Investment - Host City

Bruin: investing in people’s passions

The way sport content is consumed is changing dramatically, and this is changing the business of sports events. PwC’s Sports Survey 2021 revealed the top “key market force” in the sports industry to be the transforming media landscape.

“We want to invest around the change,” George Pyne, Founder & CEO of Bruin Capital told SportsPro Activision conference. “The pandemic is accelerating the adoption of all things digital, which if you’re investing in technology is a good thing.”

The pandemic has presented challenges as well as opportunities.

“Portfolio companies are having a hard time hiring people and not meeting with clients – and there are supply chain issues. But strategically we feel good about the long-term technology change that’s taking place today.”

Bruin bought data-driven sports marketing agency Two Circles before the pandemic. Other recent acquisitions include Deltatre, TGI and OddsChecker. Bruin also bought golf simulation technology Full Swing, which experience mixed fortunes due to the pandemic. “Home simulators sailed off the charts, but golf was one of the sports that people could still do as it was outside.”

But Bruin’s investments have generally been well placed at this time of transition. “All our companies had a good tailwind. It’s working for us, being in the tech space – tech is disrupting life and for sure will disrupt sports.

“When I started Bruin we wouldn’t have been so tech focused. Our focus is growth, so where in the sports ecosystem can you find returns? We find the best place is in technology. We’ve landed on technology because of the growth credentials.”

 

High risk threshold

Pyne offered an insight into the needs of startups.

“When you’re looking for capital, you need capital that’s patient, easy to work with and can help you grow. When you are a startup you need to be able to pivot, to adjust, to be nimble and adapt to what’s going on around you.”

Investing in startups is a high-risk business. “In the startup space, most don’t make it. If you have 10 companies, about three are going to make it. It’s about investing in technology and people you believe in.

“Your threshold for risk is quite high. We don’t expect all to be successful – it’s the level of success you’re looking for.”

Pyne empathises with the disappointments that everyone in business faces from time to time. “I’ve been fired by a client, I’ve missed a budget, I’ve failed. Every day isn’t a sunny day. We are good to be around when things go bad – that’s the Bruin secret sauce. If you’re not a people business, you can’t be successful.”

From 2006 to 2014, Pyne was President of Sports and Entertainment and Board Member of IMG. “Having the experience of running a company, we are way more empathetic to CEOs. If you’re a CEO or management team, we are able to open doors. And equally importantly when things don’t go well, we understand. Those things are important to CEOs and CFOs.

“What works for me is three-year plans. It’s not just about money, but ideas. Check in once a month on strategy and numbers and you’ll never really fall apart. We have great CEOs, they run the businesses, we’re just here to help; we’re on their side.

“It’s based on trust, integrity, doing what you say you’re going to do – and how you handle it when things go wrong. Nobody’s perfect, we try to address our mistakes in the best way possible.”

 

New and emerging technologies

Technologies are emerging at an unprecedented rate – but which ones are here for good?

“NFT is probably here to stay. Cryptocurrency and the blockchain looks pretty sticky too.

“Sport reflects life and is going to follow the trends – all those trends are being enabled through global technology and sport will follow, which is good. I embrace innovation.

“If you look at Microsoft and Activision and the impact of the metaverse – that is the new frontier. There are going to be big winners and big losers and a lot of value created. There are going to be some big enterprises that come out of those categories.”

“NFTs and crypto is very exciting, but I’m more into the data and lifetime buy of the consumer. There are so many ways to interact with consumers through data and there are so many opportunities to be great in that area.”

“The relationship between club and consumer will define success in the future.”

Which perhaps brings us to the real reason that technology is such a huge growth area – it connects people with their passions.

“Golf is a passion point and Full Swing is satisfying that passion point – we love a good passion point in a partner.

“Our focus now is on TGI and Full Swing, helping them to do well. Somewhere along the way this year we’ll probably find a new technology platform to invest behind.

“It’s all about people. Technology without people is nothing.”

This article is based on the live Q&A by SportPro’s Editor-at-Large, Eoin Connolly

Banking on the big restart of sports and events

Raymond James Stadium welcomed 24,835 fans to watch the home side Tampa Bay Buccaneers prevail at Super Bowl LV (Photo credit: elisfkc2 https://www.flickr.com/people/187103922@N04/)

It might not feel like it right now, but sport event rights holders are extremely fortunate. They have access to a wide range of revenue streams: broadcasting and city hosting rights, ticket sales, sponsorship and public funding. For the last twenty years these streams flowed ever faster, until the age of social distancing and staying at home blocked many of these lifelines.

With loyal customers and packed calendars of events, sports organisations rarely felt the need to save up for a rainy day. Few could have envisaged a black swan like Covid-19 preventing them from serving their loyal customers or paying their bills.

While some organisations have been able to stage events through the pandemic, they have tended to lack audiences to sell tickets to – and not all sports have a level of broadcast reach that can make up for this shortfall. This means most rights holders are now under intense pressure. And one person’s loss is another’s gain.

“Private equity companies are circling due to Covid,” says Andy Westlake, Chairman of the European Sponsorship Association. “A lot of rights holders will go over the cliff if they don’t get investment.”

The most popular sports have attracted ownership from high net worth individuals for decades, but institutional investment in teams is a relatively new phenomenon. “They were once seen as risky ventures that wouldn’t get past an investment committee – this has changed,” says Nic Couchman, Head of Sport at international law practice Charles Russell Speechlys (CRS).

 

Private equity investment in sports federations

Private investment in international sports federations is also on the rise. One of the earliest adopters was the World Professional Billiards and Snooker Association (WPBSA), which set up World Snooker in 2002 as a self-perpetuating commercial model to fund the not-for-profit WPBSA. 

“Private equity is very interesting to sport right now," says Jason Ferguson, Chairman of the WPBSA and Director of World Snooker Ltd. "International federations can do things differently; many are not running as proper businesses.”

Much more recently, the International Table Tennis Federation (ITTF) set up World Table Tennis as a new commercial arm. “Establishing World Table Tennis as the rights holder has enabled us to get equity, which has positioned us well through the pandemic,” says Matt Pound, Director of World Table Tennis.

The latest federation to buoy its governance function with a commercial arm is the International Volleyball Federation (FIVB), which at the start of February 2021 announced the launch of Volleyball World with backing from private equity giant CVC Capital Partners.

Rugby is also attracting a wave of private investment. CVC, having invested £200m in a 27% share of Premiership Rugby in 2018, is now closing in on a major investment into the Six Nations. Meanwhile, Silver Lake have reportedly offered US$330m for 15% stake in New Zealand Rugby.

The sport’s international federation, World Rugby, has been relatively fortunate in that the cycle of its World Cup events have so far avoided being impacted by Covid. The men’s event in Japan in 2019 broke attendance and viewing records despite Typhoon Hagibis, while the largely Covid-free New Zealand hosts are expected to fill stadiums in 2021.

But financial challenges remain. “With Covid, many of our Union members are struggling due to a lack of crowds and matches,” says Mihir Warty, Director of Strategy at World Rugby. “We have drawn down on our reserves to actively support several in managing their cashflow issues’.

“We are conscious that some organisations within the sport have attracted external investment. This appetite from investors points to the potential of rugby to continue growing as a global sport.”

 

Sport gets serious

“Investors normally look for strong commercial fundamentals – predictable, annual revenues, strong brand loyalty and market share –  and the ability to use cash and expertise to increase market share and accelerate growth,” adds Robert Datnow, Managing Director of The Sports Consultancy. “For decades, sport has been seen as a complex and impenetrable investment – with a few notable exceptions – but now, the right opportunities, at the right price, and with the right execution plans are serious business.”

Recent years have also seen the rise of strong challenger brands within the sport event space. Super League Triathlon was set up with venture capital funding from triathlon fan and co-founder Leonid Boguslavsky – a model that CEO and co-founder Michael Dhulst says is others will no doubt replicate. “There will be growth of new events with passion-driven investors. Private investment is going to become more important for rights holders.”

It’s not just immediate financial concerns that are driving the trend towards private investment: the media landscape is shifting the foundations of the industry. The sport event industry is reliant on broadcasting revenues, which has become increasingly problematic as the internet draws audiences away from TV.

“Sport at its core is a media enterprise. It was inevitable that it would confront forces of changes due to new technologies and evolving consumer habits. The pandemic accelerated all of that,” says Scott Novak, Head of Global Communications for Bruin Sports Capital.

As Giles Morgan, global sports industry veteran and executive vice president of Pumpjack Dataworks puts it, “Sports has reached a perfect storm. The sports industry was created around the eyeball; TV ratings were the gold standard. Sponsorship is the most valuable form of marketing, but it’s quick to fall in a downturn – and it relies on TV.”

 

Future growth of sports events 

All this disruption brings an opportunity for private equity. But investors are not only looking for distressed assets; they are looking for future growth.

“We have been approached by investors from a variety of sources. There’s clearly a lot of interest in investing in sport," says Mihir Warty. "However, the crucial thing is to identify properly what the money is needed for. All federations and rightsholders need to ensure that investment is seen as just that – a way of growing the entity and driving sustainable revenues. Not as a windfall.”

The loyalty of sports fans is an important, untapped asset. Although younger people are becoming more fluid about which teams they support, tending to follow the individual athlete as much as the team, there are still few industries that have as unique a hold on their customer’s hearts as sport.

“The reason that investors see potential returns in these properties is fundamentally because of the unrealised value in the fan bases,” says Charlie Greenwood of Sports Loft. “If the teams can start to know that fan base better, engage with them more through great content and sell them more products – all of which requires better technology than what has been previously used – then the investors can increase the value in the property.

“As investors are looking at investments into teams and leagues, there is much more appetite for investing in the technologies that support sports organisations - and in many cases there is an opportunity to use the sports property to help increase the value in their tech investment.”

A challenge for investors will be how to value companies coming out of the pandemic, and the rate at which fans will return – not only buying tickets to live sport, but also subscriptions and merchandise during what could be a prolonged economic downturn. A rapid rebound would represent a great opportunity for investors. According to Ian Clayden of BDO, “Private equity views sports as a sector that can mobilise quickly post-lockdown.”

Where future growth will come from is a question that applies not only to sport. Asia – particularly China – is emerging fast and strong from the pandemic. There are large, young populations with growing disposable incomes representing plenty of headroom for growth in the entertainment industries.

Sports are not the only events that have been hit by the pandemic. “Trade shows enable the discovery and furthering of commercial relationships and long-term partnerships in a way that no digital business has been able to replicate online so far. At the right entry price, this asset class could deliver quite attractive returns on the 2023-2025 horizon,” wrote Alfonso Marone of KPMG in a recent insight piece.

Music festivals have been equally badly hit, with no viable digital alternative to the real thing. Before the pandemic, private investment was growing in the live entertainment sector, which could enjoy a similar rebound to sports post-Covid.

“As the owner of Host City, the world’s largest meeting of sports, business and cultural events, we know these properties have perennial value to a variety of stakeholders,” said Matthew Astill, CEO of Cavendish Group, which also owns leading China-Europe investment forum International Capital Conference. “As the events industry opens up around the world, the opportunities are immense for anyone investing in these vital sectors.”

But private equity won’t go in with its eyes closed. Large, structured investors want detailed data on a business and its customers. Fan bases are a massive untapped resource of data – the sports and entertainment organisations that can show business acumen and a deep knowledge of their customer base will be the ones that are most attractive to investors. And in this area, sport and entertainment have a lot of homework to do.

Private investment will be a central theme of Host City Asia on 14 April and Host City Americas, set for 30 June (both virtual). Host City's global series of events climaxes in Glasgow with the hybrid Host City 2021 on 7-8 December 2021. For more information ask ben.avison@hostcity.com

Private equity firm CVC invests in FIVB to drive growth of volleyball

(Photo: FIVB, via www.microsoft.com)

[Source: FIVB] The International Volleyball Federation (FIVB) and CVC Capital Partners Fund VII are pleased to announce the launch of Volleyball World, a new partnership which will drive innovation, growth and investment in volleyball around the globe.

Volleyball is the fourth most popular sport globally, with more than 800 million fans and high participation, across attractive markets, including Italy, Brazil, Japan, Poland, China and the US. Volleyball was the most watched sport at the 2016 Rio Olympic Games, with 2.6 billion viewer hours globally.

Volleyball World will become the commercial entity for the sport around the world, initially for FIVB and aiming at working later alongside other leagues and federations, with the goal of increasing the profile and popularity of the sport, through fresh investment for the benefit of fans, players and National Federations. Volleyball World will be responsible for the commercial operation of key volleyball and beach volleyball international events, including: the World Championships, Olympic Qualifiers and the Volleyball Nations League. The partnership will focus on event hosting, fan experience, media, data / digital opportunities, and sponsorship to grow commercial revenues for reinvestment, which will ensure the long-term success of the sport.

FIVB, together with its 222 National Federations, will remain the sole, global volleyball regulatory body with responsibility for the sport and its development. As the majority shareholder in Volleyball World, FIVB will oversee the new commercial vision for volleyball while ensuring the interests of all stakeholders are represented. CVC brings extensive experience to this partnership, with a strong track record of investing in multiple sports businesses, including Formula 1, Moto GP, and Rugby. CVC also brings access to a broad international network of relationships with offices in 22 countries in Europe, Asia and the Americas, which will help accelerate the commercial growth of volleyball and investment in the sport at all levels.

Finn Taylor, who was previously the head of Cirque du Soleil’s Global Touring show business overseeing significant geographic expansion and growth, will be the CEO of Volleyball World. Fernando Lima, formerly FIVB Secretary General will Chair the Board of Volleyball World. Other Board members will include Fabio Azevedo (the current FIVB General Director) and Simon Denyer (founder and former CEO of DAZN Group).

FIVB President Ary S. Graça F° said: “We are delighted to partner with CVC to launch Volleyball World. The FIVB is committed to constantly innovating while searching for opportunities that can sustain the development of the sport around the world. In CVC we are confident we have found a partner with the experience, network and capital to support FIVB in its mission to further professionalise the sport for the benefit of fans, players and National Federations.

Volleyball World will boost our sport’s financial growth and deliver lasting legacies for the whole game. Working in partnership with CVC we will be able to secure volleyball’s future and emerge stronger from the current challenges.”

CVC Capital Partners Head of Sports, Media and Entertainment, Nick Clarry added: “Volleyball is one of the most popular sports in the world and there is a huge untapped fan base and commercial potential. FIVB & CVC working together at Volleyball World, will drive innovation and greater fan engagement, which will accelerate growth and allow for substantial reinvestment back into the sport. We are delighted to be partnering with FIVB and look forward to working closely together to develop the sport globally, working collaboratively with all the players, leagues and federations in the years to come.”

Super League Triathlon enters US market with acquisition of Malibu Triathlon

Super League Triathlon is set to establish itself in the USA with the acquisition of the Malibu Triathlon.

The prestigious event has welcomed world class athletes as well as Hollywood stars such as Matthew McConaughey and Zac Efron during its long and illustrious history and secures Super League Triathlon a significant entry into the US market.

Malibu Triathlon will remain under its own branding and will also continue to support Children’s Hospital Los Angeles (CHLA), having raised more than $15m for the cause. Further announcements on Super League’s exciting plans for the event will be announced in early 2021.

Super League Triathlon CEO and co-founder, Michael D’hulst, said: “We handpicked the Malibu Triathlon for this investment due its incredible history in sprint and Olympic distance racing and its incredible potential for Super League Triathlon.

“Acquiring the Malibu Triathlon is a perfect opportunity for Super League to move into the USA and build our presence in a region that already has a strong affinity with our exciting and dynamic racing and the content that we offer. It also aligns with our wider strategy to add more major cities and regions to our portfolio.

“We would like to thank Michael Epstein and his team who have worked so hard down the years to build and enhance the event, as well as previous owners Motiv.

“The prospect of Super League being involved with such an iconic race is very exciting.”

The Malibu Triathlon was first held in 1986 and retains a special place in the sport’s history.

The event starts and finishes on the sands of Zuma Beach and takes in the incredible ocean views of the Pacific Coast Highway.

This year’s event was replaced by the Virtual Triathlon and Duathlon Presented By Bank Of America. More than 700 participants from around the world took part raising $200,000 for Pediatric Cancer Research at CHLA.

Malibu Triathlon is a favourite of the film and entertainment industry with the likes of Tom Cruise, James Marsden and Jennifer Lopez having taken part.

[Source: Super League Triathlon]

Can Bolton and Bury survive no-deal EFL exit shock?

Bolton and the Macron Stadium (Photo: TMA Harding / Shutterstock.com)

Communities in the North West of England have been taking a bit of a hammering of late. Over a scorching bank holiday weekend, a high magnitude tremor from Cuadrilla’s fracking operations shook the Lancashire city of Preston.

The English Football League (EFL)’s office in Preston might have been closed at the time, but EFL Executive Chair Debbie Jevans CBE* has been working tirelessly over the bank holiday to deal with a different kind of shock – the possible departure of two clubs from the nearby towns of Bolton and Bury from League One due to crises in their ownership.

Jevans has granted both Bolton Wanderers and Bury FC an extension of until 5PM on Tuesday to finalise their takeovers. Both teams have had to cancel or postpone matches due to their financial crises.

While the EFL will not want to lose teams from the league, neither does it want to postpone any more matches. It is hoped that both clubs will manage to complete their sales by close of business today, despite the fact that Bolton’s negotiations with Football Ventures collapsed over the weekend.

Meanwhile, a potential buyer for Bury has emerged in the shape of C&N Sporting Risk.

Jevans told BBC Radio 5 Live on Sunday Morning that the company has “demonstrated to us enough source of funding.

"There was enough credible information before the board to allow this extension till Tuesday, but in doing that, no more games have to be postponed."

Responding to C&N Sporting Risk’s reported disappointment that the extension was not longer as its legal adviser was unavailable until Wednesday, Jevans suggested he could “give advice on the phone and by email."

"There is enough time, if all parties want to do a deal by then," she said.  "We've got many examples where clubs have changed hands in a very short period of time and we see no reason why this can't happen by Tuesday.

In a country where power and opportunities continue to be drawn towards major cities, towns like Bolton and Bury need focal points like football clubs.

Lisa Nandy is MP of nearby Wigan and co-founder of Centre for Towns. “Sport is basically the glue that holds the community together,” she told Politico. “If you go to any part of the borough you’ll find grassroots community sports clubs. You’ve got every single generation there — grandparents, parents, aunties, uncles, kids, the works… It’s a big source of pride. It’s part of our history, part of our culture, part of our identity.”

Bolton, Bury, Wigan and Preston all voted for Brexit. Perhaps for towns like these to have the future they deserve, they need more leaders like Debbie Jevans who are prepared to forsake their holidays, address audiences and help to conclude negotiations successfully – before the tremors get any worse.

*Debbie Jevans CBE is speaking at Host City 2019 in Glasgow on 26-27 November.