SBD Global/July 18, 2014/FinancePrint All
Investors in F1 are to share a $1B payout through a "refinancing that will pave the way for a future change of control of the sport," according to Mark Kleinman of SKY NEWS. F1 parent company Delta Topco is "arranging a deal known as a dividend recapitalisation which involves increasing a company's borrowings in order to fund a shareholder payout." Plans for the $1B dividend are "understood to be being discussed with potential investors in New York later on Thursday, with F1's owners confident of attracting robust demand." The payout will be the "biggest to F1's shareholders for two years, and will augment their already handsome returns on their investment" in the sport. It will also "underline the ability of F1 to continue throwing off cash even as uncertainty remains over the sport's future leadership." Crucially, the "new debt package will not include any change-of-control clause, making it theoretically easier for F1's parent company to be sold without triggering onerous repayment obligations." The deal, which is being arranged by Bank of America Merrill Lynch, will "also highlight the continued buoyancy of international financing markets." Analysts suggested that the $1B dividend plan "signalled that a fresh attempt to float F1 on the stock market was some way off." Paradoxically, the structure of the deal could "hasten a takeover of F1, with Liberty Global and Discovery Communications interested in acquiring a 49% stake in the sport" (SKY NEWS, 7/17).
In the run-up to Thursday's second Test match between England and India, the "kitchen and bar staff at Lord's Cricket Ground were looking a lot busier than the groundsmen," according to Roger Blitz of the FINANCIAL TIMES. It is "entirely in keeping with the home of cricket, a game built around breaks for lunch and tea, that the tradition-minded Marylebone Cricket Club, which runs Lord's, has been using the promise of a full stomach to open up the wallets of members and non-members to push through change." The MCC's 18,000 members have for years been engaged in a "fractious, at times vitriolic debate" over modernization. Rival camps "took sides over plans backed by a private developer to fund an ambitious" £400M ($684M) expansion through "building apartments on the outer areas of Lord’s." Those plans "were scuppered, to be replaced by the piecemeal redevelopment of outdated stands paid out of MCC’s own funds." So where will they "find the money?" Food "and drink, of course." MCC Assistant Secretary Jon Robinson said that catering and hospitality makes up "not far short of half of all our revenues." The club is "undergoing a concerted drive to have 'the best catering offer of any UK sports venue.'" The first redevelopment will see the Warner Stand next to the pavilion replaced by a £21M ($36M) "new facility that adds only 100 seats but incorporates a 'spectacular' 135-seat restaurant, plus bars." If it was "not for the cricket, Lord's would resemble a food emporium." British chef Jamie Oliver has converted part of the Nursery End of the ground into a "food village." The pavilion's "famous Long Room is turned into a banqueting suite for functions -- Alastair Cook, the England captain, was holding a benefit dinner there on Monday." Hospitality suites are "crammed into various stands and corners of the ground, including a new 'India Club' catered by Michelin-starred Tamarind of Mayfair." The MCC could "hasten development funding by banning spectators from bringing their own picnics and booze." A study once estimated that Lord's was losing up to £450,000 per Test "because of this tradition." But some traditions "are untouchable." Robinson: "We have absolutely no thought of abandoning that" (FT, 7/17).
Sportswear retailer Sports Direct and adidas have "held talks about the sale of replica football shirts after the German sports brand refused to supply the high street retailer with key World Cup products," according to Graham Ruddick of the London TELEGRAPH. Adidas CEO Herbert Hainer is "understood to have visited Sports Direct's new flagship store on Oxford Street in London in recent days and has held discussions with Sports Direct founder Mike Ashley." Sports Direct CEO Dave Forsey said, "The top level discussions have been a lot more encouraging. They see a lot more of what we are working on." The retailer and adidas "have clashed over the supply of replica football kits." Adidas has "refused to supply Sports Direct with official on-pitch replica World Cup shirts for countries including Germany and Argentina." This prompted a "furious response from Sports Direct, which has spoken to competition authorities about its concerns" (TELEGRAPH, 7/17).
RECORD PROFITS: In London, Andrea Felsted reported Sports Direct on Thursday "announced record profits." Sports Direct said that "full-year pre-tax profit rose" 16% to £239.5M, helped by an "increase in sales in stores and online." Underlying earnings before interest, tax, depreciation and amortization, "excluding the cost of the retailer's employee share scheme," rose 15% to £331.1M in the year to April 27. The performance means that Sports Direct is "on track" to exceed its £300M ($513M) target for this financial year, the "final year of its four-year employee share scheme." This would mean 3,000 employees sharing 20 million shares, worth about £140M ($240M) at Thursday's share price. For an employee on £20,000 ($34,211), this could mean a payout of about £70,000 ($119,700) at the current share price, spread over '15 and '17 (FINANCIAL TIMES, 7/17).