Introduction to CVC’s Sports Portfolio Refinancing
The owner of stakes in Six Nations and Premiership Rugby, as well as top flights of French and Spanish football, is planning to refinance its sports portfolio, which is expected to be valued at over £9 billion. CVC Capital Partners has hired Goldman Sachs, PJT Partners, and Raine Group to advise on the deal, which will be carried out through Sportsco, a new company set up to optimize CVC’s investments in the sector.
Refinancing Plans
The refinancing is likely to involve increasing new debt against one of the largest sports portfolios in private equity ownership in the world. CVC also has interests in international volleyball, the professional tennis tour, and the Indian Premier League cricket. The refinancing will enable CVC to retain its sports portfolio for longer, while also paving the way for the sale of a minority stake to Sportsco or future initial public offerings.
Creation of Sportsco
The creation of Sportsco aims to support CVC’s investments in the entire sector. Last month, it was revealed that Marc Alera, the former head of the EE mobile phone network, had been recruited as the chairman of Sportsco. The company’s strategy is intended to position CVC to maximize the commercial potential of its global sports properties through new media and sponsorship laws, as well as expansion into new formats aimed at drawing a wider audience amidst rapid shifts in media consumption.
CVC’s Sports Investments
CVC has earned billions of dollars from its ownership of Formula 1 motorsport, one of the most lucrative offers in the history of sport. In the past two decades, CVC has bought stakes in leagues and other assets that span cricket, football, rugby union, tennis, and volleyball. The investment in media rights to La Liga, the equivalent of the Premier League in Spain, is expected to achieve a nice return for the company.
Rugby Union Investments
In the Rugby Union, CVC’s acquisition of a stake in the commercial rights of Premiership Rugby was affected by the pandemic and subsequent financial pressure on clubs, with some league teams forced into bankruptcy. CVC, which bought into Premiership Rugby in 2019, has a 27% stake in the league. Under its administration, the broadcast audience and attendance figures have turned a corner, with the total TV audience increasing by 40% this year, partly due to an increase in the number of games shown.
Sportsco Strategy
The Sportsco strategy will be led by Mr. Alera, who will work across the CVC sports portfolio. Other managers are expected to be recruited to support the efforts in due course. The initiative has been compared to the approach of luxury goods conglomerate LVMH, with parallels drawn to the use of proven procedures in the NBA’s US basketball team business operations to unlock collective opportunities and drive further long-term growth projects.
Future Plans
The sporting assets of CVC will remain autonomous and independent of one another. An expected advantage of the Sportsco approach is the ability to procure new investment opportunities in future years. Another likely outcome is that CVC will remain a stakeholder in its existing portfolio for a longer period. Sportsco could be used as an acquisition vehicle for future CVC deals in the industry.
Global Sports Properties
Global sports properties have become one of the hottest growth areas for private capital in recent years. Companies such as Ares Management, Silver Lake Partners, and BridgePoint are investing significant sums in teams, leagues, and other assets across the industry. CVC’s refinancing plans are likely to be closely watched by the industry, as the company seeks to maximize the value of its sports portfolio.
