Jon Walters - Partner, Northridge
In this update, we explore the appeal of the sports sector as a whole for institutional investment, and the impact that technology has on the investment thesis. Of course, institutional investment comes in many shapes and sizes – ranging from private equity and sovereign wealth capital buoying the valuations of established sports competitions and franchises as an asset class, to venture capital investment in businesses (often technology and data driven) adjacent to the mainstream sports sector.
Northridge acts at all levels of that chain. You can read more about our work on: the sale of Chelsea FC; the creation of Michele Kang’s women’s football multi-club ownership model; Thierry Henry and Cesc Fabregas’ investment in Rezzil; and the investment in leading golf agency, Performance 54, by Sanabil Investments. We also routinely advise growth stage companies on their investment rounds and exits.
We know that the riches of elite sport may differ to the experiences of founders seeking investment in what is an undoubtedly challenging market, affected by geopolitical factors, market troubles and the price of debt. This has resulted in both a flight to quality and an aversion to priced investment rounds. Also, given the preponderance of US capital, we are seeing increased alignment between the terms of UK fundraising documentation and that originating from the US (by which we mean that the US approach is dominating). It pays to know what that means for your control and economic rights in a company in that situation; and it also pays to understand the implications of convertible debt agreements (very much the order of the day in the current market). We give further consideration to the newly revised BVCA early stage investment documents in our article.
Whatever the transaction stage and sector, our proposition is to assist with value creation and preservation for investors and investees alike. We seek to do this by market understanding of the commercial and regulatory factors that inform and underpin asset value (and which may damage that value), alongside the core legal elements of the transaction.
We would love to hear your views on any of the topics covered in this update. Please share them with us by email or our contact form.