Sat. Jan 22nd, 2022


Prosperous New Year Scoreboard readers. It’s hard to believe the holidays are over, but the news just keeps coming. We went on Novak Djokovic watch all week how the tennis star’s vaccine skepticism led to his detention in Australia ahead of the first grand slam tournament of the year. While this one is playing, we keep Oz’s coverage here and read more about the minority of influential athletes vaccine resistance.

The bigger question is how long Djokovic and other vaccines can last in sports. French President Emmanuel Macron stated this week that more restrictions were part of a strategy to ‘Go away’ the unvaccinated to pressure them to be protected from Covid-19. The place for the next grand slam? Roland Garros in Paris.

This week we dived deep into Arctos Sports Partners, the private equity firm incorporating significant stakes in sports teams, and the emergence of a new superpower in baseball.

Sam Agini, Sports Business Reporter

Inside Arctos Sports Fund – Can a Rich Grow Forever?

Atlanta Hawks center Clint Capela (15) defends against Sacramento Kings guard De'Aaron Fox

Sacramento Kings: Shaq out © José Luis Villegas / AP

At the height of the early pandemic, when virtually the entire world was in some form of lockdown, an unlikely pair of financial and sports executives declared their new private equity fund open for business.

Since its launch in April 2020, Arctos has become the fastest growing collector of minority sports interests, and has raised passive investments in 16 professional teams across the US and Europe. Its first fund closed in October 2021 with more than $ 2.1 billion raised, spurring a spate of investment as Arctos began investing in baseball. Boston Red Sox, socks’s Liverpool FC, basketballs Golden State Warriors and Sacramento Kings, and a trio of National Hockey League clubs just last month.

The Arctos founders, former private equity manager Ian Charles and former Creative Artists Agency and Madison Square Garden head Doc O’Connor, explain their philosophy behind the firm and their investment strategy in the FT, which is worth reading here.

Perhaps the biggest question hanging over the group is what potential future retirement out of their possession might look like. Typical private equity firms can hold from five years to a decade. When do their limited partners, who have contributed billions in funds to raise these sports interests, hope to see returns?

Charles and O’Connor say any future retirement is likely to reflect that of other secondary private equity markets – Charles built his career with a range of funds that build expertise in illiquid markets. No one would give a timeline for approximately when, if ever, investors would want returns.

Rob Tilliss, founder of the consulting firm Binnekringsport, told Scoreboard that exits can take shape in a number of ways: Arctos can sell if and when a controlling owner ever sells, or sells directly to their own investors, to name two. Other sports investors are raising eyebrows over their quick acquisition series – one has privately said that Arctos is “like a vacuum that sucks up every bit of fluff they see”.

For now, private capital has some clear advantages: because most league rules insist that institutional ownership is passive, more control flows to the majority owners. Minority stakeholders can turn to funds pre-approved by professional leagues for quick sales – as was the case for basketball legend Shaquille O’Neal, who sold his small position in the Kings to Arctos last year, rather than go through a lengthy due diligence process to sell to an individual buyer.

Fanatics: the company spends $ 500 million on trading cards

Los Angeles Angels hit the hit Shohei Ohtan

Major League Baseball: Trading Madness © Ashley Landis / AP

Accelerated by the pandemic, New York-based digital sports retailer Fanatics has expanded from American sports to European football teams and Formula One, and is valued at $ 18 billion in fundraising backed by high-profile investors, including SoftBank and Silver lake last August, which made an even richer man founder Michael Rubin.

Now Fanatics is accelerating its expansion by going. . . analog. This week it announced a $ 500 million acquisition of Topps’s trading card business, a brand that is synonymous with the production of collectibles. Major League Baseball cards. The MLB itself was also an investor in last year’s $ 325 million fundraiser. But the deal does not include Topps’ candy and gift voucher arm.

The takeover comes just months after a new venture launched by Fanatics won the exclusive rights to produce MLB cards, which ended Topps’ long-standing MLB deal and a plan to make it public via a special purpose acquisition agreement at a valuation of $ 1.3 billion.

So why buy now? For one, interest in baseball cards roared during the pandemic, and the deal also means that Fanatics could start much earlier than 2026, when the earlier MLB deal was meant to kick in.

Furthermore, the acquisition comes with a back catalog of cards and intellectual property dating back 70 years, while also ensuring that Fanatics can continue to use Topps branding to appeal to traditionalist collectors.

But one person close to the company says the revolution could go beyond just bringing sophisticated techniques into digital retail to trading charts, with the company also looking at opportunities in the fast-growing world of non-swingable tokens. NFTs, which work on blockchain technology similar to those that support bitcoin and other cryptocurrencies, have grown into a $ 41 billion mark in 2021. Topps has already made a start with collectible baseball NFTs but the person said it was still going to benefit from the historical catalog.

The agreement also shows that Fanatics – and Rubin – are not afraid of aggressive but clever steps to shake up the established order.

Fanatics’ next challenge is to live up to its rapidly rising valuation by realizing its ambitions.

Highlights

Southampton's English midfielder James Ward-Prowse

Southampton: changing guard © Glyn Kirk / AFP via Getty Images

  • A group of investors led by Serbian media magnate Dragan Solak obtain Southampton in a transaction appreciates the English Premier League club at £ 200m- £ 250m, including debt, the latest in a series of takeovers by top-flight football teams in England during the pandemic.

  • The New York Times has agreed to buy digital sports outlet The Athletics for $ 550 million, according to people familiar with the matter. The deal is the end of protracted talks about the future for the full-scale but unprofitable sports news site, and will be one of the Times’ biggest news coverage to date.

  • FT Asia business editor Leo Lewis looks at the future of football in the metaverse, via a project between Manchester City and Sony, for this weekend’s FT Magazine.

  • David Blitzer and Ryan Smith, co-owner and owner of the National Basketball Associationsay Philadelphia 76ers and Utah Jazzadded an respectively Major League Soccer team to their respective empires with the acquisition of Real Salt Lake, per Sporty.

  • Wasserman, the sports talent agency run by entertainment manager and Los Angeles 2028 Olympic Games host Casey Wasserman, agreed to acquire a talent agency for sports broadcasters The Monday group, According to The Wall Street Journal.

Transfer market

  • Manchester United, the largest revenue-generating club in the Premier League, has appointed Richard Arnold as its CEO, with the club trying to return to winning ways, which since 2013 has failed to win the local title. The appointment points to evolution rather than revolution, as the American billionaire Glazer replace family owners Ed Woodward with the team’s existing commercial chief.

Finale Buzzer

Dirk Nowitzki

Dirk Nowitzki: NBA legend © @NBA

Wednesday night the Dallas Mavericks held a jersey retirement ceremony for the German basketball legend Dirk Nowitzki, who presented him with a commemorative trophy for his 21 seasons with the NBA franchise. In his speech, Nowitzki remembers his arrival in Texas and the reason why he finally committed to Dallas – a greeting that Nowitzki heard years later was not quite as it seemed.

Scoreboard was written by Samuel Agini, Murad Ahmed and Arash Massoudi in London, Sara Germano, James Fontanella-Khan and Anna Nicolaou in New York, with contributions from the team covering the Due Diligence newsletter, the FT’s worldwide network of correspondents and data manufacture. visualization span

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