Upcoming Conferences and Events
SBJ/October 26 - November 1, 1998/No Topic Name
First Union bucks sports-group trend
Published October 26, 1998
As the sports industry is transformed into a sophisticated and attractive business worthy of serious investments, the finance community has taken notice. Banks and investment banks are scrambling to partake in this newly booming industry, and many are now forming specialty groups that target just the sports business.
Unlike many of its peers seeking roles as major sports finance players, however, banking giant First Union Corp. has spurned the idea of forming a stand-alone unit. Rivals like crosstown NationsBank Corp. and Chase Manhattan Corp. created sports finance groups in part to demonstrate just how serious they are about financing and advising the growing industry. But First Union continues to treat sports as only one part of its entertainment and communications effort.
"Media money really drives the cart here," said George Cole, the bank's managing director, who coordinates most of the company's sports deals. "That's why we have sports in the media group."
Cole views the sports industry as a cyclical business, which means that tying a group's fortunes solely to the business could be dangerous.
"You don't want a group living and dying on this stuff and justifying its existence by reaching for the next deal," said Cole, who estimates he spends about a fifth of his time on sports. "We take a much more rifle-shot approach to who we do business with."
Even though First Union has not committed a team to sports, the bank has forged some impressive deals.
In sports, the bank is best known for its relationship with the Charlotte Hornets. A mural of several Hornets players graces an outside wall at the First Union headquarters complex in Charlotte. The bank has advised and financed the club since the team entered the National Basketball Association, and is now aiding the Hornets in discussions on a new arena.
The bank also helped the New York Giants find an insurance company to lend the team $25 million in early 1997, as the Giants became one of the first football teams to tap what is known as the private placement market. And earlier this year, the bank helped the Vancouver Grizzlies with a $60 million private placement, which was the first sports transaction to receive an investment grade rating.
"Sports finance is a growing area ...and George [Cole] is a good student of the trend, and so is First Union," said Wayne DeBlander, a vice president with the Hornets.
DeBlander has known Cole for several years and praises him as a grounded, conservative banker.
"George is a lot like me; he is an accountant," DeBlander said. "He is to some degree your classical banker. He has a sense of humor, but I haven't seen him on stage doing any cartwheels."
Indeed, as a banker Cole defines his role in a very clear and dry way. He views his role within the bank as being a sports clearinghouse, by which he means that other First Union bankers can turn to him for his sports expertise. In a bank without a centralized sports effort, that role can prove crucial.
While some of his larger competitors are aggressively targeting the business, Cole does not envision the day when the bank's sports efforts will be centralized into a single unit.
"We have found that it works fine," Cole said, adding that sports is too disparate a business to be housed under one roof. "Once you get past the four professional leagues, the deals don't have a lot of commonality to them. You can't equate a golf management company with the New York Giants. It would be ludicrous."