When it rains, it pours. Across continents, nothing could be truer than this proverb as the fortunes of sporting world unfold in tough times.
It is pouring troubled waters on the football leagues across Europe. Investors, ready as hawks now, are seeking to pick up stakes at cheaper valuations. Across the Atlantic, golf is seeing resurgent times as more and more people are swinging their clubs at the greens .
A dream story is unfolding for the video games industry as Epic Games, the makers of battle game Fortnite, is looking to raise nearly $750 million. If the funding goes through, the company will be valued at an incredible $17 billion.
Video game action is not quite visible to those not hooked on to them. But the passion for football, particularly in Europe, can be seen. And felt. As the biggest football league in the continent, 28-year-old English Premier League, resumed action this week, fans were missing.
Its sporting action generates over $5 billion annually in revenues. But with no action for three months, the Premier League clubs together stand to lose nearly £1 billion (nearly $1.3 billion) this year.
A consortium led by the Public Investment Fund of Saudi Arabia has expressed interest in buying Newcastle United Football Club. The bill is estimated to be around £300 million. More clubs may have to sell ownership if they have to keep their head above water and survive the pandemic impact.
A different brew is keeping Serie A officials busy these days. CVC Capital Partners is considering buying a stake into Italy’s top football league and spending €2 billion (approximately $2.2 billion) for it. That could get the firm a 20 per cent stake in the company and value the league at €10 billion.
While Serie A matches are set to begin on June 20, plenty of action on the side lines is keeping the dealmakers busy.
Private equity fund Bain Capital is also in the race to swoop a deal with a €3 billion ($3.4 billion) offer. It has made a preliminary office and a possible deal is at the early stages. It the deal does go through; it could put some much-needed cash into the fourth richest football league in Europe.
|EUROPE’S RICHEST FOOTBALL LEAGUES|
|€5.3 bn||€ 3.1bn||€ 3 bn||€ 2.5||€ 1.7 bn|
For Serie A, nearly 60 per cent of revenues comes from the broadcasting rights that it sells. Its television rights come to an end next year, investors are lining up. Across the continent, television rights revenue is making the leagues very attractive investment options for large funds. In comparison, for Premier League it is 50 per cent of revenue.
|TOP 5 LEAGUES’ TV RIGHTS DEALS|
|League||Mn €/season||Deal ends|
According to KPMG Football Benchmark, Premier League television rights enjoy the highest premium and Italy is at the bottom of the table on that count.
Golf swings ahead
Several golf greens across the US are reporting numbers higher than last year. The country’s golf association, which runs 14 tournaments including the U.S. Open every year, was reported as saying that getting tee time is proving tough. According to the U.S. Golf Association’s Golf Handicap Information Network, the greens saw a 22 per cent jump compared to May last year.
The number of golfers in the country has stagnated at 24 million over the last 5-6 years. It had touched 30.6 million in 2003, when Tiger Woods ruled the greens and drew hordes of fans.
The PGA tour resumed last week in the US and, just like European football, there are no fans watching the stars. With the boom in participation from golfers, equipment manufacturers like Acushnet Holdings, Callaway Golf should see better days soon. That should set the wheels in motion again for the industry estimated to generate $84 billion in revenues.
Moolah for gaming
Two years ago, Epic Games had struck gold when the biggest names in private equity poured in $1.25 billion. It made the war game ‘Fortnite’ that turned out to be such a hit that rival gaming companies Activision Blizzard, makers of Call of Duty, and Take Two Interactive, makers of Grand Theft Auto, lost market value.
Epic’s popular game managed to get customers to pay, making it more attractive for investors. That has been one of the key benchmarks for investors. With the pandemic keeping the people indoors, it could not have asked for a better time to see its valuation soar to a new high.
As the old saying goes, different strokes for different folks!
- Ashutosh Sinha is the founder of WordWiseWeb Media. Read his column on the business of sport here. He can be connected on Twitter at ashutoshsinha00)