CVC’s Global Sport Group has secured roughly €3bn in new financing, valuing the sports investment platform at about $8bn
Private capital is still interested in sports investments, but valuations are tightening as investors become more selective and deals rely on structured financing, according to industry figures.
Alexander Jarvis, Founder of sports investment advisory firm Blackbridge Sports, says demand for major sports assets remains strong even as the market reassesses the high valuations seen in recent years.
“Investor appetite for deals is still very strong and appears to be increasing, but valuations have tightened somewhat as fewer private equity firms are buying and more seem to be divesting or looking to exit their stakes more gradually,” Jarvis tells Insider Sport.
His comments follow new financing secured by CVC Capital Partners for its Global Sport Group platform, which values the business at around €7bn ($8.06bn).
The deal brings in more than €3bn in capital, mainly through debt financing. Around €1.4bn is understood to come from investment firm KKR using capital from insurer Global Atlantic, while bond investor Pimco is providing approximately €1.5bn alongside smaller contributions from other lenders.
Global Sport Group was created by CVC to group a number of its sports investments under one structure, which includes stakes linked to Spain’s La Liga, Premiership Rugby, and women’s tennis.
CVC had previously looked at bringing in outside investors through an equity sale which would have valued the platform closer to €9bn. The final financing structure suggests a lower valuation, showing how investors are reassessing risk across sports properties.
Jarvis explains the difference between the two figures can be put down to a market and not just a drop in demand.
“The market is still willing to back large sports assets, just not at the $5bn+ prices sellers were hoping for a couple of years ago,” he says.
He adds that activity in the European sports investment market has focused more on smaller deals, with most transactions in the UK and across Europe this year falling below $50m.
Why debt is playing a bigger role in sports investment
The structure of the latest financing package also highlights the ever more common role of credit markets in funding sports investments.
Jarvis says the heavy use of debt shows both confidence in the sector’s long-term outlook and caution among equity investors, noting “geopolitical risks are spooking some investors.”
He explains lenders remain comfortable with the stability of sports revenues, especially income from media rights and long-term commercial deals. And as a result, there is still a large amount of capital available in credit markets.
However, the greater use of debt may also be a sign of tougher conditions for equity investors. Jarvis notes traditional leveraged buyout models are often difficult to apply in professional sport because many clubs and competitions do not generate steady profits.
France’s Ligue 1, which Global Sport Group holds a minority stake in, is a recent example of how unstable media revenues can affect leagues. Following a long dispute over broadcast rights, the league chose to launch its own direct-to-consumer platform to show matches.
While the league has highlighted potential benefits such as gaining more control over its content and data, the move has also created uncertainty around revenues for clubs.
“In reality, most clubs simply do not operate efficiently enough to support classic LBO structures, which makes the risk profile much higher.”
