SportsCo have been made, however.
Private equity in sport
The moves are designed to capitalise on booming global investor interest in sport, a field in which CVC has been a private equity pioneer. The firm enjoyed major success with its investment in Formula 1, which delivered billions in profit with a sale in 2016.
The gains drove CVC's confidence in further sporting ventures in rugby and football.
However, the relative complexity of club ownership and governance structures in these competitions has made it harder to make the swift operational and financial improvements on which private equity typically depends to deliver returns.
CVC's £1.3bn investment in a 13pc stake in France's Ligue de Football Professionnel has been particularly problematic.
A seemingly lucrative television rights deal with the streaming operator Dazn descended into acrimony, and then CVC's Paris offices were raided over allegations of corruption in its investment deal. The firm denies any wrongdoing.
Its sports expansion also met with bad luck. CVC's 2018 investment in English top-flight club rugby was predicated on significant increases in revenue from grounds and television rights. Those assumptions proved particularly heroic when the pandemic struck and at one stage came close to making the Premiership bankrupt.
SportsCo is being designed to allow CVC to refinance its portfolio and return money to its own investors while retaining control beyond the typical five to seven-year term of private equity ownership.
The new vehicle will be responsible for senior appointments in the sports leagues in which it holds stakes and could seek to co-ordinate television rights discussions in an increasingly globalised market in which the likes of Netflix and Apple are expected to play a growing role.
It comes at a time when private equity firms are generally struggling to cash in on investments made under very different conditions. Some 15 years of rock-bottom interest rates after the financial crisis delivered hundreds of billions of dollars into funds as investors hunted returns.
Flush with cash, buyout firms ventured into riskier businesses and paid higher prices. Now, with debt more expensive and valuations depressed, some are struggling to return cash to their investors and being forced to seek innovative ways to deliver returns.
