Sports investment conference – how to play the global sports opportunity

Published on 8 October 2019

On 8 October, Edison hosted its first ever sports conference explaining how sports and finance can combine in exciting ways. However, it was clear that some of the attendees were not sure the synergies between finance and sports were a good prospect, or even a realistic one. Needless to say, members of the panel, including management from the world’s biggest football teams and industry-leading companies, were ready to demonstrate the strengths of this synergy.

During the conference

Russell Pointon, Edison’s director of consumer and media research, chaired the conference and was first to speak. He confronted the challenges in what is a mostly privately held market, where sports teams are highly influenced by families and club members. The top three most valuable sports team brands are the Dallas Cowboys, New York Yankees and Real Madrid, all privately owned. That said, Russell highlighted the diverse and sustainable revenue growth models of listed sports companies, introducing the notion that investing in sports can be a smart idea.

Jamie Wynne-Morgan, UK CEO of M&C Saatchi Sport & Entertainment, was next to speak, highlighting the growing importance of sponsorship, and the link with brand passion. Data show that consumers are four times more likely to buy products linked to their passion, and companies now need to be prepared to spend 2.2x the cost of the sponsorship rights on ‘activating’ it. Ashley Read, MD of Science in Sport (SiS), also discussed sponsorship from a sponsor’s point of view. The company’s sponsorship model is distilled into four key areas: driving brand awareness, revenue return, educating and winning. Sponsoring elite athletes and sports teams reaffirms the link between their products and performance, and has led to tangible revenue growth. 23% of SiS’s marketing budget is deployed in sponsorship.

Finally, Stephen Duval, co-founder of 23 Capital, demonstrated the growing place for speciality finance in sports/media/entertainment – sectors with a combined $510bn addressable market. Higher risks associated with these sectors have led to deals with greater loan to value ratios. However, the risks are only high due to the early stage of speciality finance in the sports sector, a point underlined by 23 Capital’s track record of zero impairments. 23 Capital improves its risk profile by focusing on tier one brands backed by strong assets and stable cash flows. For instance, football club debt is securitised against the club’s broadcasting, licensing and merchandising assets.

The next big thing

esports tournamenteSports was also discussed as the next big thing. All the presenters agreed that the market potential is huge and developing very quickly. SiS has recently agreed an e-Racing deal with Zwift, a multi-player cycling and running game. There are already lots of leagues, arenas are packed, and the following is already bigger than some of the mainstream teams. However, it was concluded that the industry is in need of a governing body.

Our sports conference illustrated the multiple channels in which finance can access sport, provided by presentations that were both informative and innovative. The presenters stayed behind for a few more hours to answer some burning questions from the audience, highlighting the new-found interest of how to play the global sports opportunity.

Featured: Edison Explains – investing in sport


Edison explains - investing in sports
‘Over the long term, a successful sporting team should be able to grow its revenue from an increasing number of sources as global interest increases and more brands look to benefit from the halo effect of that success.’ Russell Pointon, Edison consumer analyst.

Read the report here

Participant companies

Science in Sport M&C Saatchi Twenty Three Capital tottenham hotspur FC
Science in Sport M&C Saatchi Sport & Entertainment 23 Capital Tottenham Hotspur FC

 

Summary

Event: Sports investment conference – how to play the global sports opportunity
Date: 8 October, 2019
Location: Edison office, Holborn, London
Hosted by: Edison Group
About: An exciting networking opportunity involving various industry speakers in discussions, panels and engaging presentations on topics including business of a football club, what do sponsors look for, merchandising, broadcasting and Chinese markets.

For further information and to register your interest please inquire here.

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