Fenway Sports Group, owner of Liverpool Football Club and Boston Red Sox Baseball, will look to acquire more professional sports teams and potentially a future stock exchange listing after securing a new investment that values the American group at 7.35 billion dollars.
Earlier this week, private equity group RedBird Capital and basketball star LeBron James acquired minority stakes in FSG, in a transaction that confirms its position as one of the sport’s most valuable ownership groups global.
Speaking to the Financial Times, FSG chairman Tom Werner and RedBird founder Gerry Cardinale pledged to use the new capital to buy teams in other leagues, such as the National Basketball Association and the National Hockey League of North America, as well as in European football.
“Fenway Sports Group was founded two decades ago and I think we have a lot of knowledge and experience in building and launching new businesses and in sports, entertainment and media,” said Werner. “We view Gerry as a critical partner in our interest in identifying and acquiring more assets.”
The push for growth comes, however, after previous discussions with RedBird and its special buying acquisition company, RedBall, over a potential the reverse merger collapsed.
This would have listed FSG publicly and given the owners of the group, led by billionaire John W. Henry, a faster and potentially larger short-term financial reward after years of careful management by the Red Sox and Liverpool, both of whom have made great progress. success in the field in recent years.
When asked if FSG could still sell either club and look for a quicker pay, Werner said: ‘If someone walks into your house and gives you an insane price, you look at them. . But our interest is certainly to conserve and develop the properties that we have. I think we’re seeing a lot of benefits, not just financially. We have a commitment to our supporters. “
Werner’s answer points to a larger problem for FSG, and indeed for the majority owners of other top-notch sports franchises: the ability to find buyers flush enough to write a check for billions of dollars.
In the United States, major sports franchises regularly trade hands for billions of dollars, like baseball’s New York Mets, bought in October by hedge fund titan Steve Cohen for $ 2.4 billion.
But such buying prices have not yet been reached in European football. Roman Abramovich, the Russian-Israeli billionaire who owns Chelsea, demanded a price over £ 2 billion last year from those seeking to acquire his Premier League club.
“How to get a valuation of £ 2 billion more for [a club in] a league with total revenue of £ 5bn and total net operating profit before tax of £ 500m, ”said Bob Ratcliffe, an executive at Ineos, the British chemicals group which had considered buying Chelsea as part of a larger sports portfolio. “How does that ever reconcile?”
This is the issue the FSG faces with Liverpool, one of England’s most successful clubs, which they acquired for £ 300m in 2010. Since then, the team have won the Champions League, Europe’s best club competition, and last season won the Premier League, securing their first English league title in 30 years. FSG’s assessment suggests that the football club alone is worth billions of dollars.
“The sports business is something that has not kept pace, in my opinion, with team evaluations,” said Cardinale, a former Goldman Sachs executive who helped launch the regional sports network for the Yankees from. baseball in New York, before founding RedBird, a sport-focused private investment group.
“These athletic assets and leagues are mini-businesses in today’s world, the way technology has transformed the way people want to receive and receive content, and especially live programming.” , he added.
A banker advising buyers of sports assets said a number of factors lead investors to own multiple teams across different sports, including diversification and scale.
“Owning multiple sports franchises in the same market gives the team owner more leverage over media partners when negotiating new media rights contracts,” said the banker, who asked not to be named as they were not allowed to speak to the press. “If it’s a team that plays in the summer and a team that plays in the winter, then you also have content all year round, which is invaluable if you have your own network.”
“If the two teams share the same arena, there can certainly be operational advantages in selling tickets and suites between the two teams. Finally, owning multiple franchises will give the business a much larger scale and can smooth out fluctuations from season to season, which may be more important for smaller market teams given the larger revenue base. low, ”they added.
In the meantime, private capital has occupied minority positions in the big leagues and teams, including Italian Serie A and the The San Antonio Spurs of the NBA. Major League Baseball and the NBA recently expanded their statutes to allow for such institutional investment.
As a result, and with the pandemic continuing, Cardinale said private investment in FSG made the most sense until markets “normalize”. “Later, we might think that at this point we can be a leader in sport and showcase public building and the kind of capital that goes with it,” he said.
Werner said that ultimately FSG will adhere to the same principles that have guided their management of the Red Sox and Liverpool so far.
“The reason we’ve grown is that we’ve focused on building a winning team every now and then, whether you call it ‘the diamond’ or ‘the pitch’,” he said. “The most important thing for us is to try to be the best in the class.”