Owner of Liverpool FC and Boston Red Sox, John W. Henry is reported to be in talks to place his sports holdings public to allow a deal that would raise over US$8 billion.
The proposal will see Henry and his company, Fenway Sports Group LLC, join forces with Executive Vice President of Oakland Athletics Billy Beane, creating one of the most lucrative offerings on the stock market.
Beane and Gerry Cardinale, founder of Redbird Capital Partners, a private equity firm, last August raised US$575 million through RedBall Acquisition Corp. A special purpose acquisition company (SPAC) who’s purpose was to purchase a professional sports franchise. According to RedBall’s filing in July, when Beane and Cardinale launched the SPAC, they said, “We believe that the experience and capabilities of our management team will make us an attractive partner to potential target businesses, enhance our ability to complete a successful business combination, and bring value to the business post-business combination.”
According to sources briefed about the deal, RedBall would gain a 25 percent in Fenway Sports Group. In return, RedBall would have to raise US$1 billion including the original US$575 million raising through their initial public offering (IPO).
Yet, talks are believed to be in the early stages of the process and a transaction is not guaranteed. However, owner of the Premier League champions and 2018 World Series Baseball champions is eager to finalise a deal taking his sports holdings public.
If successful, other clubs around Europe will be able to be purchased making them fall under Henry’s ownership.
The reports come at a time when the sport industry is crippled financially due to the restrictions placed because of coronavirus. Sports clubs around the globe are currently suffering significant losses from the lack of ticket sales and matchday revenue which they heavily rely on causing for job losses across all sectors of the sport industry. As a result, sports teams are having to become creative and innovative under the current restrictions.
In recent weeks, a range of sports organisations in the UK have pleaded with the government for a bailout to help with the loss in revenue the pandemic has caused. As there seems to be no light at the end of the tunnel, frustration and agony is building amongst sports organisations.
While many American sports franchises are privately owned, many of Europe’s football elite list shares on open markets for purchase. Los Angeles Lakers star Lebron James currently has a 2 percent stake in Henry’s Liverpool worth around US$43.6 million according to Business Insider.
Former Goldman Sachs banker, Gerry Cardinale purchased an 85 percent stake in French Ligue 2 side Toulouse FC in August and was reported to have been in talks over a deal with AS Roma which didn’t develop.
Beane, who has a minority stake in Barnsley FC, and Cardinale have been keen to purchase a European football side after launching the SPAC in July. The duo is believed to be under the guidance of Condoleezza Rice and Robert Gates, former officials of George W Bush, who will help with the assistance of the transaction.
SPAC’s, which provides firms a quicker route to public markets have raised US$51.1 billion this year alone. The blank-cheque companies aim to raise capital publicly on the stock market with the aim to purchase a private company after raising the significant funds for the purchase in a method called reverse merger.
Author: James Parker