SBJ/September 26 - October 2, 2016/Power Players
Power Players: Advisory
Published September 26, 2016
Few in sports have the reputation and relationships of Allen & Co.’s Steve Greenberg and Terry Morris. Greenberg has led the firm’s widely respected sports and media practice since 2002, while the talented Morris has been involved in investment banking for years, first at Morgan Stanley and then at Allen & Co. since 1995.
The two are widely seen as the gold standard in advisory, representing buyers and sellers across all the major sports (with Morris focusing on NHL work) and have been first-movers in understanding the media and RSN space.
Among the recent team transactions: represented the Pegulas in their acquisition of the Buffalo Bills; assisted Cleveland Indians owner Paul Dolan in selling limited partnerships in that team; represented Herb Kohl in his sale of the Milwaukee Bucks; and handled the Houston Astros sale for Drayton McLane. Allen & Co.’s appeal, the duo’s acumen and Greenberg’s relationships make the firm a first call on many people’s list.
“There is no better relationship person than Steve,” said MLB Commissioner Rob Manfred. “He is a perfect client service guy, he always gets you what you want and when you need him, he is always available. The length of time and depth of experience in sports, and sports media, makes him unique in terms of the advisers out there.”
Former MLB Commissioner Bud Selig often recommended Allen & Co. “Afterwards, the parties always came back to me and said, ‘Steve was really, really good. Thank you for that recommendation,’” Selig said. “Steve understands the business, the economics around it, valuations, deal structure, the personalities, markets and the game, as well as anyone I know. His knowledge is remarkable and he has a great manner.”
Jerry Reinsdorf, who has known Greenberg for 35 years, said, “There is nothing about deal structure and value that he doesn’t understand. He doesn’t overestimate or underestimate when it comes to a deal. He also has a sixth sense of who might be getting ready to sell, and always knows where the buyers are.”
Reinsdorf came back time again to two factors — relationships and trust. “People trust him. On both sides of the table, and that is very, very important.”
|Steve Horowitz (left) and Rob Tilliss
This New York-based boutique advisory firm is involved in the top team transactions in sports and is one of the most prolific firms when it comes to the number of deals on which it advises.
Former JPMorgan Chase sports financier Rob Tilliss founded Inner Circle in 2002. Some of the firm’s earliest work included representing the Wyc Grousbeck-led group in its acquisition of the Boston Celtics, and Bruce Ratner’s acquisition of the Nets.
In 2006, Inner Circle formally hit the market in its present form when Steve Horowitz joined. The firm now handles corporate finance and capital raising services for both buy side and sell side M&A, as well as minority and limited-partner transactions.
The two executives complement each other, as Tilliss brings the trained banker background while the affable Horowitz, the longtime ProServ executive, brings his relationships. Together, the two have deep connections at the highest levels of sports, finance, media and entertainment.
While the firm has advised on many media and technology deals, Inner Circle’s sweet spot is on the team side. Inner Circle was a first mover and leader in working outside of North America, representing Tom Hicks and George Gillett in their acquisition of Liverpool FC in 2006. The firm later advised John Henry and Tom Werner when they bought the same franchise in 2010.
Inner Circle has been the adviser to Josh Harris’ sports investments — his acquisition of the Philadelphia 76ers, New Jersey Devils and, most recently, Crystal Palace. Tilliss and Horowitz have advised on a number of MLS deals, including selling D.C. United for Will Chang to Erick Thohir, who they later advised when Thohir purchased Inter Milan. They advised on the sell side of the Atlanta Hawks with Goldman Sachs, represented the new owners of the Milwaukee Bucks, and advised on Scott Malkin/Jon Ledecky’s acquisition of the New York Islanders.
The duo has a number of supporters and advocates. As Grousbeck said, “Rob was there for me as a key player when I bought control of the Celtics in 2002. I couldn’t have done it without him. He and Inner Circle are power players in the best sense of the word.”
|Brent Johnston (left), Brad Katcher, Sal Galatioto, Phil Landolphi and Russ Granik
Sal Galatioto formed one of the first sports finance groups in the mid-1990s, writing a white paper to convince his then bank employer to give the untested area a go. He formed his current firm, Galatioto Sports Partners, in 2005 and counts major advisory deals like the sale of the Sacramento Kings, Charlotte Bobcats and Philadelphia 76ers to his firm’s résumé. He also has been a point person on New York Yankees financing deals.
Galatioto’s talented team includes Brent Johnston, Brad Katcher and Phil Landolphi, as well as former top NBA executive Russ Granik. All but Granik have worked with Galatioto since he formed that first sports finance group, following him to Lehman Brothers, and then to GSP. Granik came aboard in 2006 and has used his NBA contacts to cultivate relationships for the firm.
Like many in the space, GSP has had to get creative in recent years because of slow M&A flow and lending controlled by leaguewide credit facilities. International is one area, and GSP has even become a specialist in financing luxury car purchases. The firm also has been advising on more limited partnership sales, including the sale of several in the Chicago Cubs.
When it comes to the sports investment banking field, Bob Caporale and Randy Vataha are like proud grandparents, albeit still working ones. In 1994, lawyer Caporale (or “Cap” as he is known) and former New England Patriot Vataha formed Game Plan to advise on sports team sales. The two, who years earlier owned stakes in the USFL Boston franchise, are believed to be the first to form a specialty practice in sports finance.
Over the years, Caporale and Vataha have advised on major team sales, ranging from the Golden State Warriors and Boston Celtics, to a host of MLB, NHL and MLS transactions. The duo has tried some unorthodox deals as well, such as advising Bain Capital on buying the NHL, but that did not succeed.
The two closed their Boston office years ago, and Vataha now works out of his homes in that city and in California, while Caporale is found in Miami and on his South Carolina horse farm.
The Raine Group
|Joe Ravitch (right) and Colin Neville
The Raine Group has parlayed a focus on sports, entertainment and digital media into successes with leagues and teams that own their own content. Co-founder and partner Joe Ravitch was an early investor in the UFC, helped advise the Yankees as the team launched YES Network, and owns the action sports company Nitro Circus.
“I always tell league commissioners that they’re running a media company that’s worth $30 [billion] to $50 billion, or in the NFL’s case more,” Ravitch said. “One of the beautiful things about leagues is that they control 100 percent of their intellectual property on a global basis.”
Raine also has found success by moving into international markets, overseeing such investments as building a private cricket league in the Caribbean, and establishing a soccer league in Afghanistan. Beyond its advisory role, Raine manages multiple funds and makes a variety of investments in sports.
“Our fund strategy is to find companies that are growing — there has to be a strategy that we’re excited about,” said Vice President Colin Neville. “The second big thing is we typically take minority stakes. So we look for strong management teams that can run companies day-to-day and execute on a vision.”
Don Cornwell appeared destined for a career in finance. His father worked in investment banking and his mother was a banking examiner. The Harvard and Stanford grad got his start in the field at Morgan Stanley, where he oversaw the sales of IMG and the Buffalo Bills, and the restructuring of the Pittsburgh Steelers. Shortly after the Bills sold in 2014, Cornwell moved to his former boss’s new investment banking boutique, PJT Partners, and established a sports practice.
PJT Partners advised the NFL on the size of the relocation fee to Los Angeles and was hired to study strategic alternatives for the Pittsburgh Penguins, including a potential sale.
Moelis & Co.
Moelis & Co. is a global investment bank that formed in 2007, went public in 2014, and now covers many sectors, including sports. Moelis’ point person in sports is co-founder Navid Mahmoodzadegan, who has advised on the purchase of the Atlanta Hawks, the sale of Los Angeles FC, and Learfield Communications on its sale to Providence Equity Partners in 2013. Providence has also recently hired Moelis to sell Learfield.
Evolution Media Capital
Evolution Media Capital executives describe their company as a merchant bank with advisory capabilities for media
EMC worked with Kings owner Vivek Ranadivé on the buy side, helping him with the bid. It worked with banks to get financing in place, worked with the league to keep the team in Sacramento, and negotiated a local media rights deal with CSN Sacramento.
“This might not be the biggest deal of all the big deals we’ve done, but it’s a good example of how we can advise on process and deal structure; raise capital; work with the banks to refinance debt; and help them get the best possible media rights deal that they can get,” he said.
EMC has worked with numerous teams and leagues on sports financing transactions, and it has established an investment platform with TPG Growth that gives it access to $500 million in investment capital.
Since its inception in 2008, EMC has advised on and closed more than $45 billion in sports and media transactions.
Andrew Kline is a Power Player who can say he ran a power play in the NFL. A former lineman for the St. Louis Rams, Kline retired from football in 2003 and formed Park Lane in 2005 to focus on sports finance.
Park Lane, based in Los Angeles, has an investment bank that advises on M&A, including deals for parts of the Golden State Warriors, Cincinnati Reds and Cincinnati Bengals. Park Lane also has a merchant bank that invests in entities ranging from Street League Skateboarding to Whistle Sports.
Two years ago, Kline hired former Citigroup banker Rick Perna to handle investment banking, while he manages the entire operation. In his nine years at Citigroup, Perna worked on deals that included the sale of the Detroit Pistons and Minnesota Wild.
Tipping Point Sports
Mitchell Ziets is a top consultant for teams and municipalities on negotiating stadium deals. His Tipping Point Sports, formed in 2011, has been retained by the city of Oakland, for example, in the long-running quest to strike a stadium pact with the Raiders. He’s providing advice on efforts to build a new stadium for the San Diego Chargers as well.
The former investment banker works solo, and is usually juggling several different assignments. Some of the others include efforts to build a new downtown arena in Seattle and providing investment banking services for the Arizona Coyotes as they explore building a new arena.
Despite his link to such high-profile projects, Ziets prefers to stay in the background.
Former NFL and Big Lead Sports executive Chris Russo has brought a significant amount of league and media experience since joining global investment bank Houlihan Lokey last year.
Working with Mark Patricof, co-head of the firm’s technology, media and telecom group, and director Brian Marler, Russo has aided several major deals, including a $275 million Series E funding round for daily fantasy giant FanDuel, World Golf Tour’s sale to Topgolf, and Univision’s takeover of Gawker’s assets, including Deadspin.
Houlihan Lokey has also worked with more than two dozen pro teams and sports media and data entities such as the YES Network and Sportradar on a range of financial advisory projects, including owner estate planning and fairness opinions.
Lyle Ayes emerged as a sports power player when he was tabbed for a co-advisory role on the sale of IMG in 2014, as he led boutique investment firm Evercore’s surprise assignment while up against more than 20 other investment banks. In addition to the IMG deal at Evercore, Ayes represented Forest City in selling the Brooklyn Nets and a share of the Barclays Center to Mikhail Prokhorov, and handled the PBR’s sale to WME-IMG in 2015.
After three years at Evercore, Ayes last month was hired by rival New York-based firm LionTree to build the technology, media and telecom-focused boutique’s presence in sports and lead a new sports advisory practice. How much the Harvard Law grad will touch the team M&A space remains to be seen.
Being well-known and well-liked in the space should help Ayes, as prior to Evercore, he was at Shearman & Sterling and Morgan Stanley, where he advised on the Ontario Teachers’ Pension Plan’s sale of MLSE to Bell and Rogers, and worked on behalf of the Rooney family to bring on limited partners for the Pittsburgh Steelers.