Olympic Games open the door to private equity
Under new leadership, the Olympic Games could soon become an investable asset for private equity firms such as CVC, Carlyle and Permira.
Seven candidates for the presidency of the International Olympic Committee (IOC) presented their plans at a non-public meeting of the committee on 30 January in Lausanne, Switzerland. One of them will be elected by the 111 IOC members in Greece in March.
The vote is likely to be a neck-and-neck race between two favourites. One is Sebastian Coe, President of World Athletics (formerly known as the IAAF). The 68-year-old won four medals at the Olympics, and set eight world records. The other presidential candidate, who also has a good chance according to insiders from the IOC environment, is Juan Antonio Samaranch, son of the long-serving IOC President who died in 2010. The 65-year-old ex-First Boston banker is the founder of the investment boutique GBS Finance in Madrid.
What is special about his programme is that Samaranch wants to make the Games an unashamedly investable asset, and names private equity firms such as CVC, Carlyle and Permira as potential partners. With their help, the Games are to be put on a stronger financial footing.
7.6 billion dollars in revenue
According to the most recent annual report, revenue in the last four-year Olympic cycle from 2017 to 2021 totalled 7.6 billion dollars. Almost two-thirds of this came from television rights, and 30% from a small group of elite sponsors as part of the Olympic Partner Programme. Of the total revenue, 90% is earmarked for distribution to international federations, national Olympic committees, Games organising committees and athletes.
Samaranch's idea is now to set up an investment fund that utilises the „knowledge, experience and connections“ of the IOC to invest in sports-related companies. The second goal is to monetise the Olympic Broadcasting Services, the network that produces the live broadcasts of the Games on television, the internet and radio. In an interview with the Bloomberg news agency, Samaranch calls it „one of the most sophisticated sports broadcasting companies in the world“, but one that is „only active 16 days every two years“.
Sport as an asset class
Of the investment fund, he notes that "sport is becoming an asset class“, and a partnership between the IOC and a large private equity firm would give such a fund an advantage. Although he won't name names, he says that "I have tested the idea with people and we would have no shortage of companies that would try to partner with us. I deal with private equity people on a daily basis and do deals for Carlyle, for CVC, for Permira. I know all these people, this is my world.“
He emphasised that the fund would not compete directly with private equity firms buying sports teams, leagues or other on-field products, because it would not have the same deep pockets, but also to avoid obvious conflicts of interest. Instead, he says, the fund – which he says could raise 1 billion US dollars in a first round – would take care of everything else: Equipment manufacturers, training systems, sports finance and development.
CVC strong in sports
One of the most active private equity firms in the sports sector is CVC. The British investment company, which is listed on the Amsterdam stock exchange, is already involved in the top football leagues in France and Spain – Ligue 1 and La Liga. In Germany, however, the German Football League (DFL) decided against a minority stake worth billions in the media revenues of the Bundesliga, following fierce fan protests.
