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SBD Global/October 3, 2013/FinancePrint All
Spain's economic crisis "has not left football's side," according to Sara Massa of EL CONFIDENCIAL. Although "Real Madrid and Barcelona are managing millions, the rest of the teams are trying to confront debts and be up to date on their accounts." One measure that some clubs have taken is "lowering prices of tickets for this season." The best example has been Villarreal, "which has offered its cheapest season tickets for a La Liga season in franchise history," starting at €100 ($136). Despite this, "stadiums are still grieving, with many empty bleachers." Teams "are beginning to show their concerns." Some, like Osasuna and Getafe, have "assured that it costs more to open their stadiums than they are making on ticket sales." The clubs "are attributing small crowds to new, nontraditional game times imposed by TV schedules, but the price of tickets is also not helping to fill stadiums." Though "prices have dropped, it remains difficult" to see a La Liga game for less than €20 ($27). The exception on "the most recent matchday was at Valencia, where the cheapest ticket" for the club's game against Rayo Vallecano cost €5 ($7). Recently, the cheapest tickets were €25 ($34) for "Valladolid-Málaga, Real-Sevilla, Celta-Elche and Espanyol-Getafe matches." The most "expensive seat was for the Real Madrid-Atlético derby," which cost €235 ($319). These prices "have little in common with prices for other European competitions." Without "going any further, Wednesday's Bundesliga side Bayer Leverkusen-Real Sociedad Champions League match" offered tickets ranging from €8-€42 ($11-$57). This "is typical in the Bundesliga, where there are rarely empty seats." The Spanish Football League (LFP) has "confirmed that attendance was better in August of this year than it was last year, but added that it still has to take many steps to better fill stadiums" (EL CONFIDENCIAL, 10/2).
After the announcement that Madrid's 2020 Olympic bid failed, "the majority of Spain's athletic federations are returning to face the harsh reality of Spain's economic crisis," according to Amaya Iríbar of EL PAIS. Nothing "reflects this better than Spain's national roller hockey team, which just won its 16th world championship in Angola thanks in part to a sponsorship with a Spanish company with ties to Angola that sponsored the team's trip to Africa." Spanish "hockey's situation is not unique: 29 (including 19 Olympic sports federations) of Spain's 63 sports federations have presented, or will soon present, economic viability plans" to Spain's Superior Sports Council (CSD). The CSD "will supervise through '16 the federations' finances, with inspections every six months carrying the threat of decreased financial contributions from the government." Under "the approved plans, the federations will reduce their average spending by 36% before the 2016 Rio Olympics and they aim to decrease their collective debt," which has reached €27M ($36.7M), by 40%. Although "compared with the magnitude of the problems in football, these figures seem trivial, the situation has become unsustainable for many federations, which are suffering from recent decreases in the government's subsidies." Of Spain's Olympic sports athletic federations, some, "like basketball, football and tennis, do not have problems." However, "three of Spain's biggest sports -- athletics, swimming and gymnastics -- are among the 19 Olympic sports federations that have not made the cut." To reduce costs, the athletics federation, for example, "has approved a budget" of €7.2M ($9.8M) for this year. This "is 35% less than a year ago and half of the federation's budget for '08" (EL PAIS, 10/1).
Spanish Superior Sports Council President Miguel Cardenal and Atlético Madrid President Enrique Cerezo, a movie producer, will on Thursday "present a collaborative initiative between the film and sports industries in which Cerezo will donate 1% of what he earns in ticket sales" from Cerezo's latest movie, "The Witches Of Zugarramurdi," according to AS. Cerezo "will actively collaborate in programs that assist Spain's professional sports." The donation "has the objective of driving assistance toward Spanish athletes." The movie "led Spain in box office sales its first weekend in theaters" (AS, 10/2).
FidelisWorld, the Dubai-based sports, media and entertainment group, "has entered into private equity" with the launch of FW Sports Investment Fund LP, the first of its kind PE fund in the sports and sports ancillary space, according to Reghu Balakrishnan of the Indian BUSINESS STANDARD. FW "has announced a first close with raising about" $100M. Former JP MorganChase Managing Dir ANAND S. KRISHNAN "had set up FidelisWorld" after he retired as CEO of Dubai-based PE firm Dubai Int'l Capital in '11. Krishnan spoke to Reghu Balakrishnan on the "rationale behind new fund and investment strategies."
Q: What was the rationale behind launching an exclusive fund in area of sports?
Anand S. Krishnan: We have always felt that the sports industry in the region, and this means all businesses involved in servicing sport, has been largely untouched by the forces of organized investment and corporate practices. Our thesis has always been to look at creating an ecosystem around such companies where the growth of one can leverage the growth of the other, introduce best practices and proper governance, and apply a level of strategic and financial engineering in order to help these companies compete globally and create value.
Q: What are the investment strategies -- areas and size of investments?
Krishnan: Areas of investment are, for the large part, in any sports-related company that can make money regardless of whether a team is winning or losing. We are not hunting valuations, rather we are looking for value.
Q: There are premium leagues being played in cricket, football and badminton etc. Will these funds be used for investments in teams?
Krishnan: This is not our primary focus. As discussed, we are looking for businesses that have underlying fundamentals beyond valuations built on intangibles such as brand value and hype. We are uncomfortable in general with businesses that rely too heavily on sponsorship as a source of income.
Q: Is there any specific allocation for India? And how do you see India as an investment destination?
Krishnan: I think India is a medium to long term story despite rough weather in the short term. We do not have a specific allocation for India, but our investment geography encompasses South and Southeast Asia and the West Asia, in which India is a major market that we cannot ignore (BUSINESS STANDARD, 10/2).