RedBall begins search for sports franchise

RedBall begins search for sports franchise as IPO raises US$575m

Gerry Cardinale and Billy Beane are set to begin their search for a professional sports franchise after their new special purpose acquisition company (SPAC) raises US$575 million (almost $440 million) in its initial public offering (IPO).

Redbird Capital Partners, the US investment firm led by Gerry Cardinale, joined forces with Billy Beane of Oakland A’s to form RedBall Acquisition Corp., in what will be the first sportsfocused SPAC.

An initial public offering (IPO) was filed by the securities and exchange commission (SEC) at the end of July, with RedBall hoping to generate US$500 million to buy a professional sports franchise. However, due to demand, a further US$75 million was raised as underwriters exercised an option to sell an additional 7.5 million shares. The company has the freedom to secure a company in no particular sector.

According to the filing, “it intends to focus on businesses in the sports, media and data analytics sectors, with a focus on professional sports franchises, which complement the management team’s expertise and will benefit from its strategic and hands-on operational leadership.”

Trading of stocks began on August 13 operating under RBAC.U’ on the New York Stock Exchange, while investment and financial services firm Goldman Sachs acted as the sole book-running manager for the offering. In the space of four days, the IPO raised a better-thanexpected IPO of US$575 million, with 57.5 million units sold at US$10 per share.

Israel ‘Izzy’ Englander, founder, chairman and chief executive of New York-based hedge fund Millennium Management LLC and one of the world’s richest billionaires, has taken a 7.8 per cent stake in RedBall Acquisition Corp.

In a move showing the continued interests in the sports and entertainment industry among the financial and investment communities, Englander’s Millennium Management was shown in a new filing with the US securities & Exchange Commission to own 4.5 million shares, worth more than US$45 million.

Beane, who became recognised because of his data-driven approach while being general manager of Major League Baseball (MLB) team Oakland Athletics, will be co-chairman alongside Cardinale. Joining them on the management side of things will be Alec Scheiner, chief executive, and Luke Bornn, executive vice president.

Furthermore, former English Premier League boss Richard Scudamore has been appointed to the board as the company looks to invest in European football, with a Premier League club understood to be top of its wish list. The New York Post has reported that RedBall have identified purchasing a minority stake in English Premier League Champions Liverpool FC as a ‘primary target’. Beane, reportedly a Liverpool fan,

begins search for sports US$575m

has links to John W. Henry, founder of Fenway Sports Group (FSG), the parent company of Liverpool FC and Major League Baseball’s (MLB) Boston Red Sox.

England’s elite sides are likely to be open to cash infusions in the wake of COVID-19, with financial services firm Deloitte predicting that teams will face a permanent loss of £500 million (US$654 million) made up of rebates to broadcasters and the loss of matchday revenue from the 2019/20 season. Recent on field success has seen Forbes value Liverpool at US2.18 billion, with the club also announcing pre-tax profits of £42 million (US$54.9 million) for the 2018/19 financial year but could lose over US$250 million as a result of the coronavirus pandemic.

However, as well as facing coronavirus fiscal losses, FSG is set to take a further hit as the Red Sox continue a truncated MLB campaign, potentially opening the door for RedBall. The Post reports that RedBall have ‘well over US$1 billion at its disposal’, which would be enough to take a sizable minority stake in Liverpool.

“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,” says RedBall’s file.

“Our management team represents a unique combination of operating, investing, financial and transactional experience. This group has a strong track record of creating value for shareholders in multiple sports, media and data analytics companies that we have led, managed and/or invested in.”

RedBall now have 24 months to purchase a company in any industry, though the intention is to purchase a professional sports franchise, “While the company may pursue an acquisition in any industry of sector, it intends to focus on businesses in sports, media, and data analytics sectors, with a focus on a professional sports franchise, which complement the management team’s expertise and will benefit from its strategic and hands-on operational leadership.”

If the money raised through the IPO is not used within the next 24 months, it will be returned to investors.

SPACs such as RedBall have become increasingly common in finance circles, with SPAC Research estimating they have raised more than US$19 billion this far in 2020. The instrument was notably used in a three-way merger earlier this year that turned prominent gaming operator DraftKings into a public company. The popularity of SPACs stem in large from the lack of downside risk for investors, with shareholders able to recoup their funds if the SPAC is not able to complete a suitable business acquisition.

REDBIRD CAPITAL BUYS 85% STAKE IN TOULOUSE

Recently relegated French side Toulouse have agreed on a deal with investment company RedBird Capital Partners which will see the firm acquire an 85 per cent stake in the club.

Oliver Sadran who was the owner of Toulouse stepped down as majority shareholder selling 85 per cent to RedBird Capital Partners, although still retaining a 15 per cent stake and will remain on the Board of Directors.

RedBird and its founder Gerald Cardinale have US$4 billion in equity and have had investment partners such as the New York Yankees, the Dallas Cowboys and the US National Women’s Soccer Team.

In a statement, Gerry Cardinale said, “We are proud and excited to help write the next chapter of Toulouse FC and realize its tremendous potential.

“We are committed to building a sustainable, long-term foundation for the Club’s success by enhancing its on-field sporting performance, business operations and contributions to its community. We look forward to working closely with Olivier, the City of Toulouse and the Occitanie Region to return Toulouse FC to an elite level and elevate the entire city of Toulouse through its long-term success.”

Oliver Sadran added, “I welcome Gerry and RedBird as new partners in an organisation and a city that are big parts of my life. I am also pleased that RedBird has brought Damien to Toulouse as a key member of our leadership team.

“Damien is a well-respected colleague in the Football world. After getting to know Gerry, Damien and the team at RedBird, I am confident that together we have the energy, expertise and resources to take the Club to the next level. I look forward to working alongside them and sharing the pleasure of winning.”