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Why long-term private equity capital in sport is a potential game changer

Why long-term private equity capital in sport is a potential game changer
Wednesday, 12 August 2020 By Peter Hanton, Greg Scott

Whilst financial investments in the global sports sector are not a new phenomenon, such investments have historically been primarily reserved for industry insiders and ultra-high net worth individuals (and in many cases, investments have been made without an eye on an exit).  However, as is often the case, successful investments tend to attract interest from other investors. With CVC's acquisition of Formula One in 2006 and subsequent sale to Liberty Global Media in 2016, touted as one of private equity's most lucrative and transformative success stories[1], other sophisticated financial investors have raised their heads above the parapet to deploy capital into the sporting value chain. Investors reported to be considering opportunities involving sporting targets have included Bain[2], Blackstone[3], Bridgepoint (Moto GP)[4], Cinven[5], Elliott[6], Apollo[7], Advent[8] and many others, ranging from investments in teams (e.g. AC Milan), leagues (e.g. Six Nations Rugby, Women's Football, MotoGP), sports tech (e.g. Peloton, Fitbit), sports betting (e.g. Sky Bet), talent management (e.g. Endeavor, Octagon) and the high growth esports ecosystem.

This article considers in detail the previously unexplored intersection and opportunities between longer-term private equity strategies and potential investment in the sports sector. The authors will highlight three key commercial and legal drivers which will continue to strengthen the appeal of sporting assets to long-term private equity funds and result in increased activity levels in this space in the coming months and years.  Specifically, it looks at:

  • The current state of private equity in sport;
  • Three key commercial and legal drivers:
    • Fund life;
    • Governance and capital structure;
    • Yield;
  • Potential effects of Covid-19.

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Written by

Peter Hanton

Peter Hanton

Peter is an Associate at Clifford Chance.  Peter specialises in cross-border private M&A, with a particular focus on private equity transactions. Peter has advised, amongst others, firm clients BlackRock, Blackstone, CD&R, Cinven, CVC Capital Partners, Elliott and Permira.

Peter has spent time on secondment at each of CVC Capital Partners and Blackstone.

Greg Scott

Greg Scott

Greg is a Senior Associate at Clifford Chance. Greg advises on cross-border private equity transactions, advising amongst others, firm clients Apax, Blackstone, CD&R, Cinven, CVC, EQT, GIC and KKR.

Greg has also spent time on secondment at each of CVC Capital Partners and Blackstone.

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