ALEX PRASAD is a senior associate at sports merger and acquisition firm Whitecap Sports Group. Prasad began his sports career with the Big Ten Network before attending law school and shifting his focus to mergers and acquisitions. Since joining Whitecap, he has helped facilitate a strategic partnership with U.K.-based mergers and acquisitions specialist Blackbridge Cross Borders. The collaboration will provide an avenue to open the U.S. market to European and Asian investors and vice-versa. Prasad spoke to SBD Global about the partnership, how Whitecap operates and challenges for investors venturing into foreign markets.
On what Whitecap does ...
Alex Prasad: On a daily basis, we're trying to match buyers, sellers and investors in sports vertical. The bulk of our work is franchise opportunities. ... In regards to Blackbridge, we've got opportunities all over the place: Hungary, Poland, Portugal, all top-tier of the soccer pyramid; up and down the pyramid in the U.K., including some Premier League opportunities; some La Liga opportunities in Spain. ... Since I've come on, I've put a much greater emphasis on sports tech firms.
On current endeavors ...
Prasad: We're trying to move more in [the tech] realm primarily because when you think about who invests in sports franchises, it's a lot more emotion-based than an average investment. ... But when you invest in a sports tech company you both have the sex appeal of investing in sports but also some of the logic and gravity. It's not all emotion when you do something like that. So, it can be both something that is cool and interesting and unique but also has some of that foundation attached to it as well.
On the relationship with Blackbridge ...
Prasad: Alexander Jarvis is the principal at Blackbridge. ... We text each other on a daily basis, just checking each other's temperature on, "Hey, I've got this opportunity. You're going out and talking to people. Does that seem desirable to your folks?" and vice-versa. This has been a four-month relationship thus far and it's been great. We don't want to compete with folks, we want to collaborate with them. So, our only interest is that people do deals and outside of that, it doesn't make a difference to us. And Alexander has taken the exact same approach. ... It's a relationship based on trust. There's some twists and turns and there's some oddities to particular deals but we are sharing revenues.
On the differences between U.S. and int'l franchise ownership ...
Prasad: If you compare running an NFL team to running a Major League Baseball team, I think that is the dichotomy that Americans sometimes get a little bit intimidated about. Business models vary greatly in Europe. You could be a Portuguese team who's making all of this money basically by transferring players. Compare that team to a La Liga team. Completely different businesses. ... But compare the Oakland Raiders and New England Patriots. Same business model. They want butts in the seats, they want people watching, but it's the same business. When you think about a baseball team that has the possibility to scout internationally, cultivate this 16-year-old kid to be on your Major League roster seven or eight years from now -- that's what these European teams are doing. So it's a much more comprehensive business strategy, it's a very long business strategy.
On the hesitation of U.S. execs to invest in foreign properties ...
Prasad: When Americans look at European teams, they go, "Oh man, running this team is going to be a challenge. What if we struggle?" If it's the NFL, you're still going to get a really healthy revenue share, you're going to make money. It's kind of hard to screw it up. If you did that in the Premier League, and you're relegated, your valuation was just halved. So, if for whatever reason you needed to sell the team next year, you're screwed. You lost a whole bunch of money. So I think if you combine the foreignness of running that full structure with the fear of relegation, that scares a lot of American owners. ... They want to know what they're buying and what it's worth.
On challenges convincing foreign investors of the appeal of U.S. properties ...
Prasad: I think a lot of foreign investors don't appreciate that uninterrupted valuation rise, because it doesn't make sense and it's divorced from numbers. When you put a P&L in front of a foreign investor, they look at it and go, "How is this team selling for that price?" We say, "Well, Major League Baseball teams always increase in value. You just have to trust that that's the case because for 100 years it's been true." And they say, "Well, OK, that's great. But these numbers don't match that valuation at all, not even the same ballpark. So, thanks but no thanks. It doesn't make sense to me." And they're right. It doesn't make sense when you look at it from a traditional business perspective. But it certainly does when you think about the historical context.
On marketing benefits of the Blackbridge relationship ...
Prasad: One hundred percent there's a marketing angle. When we go to credential ourselves to U.S. investors, we almost always mention the relationship with Blackbridge. Alexander Jarvis does the same. I think it gives investors a level of confidence, given it would be very hard for either of us to maintain our networks if we didn't have feet on the ground on either continent.
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