Private equity’s plan for rugby

Since the retirements of Roger Federer and Serena Williams, tennis has been hoping some new superstars would emerge to help capture the imagination of fans around the globe. This week an unlikely new name grabbed the headlines: Lance Davis.

He is not some teenage sensation. In fact, he’s not even a tennis player. He is the founder of Killer Bee Live Removal, a pest control company in Palm Desert, California. It was Davis who came to the rescue this week when a swarm of bees forced play to be halted in the quarterfinals of the ATP event at Indian Wells — but not before world no.2 Carlos Alcaraz had been stung on the head.

“I was really happy to be there to help everybody not get hurt”, Davis, who removed the bees barehanded, told the ATPTour.com.

This week in Scoreboard, we’re looking at the increasing influence of private equity in global rugby. Plus we explain how the “chaotic” boss of Adidas helped turn the company around. Do read on — Josh Noble, sports editor

Project Amplify: CVC maps out rugby’s future

Nick Clarry had been at CVC Capital Partners for just three years when the private equity firm’s co-founder, Donald Mackenzie, returned from lunch with Formula One supremo Bernie Ecclestone intent on buying into the sport.

F1 was one of CVC’s most successful deals of all time. Beyond generating juicy returns, F1 demonstrated the potential for private equity to invest in sport. Institutional investors have followed suit, pouring billions into the sector, which is increasingly melding in with media and entertainment.

Since exiting F1, which was acquired in an $8bn deal by US group Liberty Media, Clarry has gone on to lead CVC into a range of sports.

Rugby has been one of the firm’s biggest bets. The European buyout firm has invested at least £700mn in the sport, spanning a 27 per cent stake in Premiership Rugby for £225mn in 2018, 28 per cent of United Rugby Championship for £120mn in May 2020, and a 14.3 per cent portion of Six Nations for £365mn in 2021.

However, rugby is a sport steeped in tradition. It has a long history of resisting change. After all, the sport waited until 1995 to turn professional.

More recently, the coronavirus pandemic posed existential questions for the sport. Survival occupied rugby’s powers that be. CVC’s capital helped shore up balance sheets, but senior figures in the sport say now is the time to push forward with structural change and get the game ready for the future.

As we covered in the FT this week, calendar changes to reduce fixture clashes are in motion and new competitions are coming to the sport, in a move to grow audiences and revenues.

CVC is aiming to unite rugby’s infamously labyrinthine structure of governing bodies, unions, competitions and clubs.

Under a plan dubbed Project Amplify, the Premiership, URC and the Premiership could be at the forefront of a push to create a single management team to handle media rights and other commercial deals.

“This set of steps would result in a better product for players, fans and commercial partners, and more revenues to reinvest back in the game,” Clarry told the FT. “That is the direction of travel.”

Such a body would, in theory, have greater negotiating power when sitting down with broadcasters and commercial partners. But it’s important to note that CVC’s rugby investments are all minority stakes, so it cannot simply impose its will.

Whether Clarry and CVC can bring rugby together is one of the big questions facing rugby as it tries to get on the front foot.

The man — and the shoes — putting Adidas back on track

It is coming up to 18 months since Adidas ditched its partnership with Kanye West over the rapper’s antisemitic remarks. Canning the Yeezy brand partnership piled more pressure on the company, already suffering from weak sales in China and the cost of leaving Russia. Shares in the German company took a battering while the loss of Yeezy halved sales.

But now, the sportwear brand appears to have moved on. This week the company said the Chinese market was continuing to bounce back, while earnings for this year are expected to almost double those of 2023. Shares are up 46 per cent in the past 12 months.

The man at the centre of this remarkable recovery story is Bjørn Gulden, the Norwegian ex-footballer who became chief executive at the start of last year. How did the “chaotic” former Puma boss turn things around?

First off, he ordered a rapid increase in the production of two popular shoes — Gazelles and Sambas. The retro sneakers were “hot”, he told the FT, and the company needed to make a lot more of them, fast.

Second, he found a way to deal with the Yeezy hangover: €500mn of stock that Adidas could not sell or destroy without facing another torrent of bad press. The solution was to let customers buy Yeezy gear but donate some of the proceeds to charity — those on Adidas’s mailing lists may even have noticed some marketing for the brand this month.

Another key move was to repair the company’s relationship with retailers. Like its main rival Nike, Adidas had been focused on growing its own direct-to-consumer business, much to the frustration of its long-standing distributors. But also like Nike, the German company has realised that the high margins offered by cutting out the middle man do not make up for the damage it has been causing to its retail network, where two-thirds of sales come from.

It’s not all rosy for Adidas, however. The US market is expected to be a drag on the company this year, partly due to large amounts of unsold stock.

But compared to Nike, which is in the midst of the $2bn cost-cutting drive, Adidas looks to have stolen a march on its top competitor.

Highlights

• The San Diego Wave, the NWSL franchise, has been sold to private equity firm Levine Leichtman Capital Partners for $113mn, almost double the previous record for a US women’s football team, Sportico reported.

• A Bermudian financial structure used by the Miami-based bidder for Everton Football Club to funnel money invested for widows and orphans into the sport has begun to unravel, the FT reported this week.

• Italy’s finance police raided the headquarters of Serie A football club AC Milan on Tuesday as part of an investigation into potential irregularities over its 2022 sale by US hedge fund Elliott Management to private equity group RedBird.

Transfer Market

Michael Edwards (left) is back at Liverpool FC. The 44-year old will return to Anfield with a new job title — chief executive of football at Liverpool owner Fenway Sports Group. Edwards spent a decade at Liverpool before leaving in 2022, and will return as the club searches for a replacement for Jürgen Klopp. The German is due to step down as the team’s head coach in the summer.

Final Whistle

Do you pine for the good old days when football matches at this time of year were played in a thick slop of mud? Well then Croatia’s second tier may be for you.

Here are the final moments of last weekend’s game between NK Croatia Zmijavci and table-toppers Zrinski Jurjevac. We won’t spoil the ending.