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Last week, a report emerged that threw into question the viability of one of the best-known and most successful agencies in sports rights arbitrage.
According to TV Sports Markets, MP & Silva has missed scheduled payments to English soccer’s Premier League and the European Handball Federation, and is said to be in arbitration with Fifa over its advisory contract for Italian rights to the 2018 and 2022 World Cups. The possibility exists that rights will revert to their original holders for resale.
Founded in 2004 by the Italian trio of Andrea Radrizzani, Riccardo Silva and Carlo Pozzali, MP & Silva had comfortably ridden the rising tide of rights values for over a decade by the time it was taken over by Baofeng Technology and Everbright Securities in May 2016. The two Chinese companies took a 65 per cent stake in a deal that valued the company at US$1.1 billion.
The story at MP & Silva since then, however, has been of a loss of mojo. There has been a rotation of senior management. It has missed out on huge partnerships. Last October’s loss to IMG of the international rights to Italian soccer’s Serie A was followed by another disappointment in its bid for the rights to Conmebol’s South American club soccer competitions from 2019 to 2022. Those went to an IMG-Perform joint venture in a US$1.4 billion deal.
There is an inherent vulnerability to the agency trade. The service that you are selling is based on a series of elements – access, expertise, infrastructure and culture – that are not straightforward to quantify and that some organisations will work to bring in-house. Business is generated by trust and confidence on the way in, and results on the way out. A steady flow of work is also invaluable, creating new opportunities to go into the marketplace and find out who is spending, how much they’re spending, and what they’re spending it on.
So, to put it plainly, missing out on a couple of billion dollars worth of business doesn’t help, and losing clients can have a knock-on effect.
The story at MP & Silva since then, however, has been of a loss of mojo. There has been a rotation of senior management and it has missed out on huge partnerships
Problems have arisen for MP & Silva since founder Riccardo Silva (right) sold his controlling stake in the company
These are also changing times in the sports rights sector. New players are emerging from digital media – so I’m told – with different resources and an entirely different set of priorities. Models that had built revenues at staggering rates of growth are not as efficient as they used to be. There is bound to be a squeeze.
That would be enough to give any investor in the space pause and, according to last week’s reports, Baofeng and Everbright have been hovering over key decisions. MP & Silva is said to have been in ‘a state of paralysis’, with president and chief executive Seamus O’Brien waiting several months for approval on new plans.
A sidebar to all of this: the takeover of MP & Silva not only completed a flurry of major agency acquisitions, with IMG long in the hands of a consortium led by WME and Swiss-based Infront Sports & Entertainment having been gobbled up by Wang Jianlin’s Wanda Group, it also came at a high watermark of Chinese investment in the global industry. Encouraged by the state, which had ambitions to create the world’s biggest domestic sports market by 2025, one group after another was turning up with apparently abundant supplies of cash.
These are also changing times in the sports rights sector. New players are emerging from digital media with different resources and an entirely different set of priorities
The picture in 2018 is different, and inconsistent. After that flurry of spending, the Chinese government began applying pressure for a more rational, returns-based approach. Tech company LeEco collapsed after completing a series of sports deals; the takeovers of European soccer clubs Aston Villa and AC Milan have wrought financial trouble and recriminations, not to mention speculation over the scale and the origin of their leaders’ resources.
Even this week, Premier League side Arsenal were drawn into a bizarre story involving electric car manufacturer BYD, which claims a sponsorship deal announced in April was completed without its knowledge.
None of these are connected and the growth of China as a sports market and power base will continue, but scepticism about investment from the country is rising. That may be a good thing: the suspicion is that excitement about Chinese wealth overrode due diligence in some individual cases.
Baofeng, which suggested on its purchase of MP & Silva that it wanted to explore opportunities in virtual reality, has its own challenges in China as it seeks a productive niche in the changing consumer tech sector. But the issue with its leadership of MP & Silva hints less at a problem of resources and more at a lack of new ideas for creating value.
Under their own new ownership, both Infront and IMG have become part of bigger media entities. Infront sits under the same Wanda Sports umbrella as ultra-triathlon brand Ironman and the Rock ’n’ Roll Marathon Series. Its expertise is being leveraged to deliver new event properties and expand existing ones. Its owner is now a Fifa sponsor with an interest in backing new soccer competitions.
IMG, meanwhile, is part of what is now the Endeavor group, alongside the UFC and a whole range of entertainment assets. Its longstanding broadcast and event production capacity, and willingness to work with companies like digital specialist Perform, further spread its capabilities.
Arsenal were drawn into a bizarre story involving electric car manufacturer BYD
Tellingly, Radrizzani and Riccardo Silva – who retain minority stakes but no control of MP & Silva – have merrily diversified with their spoils from the takeover. Both men have invested in club soccer: Radrizzani’s Aser Media bought second-tier English side Leeds United last year, while Silva International Investments owns lower-league US soccer club Miami FC and is reported to have bought a stake in AC Milan.
Radrizzani’s pay-TV broadcaster Eleven Sports has followed a nimble game plan, establishing itself in a disparate range of markets and picking up rights it sees as undervalued elsewhere. The launch of a UK channel with coverage of Serie A, La Liga, the Netherlands’ Eredivisie and the Chinese Super League is being supported by IMG. Silva’s other interests, intriguingly, include SportBusiness Group, whose reporters broke the news of MP & Silva’s difficulties last week.
MP & Silva has not issued any official response to the reports as yet and it could yet have a significant future. This remains an agency with a track record of working with major clients and breaking new territories. But its apparent difficulties have only underscored the need to respond to an industry whose points of reference are shifting rapidly.
Whatever MP & Silva looks like in the future, it won’t be the agency that changed hands two years ago.
Last week, a report emerged that threw into question the viability of one of the best-known and most successful agencies in sports rights arbitrage.
According to TV Sports Markets, MP & Silva has missed scheduled payments to English soccer’s Premier League and the European Handball Federation, and is said to be in arbitration with Fifa over its advisory contract for Italian rights to the 2018 and 2022 World Cups. The possibility exists that rights will revert to their original holders for resale.
Founded in 2004 by the Italian trio of Andrea Radrizzani, Riccardo Silva and Carlo Pozzali, MP & Silva had comfortably ridden the rising tide of rights values for over a decade by the time it was taken over by Baofeng Technology and Everbright Securities in May 2016. The two Chinese companies took a 65 per cent stake in a deal that valued the company at US$1.1 billion.
The story at MP & Silva since then, however, has been of a loss of mojo. There has been a rotation of senior management. It has missed out on huge partnerships. Last October’s loss to IMG of the international rights to Italian soccer’s Serie A was followed by another disappointment in its bid for the rights to Conmebol’s South American club soccer competitions from 2019 to 2022. Those went to an IMG-Perform joint venture in a US$1.4 billion deal.
There is an inherent vulnerability to the agency trade. The service that you are selling is based on a series of elements – access, expertise, infrastructure and culture – that are not straightforward to quantify and that some organisations will work to bring in-house. Business is generated by trust and confidence on the way in, and results on the way out. A steady flow of work is also invaluable, creating new opportunities to go into the marketplace and find out who is spending, how much they’re spending, and what they’re spending it on.
So, to put it plainly, missing out on a couple of billion dollars worth of business doesn’t help, and losing clients can have a knock-on effect.
These are also changing times in the sports rights sector. New players are emerging from digital media – so I’m told – with different resources and an entirely different set of priorities. Models that had built revenues at staggering rates of growth are not as efficient as they used to be. There is bound to be a squeeze.
That would be enough to give any investor in the space pause and, according to last week’s reports, Baofeng and Everbright have been hovering over key decisions. MP & Silva is said to have been in ‘a state of paralysis’, with president and chief executive Seamus O’Brien waiting several months for approval on new plans.
A sidebar to all of this: the takeover of MP & Silva not only completed a flurry of major agency acquisitions, with IMG long in the hands of a consortium led by WME and Swiss-based Infront Sports & Entertainment having been gobbled up by Wang Jianlin’s Wanda Group, it also came at a high watermark of Chinese investment in the global industry. Encouraged by the state, which had ambitions to create the world’s biggest domestic sports market by 2025, one group after another was turning up with apparently abundant supplies of cash.
The picture in 2018 is different, and inconsistent. After that flurry of spending, the Chinese government began applying pressure for a more rational, returns-based approach. Tech company LeEco collapsed after completing a series of sports deals; the takeovers of European soccer clubs Aston Villa and AC Milan have wrought financial trouble and recriminations, not to mention speculation over the scale and the origin of their leaders’ resources.
Even this week, Premier League side Arsenal were drawn into a bizarre story involving electric car manufacturer BYD, which claims a sponsorship deal announced in April was completed without its knowledge.
None of these are connected and the growth of China as a sports market and power base will continue, but scepticism about investment from the country is rising. That may be a good thing: the suspicion is that excitement about Chinese wealth overrode due diligence in some individual cases.
Baofeng, which suggested on its purchase of MP & Silva that it wanted to explore opportunities in virtual reality, has its own challenges in China as it seeks a productive niche in the changing consumer tech sector. But the issue with its leadership of MP & Silva hints less at a problem of resources and more at a lack of new ideas for creating value.
Under their own new ownership, both Infront and IMG have become part of bigger media entities. Infront sits under the same Wanda Sports umbrella as ultra-triathlon brand Ironman and the Rock ’n’ Roll Marathon Series. Its expertise is being leveraged to deliver new event properties and expand existing ones. Its owner is now a Fifa sponsor with an interest in backing new soccer competitions.
IMG, meanwhile, is part of what is now the Endeavor group, alongside the UFC and a whole range of entertainment assets. Its longstanding broadcast and event production capacity, and willingness to work with companies like digital specialist Perform, further spread its capabilities.
Tellingly, Radrizzani and Riccardo Silva – who retain minority stakes but no control of MP & Silva – have merrily diversified with their spoils from the takeover. Both men have invested in club soccer: Radrizzani’s Aser Media bought second-tier English side Leeds United last year, while Silva International Investments owns lower-league US soccer club Miami FC and is reported to have bought a stake in AC Milan.
Radrizzani’s pay-TV broadcaster Eleven Sports has followed a nimble game plan, establishing itself in a disparate range of markets and picking up rights it sees as undervalued elsewhere. The launch of a UK channel with coverage of Serie A, La Liga, the Netherlands’ Eredivisie and the Chinese Super League is being supported by IMG. Silva’s other interests, intriguingly, include SportBusiness Group, whose reporters broke the news of MP & Silva’s difficulties last week.
MP & Silva has not issued any official response to the reports as yet and it could yet have a significant future. This remains an agency with a track record of working with major clients and breaking new territories. But its apparent difficulties have only underscored the need to respond to an industry whose points of reference are shifting rapidly.
Whatever MP & Silva looks like in the future, it won’t be the agency that changed hands two years ago.
