26 June 2019

Rugby to score an M&A try or kicked into touch?

Sports teams and clubs have certainly attracted their fair share of mergers and acquisitions (M&A) over the years, having been targeted in 2,428 deals since records began, according to Zephyr, the M&A database published by Bureau van Dijk. While 2014 scored the most in terms of volume (243 deals), value touched down at an all-time-high of USD 11,769 million in 2016.

M&A in the arena so far this year appears somewhat subdued as only 58 deals worth a total USD 1,062 million have been announced, with only four of these valued at more than USD 100 million. Atlanta Falcons Football Club currently accounts for the largest in the field after Arthur Blank, the US businessman who co-founded Home Depot, sold a 10 per cent stake in the professional American football team to new limited partner Alan Kestenbaum and existing limited partners Doug Hertz and Ron Canakaris for a reported USD 300 million in March.

Italian football - or soccer, so as not to be confused with American football – clubs ACF Fiorentina and FC Internazionale Milano are next; Rocco Commisso, the president and chief executive of Mediacom Communications and the owner of soccer club New York Cosmos, acquired the former for USD 180 million after failing to score a deal for AC Milan last year; Lion Rock Capital bought a 31 per cent stake in the latter, which is more commonly known as Inter Milan outside Italy, in January from Erick Thohir, via International Sports Capital, for USD 170 million. LOSC Lille is the only other sports team or club to have been targeted in a deal worth more than USD 100 million in 2019 to date after converting debt in a USD 161 million capital increase agreement with Elliott Associates and current owner Gerard Lopez.

Undoubtedly, football and soccer hold sway over the M&A masses but surely it is time for rugby - be it union or league - to get involved in the scrum? At the end of last year, CVC Capital Partners took a minority stake in Premier Rugby for a reported GBP 200.00 million in a move which may have created an openside play for investors to enter the sport. Since then, Leicester Tigers has received various expressions of interest from a range of potential investors, which has prompted the rugby union club to hire Zeus Capital as a financial advisor on a strategic review of options, including a possible formal sale process, to create shareholder value.

Today, Leicester Tigers noted the “focus on commercialising the sport has created an attractive environment for investment at the club level for the benefit of all concerned, including players and fans.  Given its status as the country’s premier rugby club in terms of supporter base and track record, the board believes Leicester Tigers is ideally positioned to prosper from the changing structure of English rugby."

The statement comes a week after Kenyan newspaper the Star reported Kenya Rugby Union’s chairman Oduor Gangla, who just happens to helm Genghis Capital, wants to revive the union’s financing arm in order to generate funding for the country’s various clubs and to help commercialise the sport. Gangla told the Star: “Finance is key and I believe with this entity [Kenya Rugby], we can go a long way in addressing issues to do with sponsorships and making the sport more attractive as well as supporting our various national teams.”

It is a waiting game to see just how M&A or private equity investment in the sport goes from here, but one thing is certain, its fan base in countries ranging from the UK to New Zealand is not going anywhere.

© Zephyr