One thing to start. Lionel Messi announced on Friday evening he will remain at FC Barcelona next season, having previously expressed a desire to leave the world’s highest earning football club. The Argentine said he wants to avoid a legal battle over a €700m buyout clause, but lambasted Barcelona’s management including under-fire president Josep Maria Bartomeu.
In this week’s briefing on the business of sport, we welcome the return of Grand Slam tennis at the US Open but lament how coronavirus has destroyed the income of lower-ranked players, marvel at Michael Jordan’s latest corporate gamble with DraftKings, explain why £22bn money manager Lindsell Train is backing sports stocks, and more.
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Why a tennis career can be a loss making enterprise
The return this week of Serena Williams, Naomi Osaka and Novak Djokovic at the US Open represents a comeback for tennis, even if spectators cannot attend matches at Flushing Meadows in New York.
While you watch the action on television, spare a thought for hundreds of lower-ranked players who struggle to earn a living through winning prize money on the sport’s gruelling world tour.
With tournaments postponed for months during the pandemic, the year has been a financial disaster for many professional players.
Of the world’s top 200 ranked women, around a tenth have seen their income fall by at least 40 per cent in the first half of 2020 to below $50,000, according to a FT analysis.
Take Britain’s Samantha Murray Sharan, whose tour winnings have shrunk by 43 per cent from $37,813 in the first half of 2019, to just $21,434 in the first six months of this year.
The world’s 181 best ranked female tennis player says she tries to find cheap travel and accommodation deals and only sparingly pays for a coach during tournaments. Even so, often her winnings do not cover costs, so the player borrows money from family members to stay on tour.
Lockdown was a particular blow to the 32-year-old, who has only just made a successful comeback after injury.
“Financially, it would have been my best ever year,” Murray Sharan told Scoreboard. “This is the kind of year that would have made up for all the years I didn’t make a profit. Then [the pandemic] happened.”
Her plight reflects how money flows disproportionately to the top of the sport. At the US Open, one of the sport’s four annual “Grand Slam” tournaments, 128 players qualify for the main draw of both the men’s and women’s singles championships.
Those knocked out in the first round earn $61,000. Winning the event earns $3m.
Tour organisers have steadily increased prize money over recent seasons, while also releasing more money for players in distress this year.
But the pandemic has exposed the labour structure of a sport reliant on hundreds of lower ranked players to enter tournaments across the planet.
“Anyone a bit lower than me, I don’t know what they’re going to do,” said Murray Sharan.
Get behind the story
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Michael Jordan’s 2020 winning streak
Among many remarkable developments this year, 2020 has been the year of the Michael Jordan renaissance.
First, there was his wildly successful mini-series, The Last Dance. Its fast-tracked release in the spring benefited from debuting into a vacuum of live sports during the height of the pandemic.
In June, the player who once famously eschewed a political endorsement because “Republicans buy sneakers too” committed his name – and $100m over ten years – to select organisations supporting the black community, in light of the George Floyd protests.
And this week, Jordan took a stake in US sports betting outfit DraftKings, a once-unthinkable corporate partnership. The main criticism of Jordan as a celebrity athlete has been his penchant for high-stakes gambling.
Associates of Jordan who spoke with Scoreboard this week said the deal is among the strongest indicators yet that the six-time NBA champion is coming into his own as “a corporate statesman”, as his former agent, Donald Dell, put it.
The deal also reflects shifting attitudes within the US, as well as the National Basketball Association, regarding gambling.
Jordan will balance his role as special adviser to the DraftKings board alongside his duties as majority owner of the Charlotte Hornets basketball franchise. It’s a far cry from the early 1990s, when former NBA commissioner David Stern investigated Jordan’s off-court gambling activities.
Terms of Jordan’s stake in DraftKings weren’t disclosed, but the firm has benefited from the rapid legalisation of sports betting in the US since a landmark Supreme Court case in 2018.
DraftKings revenues in New Jersey more than octupled in the first twelve months since sports books became legal in the state, now accounting for 30 per cent of the company’s annual revenues of $323m.
Despite the pandemic, sports betting is growing in the US. Total revenues in states where the practice is legal were up 86 per cent from July 2019 to July 2020 to $69m, according to the American Gaming Association.
Jordan’s contract with Nike, which pays him a cut of revenues from his eponymous sneaker line, has made him a billionaire, according to former Nike marketing agent Sonny Vaccaro, who helped shape the deal.
To that end, Jordan’s projects and deals this year reflect a rare sense of wealth: investments undertaken for the passion, not the money.
Get behind the story
Corporate Person in the News: Michael Jordan places his latest bet with DraftKings deal
Michael Jordan takes stake in sports betting company DraftKings
Column: ‘The Last Dance’ and lessons in leadership
The £22bn money manager backing sports stocks
Investing in sport requires fortitude.
Just take Lindsell Train, a London-based money manager with £22bn of assets under management, which has a cult following among retail investors. It has an 11.3 per cent stake in Juventus, the Italian football club controlled by the Agnelli family.
Back in 2011, when Lindsell Train’s stake was far smaller, Libya’s state investment fund still owned 7 per cent of Juventus. Though that was before Muammer Gaddafi was ousted.
Lindsell Train, founded by Nick Train and Michael Lindsell, has since become Juventus’s second-largest shareholder.
Part of their investment case was that Juventus would be “at the forefront” if Serie A could catch up with the global commercial success of the English Premier League. In the past few months, private equity firms have been vying to buy a stake in Italy’s top football league.
The best clubs represent the best stocks. Juventus shares are down some 30 per cent this year but still almost triple the levels they traded at in 2011 when Lindsell Train noted the “challenging and unusual” nature of investing in Italian clubs.
Equally unfazed by the coronavirus pandemic, a recent $90m buying spree suggests that Lindsell Train’s fund managers think their sports investment thesis is intact.
Among the purchases were additional shares in Manchester United, the biggest revenue-generating club in the Premier League, and a new position in Madison Square Garden Sports, the parent company of the New York Knicks basketball team and the New York Rangers ice hockey side (more on them below).
The tickets that can’t be sold as a result of government restrictions on mass gatherings aren’t exactly the main reason for Lindsell Train’s investment.
Rather, it’s a bet that big sports brands will continue to generate content that attracts eyeballs, wins bumper broadcast deals and pushes their reach in Asia.
That thesis is set to be tested.
Get behind the story
Lindsell Train bets $90m on sport’s return to form
Football clubs become a big draw for investors
Celtic offers business case for investing with heart and head
Highlights
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The English Premier League faces a shortfall of £540m from lost matchday income next season as a result of government plans to only allow the partial reopening of stadiums from October. It is another financial blow for the competition after it abruptly terminated its $700m broadcast deal with China’s PPTV in a dispute over withheld payments in the pandemic.
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Hedge fund titan Steven Cohen is in exclusive talks to buy the New York Mets, after competing suitors including Alex Rodriguez and Jennifer Lopez dropped out of the high-stakes auction.
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23 Capital, the football finance house backed by George Soros, is winding down its $1bn loan book. Jason Traub plans to set up a new entity under the 23 brand that focuses on lending to sports clubs after splitting from co-founder Stephen Duval.
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The parent company of Manchester City has acquired French second division football team ESTAC Troyes, the tenth club in City Football Group’s global portfolio of clubs.
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The pandemic-postponed Kentucky Derby will run on Saturday in Louisville, where the favourite Tiz the Law, already the winner of the Belmont Stakes, is chasing coveted Triple Crown. Tiz was bought at auction for $110,000 by a syndicate of 35 people.
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Jimmy Haslam, owner of the Cleveland Browns NFL franchise, is exploring a purchase of the Minnesota Timberwolves NBA team, according to Sportico.
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Ian Watmore, the new chairman of the England and Wales Cricket Board, has warned the virus will result in job cuts at the governing body, which faces lost revenue of at least £100m.
Transfer Market
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Claire Williams, deputy team principal and family scion of the Williams Formula One team, is stepping down after this weekend’s Italian Grand Prix. The motor racing outfit was sold to US investment group Dorilton Capital in a €152m deal last month.
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Delia Bushell has stepped down as the chief executive of The Jockey Club, which operates many of the UK’s most prestigious racecourses, after an independent inquiry upheld allegations of bullying and racist comments. In her resignation letter, the former BT Sport and Sky executive complained of being the victim of a “deeply unpleasant stitch-up”.
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Trevor Birch has stepped down as chief executive of Swansea City football club to join Tottenham Hotspur as director of football operations. He was previously the chief executive of Chelsea when the Premier League side was sold to Russian oligarch Roman Abramovich.
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The parent company of the New York Knicks basketball and New York Rangers hockey teams has hired David Hopkinson. The former global head of partnerships at Spanish football club Real Madrid joins Madison Square Garden Sports as executive vice president and president of team operations.
Final Buzzer
Viewers of The Last Dance may recall an excerpt of this infamous 1993 interview between Connie Chung and Michael Jordan, in which His Airness said he didn’t have a gambling problem but “a competition problem”.
With Jordan and gambling back in the news, revisit this look at the Chicago Bulls star’s life in his playing heyday. Come for the 90s basketball highlights. Stay for the oversize suits and shoulder pads.
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Scoreboard is written by Samuel Agini, Murad Ahmed and Arash Massoudi in London, Sara Germano, James Fontanella-Khan, Anna Nicolaou in New York, with contributions from the team that produce the Due Diligence newsletter, FT’s global network of correspondents and data visualisation team.