This week, I watched Javier Tebas, president of Spain’s La Liga, give a press conference to announce an extraordinary deal: the overwhelming majority of elite Spanish football league teams had voted in favour of a €2bn-plus investment from CVC Capital Partners. Read more about it here.
Tebas is quite a force, getting the deal through despite opposition from the country’s two biggest sides, FC Barcelona and Real Madrid. Clubs in Italy’s Serie A and Germany’s Bundesliga had previously sent private equity groups packing. High finance is now here to stay within the world’s favourite game.
This week we delve deeper into the rebalancing of European football. First, the departure of Lionel Messi is a loss for Barça and La Liga, but we analyse what is to gain at his new club, Paris Saint-Germain. Then, we look at the cryptocurrency millions pouring into sport. Do read on. — Samuel Agini, sports business reporter
What PSG really wants from Messi
In the official video that unveiled Lionel Messi as a Paris Saint-Germain player, a camera sweeps through the Parc de Princes, the French club’s home ground, before reaching the world’s best footballer at the centre spot.
Yet the first place that camera floats around is PSG’s official superstore. That should be no surprise. Hiring Messi, more than anything, is a branding exercise.
Of course there’s footballing merit in PSG’s new fearsome forward line of Messi, Neymar and Kylian Mbappé. The Argentine’s arrival will boost PSG’s obsessive pursuit of winning Europe’s Champions League
But there is a broader purpose behind the quest to acquire the most prestigious trophy in club football. It stems from the reasons that Qatar Sports Investments, a state-backed fund, acquired the French club in 2011.
A new 💎 in Paris!
PSGxMESSI ❤️💙 pic.twitter.com/scrp1su9a6
— Paris Saint-Germain (@PSG_English) August 10, 2021
“It’s a big geopolitical statement to own PSG,” a former senior club executive told Scoreboard. “It’s a cheap way to make [Qatar’s] name known.”
This person reckoned one of Qatar’s motivations to invest in football, including hosting the 2022 World Cup, is to drag a global spotlight towards the previously obscure but gas-rich state on the Arabian peninsula. This would make it harder for the world to ignore if sometimes hostile neighbours ever attacked it.
The Qataris themselves argue their investments in sport are about diversifying income streams for a future beyond petrochemicals. Activists say it is a “sportswashing” strategy employed by Gulf states to distract from poor human rights records.
Whatever the underlying purpose, club executives speak of developing a new commercial focus in recent years: turning PSG into football’s leading luxury brand.
The club has hired executives steeped in the Paris’s fashion culture. It cultivates celebrities, from Rihanna and Kendall Jenner, to watch games at the Parc des Princes while wearing the club’s shirts.
In 2018, PSG signed a kit-wear deal with Nike’s Jordan brand, worth a reported €100m, featuring the US sportswear group’s jumpman logo, instead of its swoosh displayed by other football teams.
As the majority of revenues from shirt sales go to the manufacturer, the real aim of this tie-up was to align PSG with Jordan’s sense of cool, creating a line of merchandise that could be worn by the youth of New York and Tokyo as a fashion statement more than signalling allegiance to a football club.
That brings us back to Messi. With Europe’s so-called Financial Fair Play rules in effect suspended because of the pandemic, PSG’s wealthy owners had little to stop them funding his multimillion-euro wages alongside those of an already star-studded team.
Alongside Juventus’s Cristiano Ronaldo, Messi is football’s biggest individual brand. He brings outsized attention from fans around the world — a high-end purchase to enhance the club’s desire to become the sport’s pre-eminent luxury brand.
That made Messi priceless to PSG.
Read Simon Kuper’s “Person in the News” profile of Lionel Messi here.
The risks for sports teams associating with crypto groups
AC Milan this week revealed BitMEX, a cryptocurrency derivatives trading platform, as its first official shirt sleeve sponsor. The Italian Serie A side lauded the deal for showing how the club could “reinterpret itself for a more modern and international audience”.
Within hours, the US Commodity Futures Trading Commission, a derivatives regulator, said the District Court for the Southern District of New York had ordered BitMEX to pay up to $100m for running an unregistered trading platform and failing to prevent money laundering.
AC Milan declined to comment. BitMEX said it was “continuously strengthening our compliance framework and have already delivered industry leading user verification and anti-money laundering controls which will remain at the centre of everything we do”, while chief executive Alexander Höptner wrote in a blog after the fine was announced: “crypto is changing, and we’re changing with it.”
As teams and leagues seek to recover from the coronavirus pandemic, it will be hard for them to resist sponsorship cash from crypto groups seeking to target the millions of consumers obsessed with the sport.
But there are risks for sports groups associated with a nascent crypto sector that regulators are still working out how to supervise.
Crypto firms are seeking to raise interest in trading digital assets, from bitcoin to so-called “non-fungible tokens” tied to National Basketball Association highlights.
The need to sell to the masses is why crypto exchange FTX is paying millions of dollars to sponsor Major League Baseball. And why Crypto.com, the digital wallet provider, is paying up to $30m a year to sponsor Formula One, the global racing series.
Inter Milan’s shirt for the new season promotes the Italian club’s “fan token”, a digital asset that gives fans the right to participate in team promotions and votes, following the end of its 26-year association with Italian tyremaker Pirelli.
Investors are throwing money into exchanges such as FTX, which was valued at $18bn in a fundraising last month, up from $1.2bn last year.
But by accepting their sponsorship cash, clubs and leagues are in effect endorsing crypto products to their fans, a potentially vulnerable group of retail investors.
The growing scrutiny from global regulators, who fear people will lose money on risky digital assets, hints at coming trouble for the crypto sector — and the sports groups linked to them.
Adidas, the German sportswear company, has sold its Reebok brand for €2.1bn to Authentic Brands, the celebrity and clothing licensing group. Adidas paid $3.8bn to acquire the company in 2005, but Reebok suffered lacklustre sales and losses.
Fanatics, the Florida-based sportswear ecommerce group, has been valued at $18bn after agreeing to a $325m fundraising, according to people close to the company. SoftBank and SilverLake, which were existing shareholders, were among the investors in the latest funding round. The deal increases Fanatics’ valuation from $12.8bn in March.
Entain, the owner of Ladbrokes and Coral bookmakers, has acquired US-based esports betting group Unikrn, gambling that it will cash in on the development of the $2bn esports industry.
Sports competitions are experimenting with new, shorter formats including the Formula One car racing series and the England and Wales Cricket Board’s introduction of a new tournament called The Hundred. As this FT report explains, sports executives fear losing younger viewers to video games and esports.
Elite athletes are traditionally associated with blowing their fortunes. But as this FT feature suggests, many are becoming more commercially savvy, increasingly turning to professional advisers to build wealth that can last for generations.
John Textor, the former executive chair of US streaming service FuboTV, has become a minority shareholder in Crystal Palace, the English Premier League football club. The deal values the London-based team at roughly £250m, according to a person with knowledge of the matter.
Steve Parish, the club’s chair, said: “We have been looking for the right investment for the right investor for a while, both to progress the club and deal with the significant financial challenges of the past 18 months due to Covid.”
The Tokyo Olympics are over, but stories from the Games keep coming. Jamaican athlete Hansle Parchment revealed he boarded the wrong bus on the day of the 110m hurdles final and ended up at the wrong venue. A volunteer handed him the taxi fare to get to the Olympic stadium in time to make his race — and win gold. Parchment returned to thank the volunteer, hand back the fare and show off his medal. Watch him relay the heartwarming tale here.
At the Olympics, Jamaican hurdler @ParchmentHansle accidentally showed up to the wrong venue for his race.
A young woman gave him taxi money to get to the right stadium.
He won gold.
Then, he tracked down the woman to say thank you.
— Goodable (@Goodable) August 11, 2021
Scoreboard is written by Samuel Agini, Murad Ahmed and Arash Massoudi in London, Sara Germano, James Fontanella-Khan, and Anna Nicolaou in New York, with contributions from the team that produce the Due Diligence newsletter, the FT’s global network of correspondents and data visualisation team
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