The Largest Empire in Sports 👑
And New Competition for Adidas and Nike | Athletic Interest Weekly #13
Liberty Media is one of the most American names a company could ever have! Next, you are going to tell us it’s run by some dude named Chase with a thick handlebar mustache… oh f**k.
While on the face of it Liberty Media may sound (and look) more like a steel company, they are actually the leading example of a relatively modern form of business…The Sports Holding Company.
So, what is a sports holding company?
Essentially, it is a company that purchases several sports teams across the globe and manages them as one closely connected business.
Think of the Manchester City Football Group. The Abu Dhabi owners have purchased a number of teams in different leagues and created an interconnected network of clubs that trade players, knowledge, and resources. This close connection reduces costs for each team and boosts profits.
According to Forbes, the top 20 largest sports holding companies grew by around 22% last year. In total, their market values increased from $102 billion in 2021 to $124 billion in 2022.
Liberty Media, the company that owns Formula 1 and the Atlanta Braves, are the kings of this list. Liberty boasts a total valuation of $17.2 billion, a 32% increase from 2021.
How did they reach such a lofty valuation? The surging popularity of Formula 1 played a massive role, while their diversification into drone racing has helped them enter growth markets.
For the other companies on this list, growth has come from the fact that most major U.S. sports teams are experiencing surges in their valuations.
For example, the average value of a team in the NHL has gone up by 30%.
The rest of the top 10 is as follows:
Kroenke Sports & Entertainment - $10.54 billion
Fenway Sports Group - $9.81 billion
Jerry Jones - $8.85 billion
Madison Square Garden Sports - $7.84 billion
Yankee Global Enterprises - $6.81 billion
Kraft Family - $5.88 billion
Glazer Family - $5.84 billion
Paul G. Allen Trust - $5.69 billion
City Football Group - $5.00 billion
🤪 Weird Deal of the Week
The Biggest Kit Deal in History? 🎧
A few months ago, the owner of Spotify wanted to buy Arsenal Football Club… We assume he didn’t have the funds to buy one of the big teams or the sense of humour to consider Tottenham.
While that deal may have died, Spotify are now reportedly in talks to become the new shirt sponsor of Barcelona.
The Swedish music streaming giant is allegedly willing to pay around $380 million to be featured on the front of Barcelona’s shirts for the next five seasons. This deal would be completed in collaboration with blockchain company Polkadot which is offering $110 million to appear on the sleeve of Barcelona’s shirts for five years.
That comes to a total of $490 million over five years, or just under $100 million per season.
For Spotify, association with one of the most popular brands in the world could prove to be invaluable as they try to increase their market share in the competitive audio streaming space.
This deal is still far from certain, with other companies, including a Vegan Crypto Currency, still fighting for a chance to sponsor Barcelona.
If successful, the deal with Spotify and Polkadot would represent an almost $200 million increase on their current deal with Rakuten and looks set to be the biggest kit deal in history.
This would be welcome news for Barcelona which sits $1.6 billion in debt, having lost over $500 million in 2021.
🎬 Video of the Week
The Biggest Hoax in Olympic History
When Bruno Banani stepped out into the opening ceremony of the 2014 Winter Olympics, the IOC was not happy!
Months earlier they had been trying to ban the young Tongan from competing.
The reason? Well, the answer involves a German Underwear brand, a controversial name, and one of the most inspirational stories in sporting history!
✍️ Deal of the Week
New Competition for Adidas and Nike
You can call us snobs, but the phrase ‘I really can’t wait for the new Castore collection to drop’ just doesn’t sound like something people will be saying anytime soon.
This is probably because Castore sounds like the name of an artificial sweetener found in a bottle of Coca-Cola Zero.
Despite this questionable name choice, Castore is working hard to become the hottest brand in sports apparel.
The Manchester-based apparel company has already entered into high-profile kit deals with a number of football clubs, including Newcastle, Wolves, and Rangers.
According to co-founder Phil Beahon, Castore will dramatically grow its brand by exploiting a huge missed opportunity by Nike and Adidas.
“It’s a situation in those leagues where the big brands focus resources on a small number of clubs and where they have invested outside of tier one, they haven’t put the same resources into development,” explained Beahon in an interview with Sport Business.
“That’s where we identify the opportunity, to help those clubs just outside tier one to improve their retail and marketing programme, internationalise and improve e-commerce, helping those clubs to grow their revenue and in turn growing the Castore brand,” he continued.
Essentially, Castore is looking to boost its brand by associating itself with the clubs that Adidas and Nike generally ignore.
Castore has recently announced that they will be concluding deals with at least one club from each of the Premier League, La Liga, Serie A, and the Bundesliga.
While the company has not officially announced any names, reports suggest that the list includes Aston Villa, Bayer Leverkusen, Lazio, and Sevilla.
Another example of this campaign to cater to clubs outside the ‘top tier’ comes from the Netherlands, with De Telegraaf reporting that Castore is close to agreeing on a six-year deal with Feyenoord worth around €50 million.
Castore’s strategy of supporting ‘underappreciated’ clubs could raise their appeal with millions of football fans, but it remains to be seen if this translates into sales that can rival the mighty Adidas or Nike.
📱 Social Media Madness of the Week
Peloton Lose Billions Thanks to Billions
The home fitness technology company Peloton has had a 12 months to forget.
First, they didn’t have enough machines to meet demand and then they made too many machines and lost money.
Then came the heart attacks! Luckily none have happened to real people, but for some reason, TV characters have been experiencing heart attacks after using Peloton devices.
This all began when Sex and the City character Mr. Big died from a heart attack after completing a session on a Peloton cycling machine.
His death shocked social media and spooked investors, who instantly sold Peloton stock. The company saw an almost instant 11% drop in its stock value.
In other words, Peloton lost $2 billion in market value because a character had a heart attack on TV!
The company’s initial plan was to laugh off the event. They even went so far as to hire Mr. Big actor Chris Noth to appear in an advert making fun of his on-screen death.
This strategy quickly backfired when Chris Noth was accused of sexual assault, leading Peloton to pull the advert.
This week, the situation got even worse for Peloton, when Billions character Mike Wagner suffered a minor heart attack after using a Peloton machine.
This time, Peloton distanced itself from the events and tried to explain that cycling actually improves heart health.
Despite the best efforts of the PR team, the damage was done and Peloton became social media’s favorite punching bag once again.
In the words of a source working for Peloton, this has been ‘the worst advertisement of all time.’