Does it matter who owns The Hundred? And some other questions about sport's relationship with private equity

tl;dr

• The Hundred is the most interesting new sports property in the UK, despite not actually existing yet.

• What role could private money play in developing it?

• The commercial success of the IPL is easily misread.

• Podcast plug - Unofficial Partner meets The Analyst (aka Simon Hughes off the telly)

The vacuum where a cricket tournament should be

The Hundred is the ECB’s new event product for the men’s and women’s game, due to be launched this year and delayed till 2021 for obvious reasons.

The reaction to it - or the reaction to the idea of it, given nobody’s actually seen a match yet - has been predictable, dividing along cricket’s cultural divide between those who fetishise the past and those who fetishise the future.

The delay has created a vacuum where a cricket tournament would normally be, which is being filled with people projecting their own prejudices and preconceptions onto it, or what they think it stands for.

So in this way it’s a useful universal case study in how sports rights owners will seek to evolve. All the favourites are in play: private equity, ageing audience, sport as entertainment, Big Eventers and Avids, fans and customers, product innovation from outside or within a governing body; equality and diversity; changing media behaviour and the decline of the bundle.

The questions hanging over The Hundred are made more pointed by the ECB’s chequered history of getting major decisions wrong, best illustrated by a previous regime’s choice to take money over exposure after the 2005 Ashes (although...the decision to do that had been taken before ‘the greatest Ashes ever’ created what some consider to be a false memory and an artificial high in cricket viewership on Channel 4, against which the last fifteen years of Sky viewing numbers have been judged. But slagging off cricket administrators is not an area laden with nuance).

First a bit of context.

Cricket’s perennially worrying data

Good summary here by Murad Ahmed in the FT a few months ago:

In the UK, the sport retains a mainly white, affluent, middle-aged-male audience. Beyond this privileged set, the appeal fades. The findings are from four years of surveys, taking in the responses of more than 100,000 people on their attitudes towards cricket. Of the 10.5 million “followers” interested in the sport, 1.1 million actually attend matches. The amount of people playing the game is falling. Only 5 per cent of children aged between seven and 15 years old list cricket in their top two favourite sports. The average age of an English cricket fan is 50.

The Hundred is owned by the ECB and it would be controversial if that fact changed. But…what if? This is what I asked Simon Hughes:

1. Does it matter who owns The Hundred?

2. Why will fans follow newly created teams? (We’ll leave this to another email)

The first question is in the context of private investment flowing in to what some are calling sport’s thrilling new role as an asset class. This is an obvious trend made more relevant by Covid, which has blown a hole in every rights owner’s carefully constructed models of the future. Here’s a small snapshot of recent p/e activity:

Football: Silver Lake's $500m investment for a c.10% stake in the City Football Group, owner of Manchester City FC (itself ultimately controlled by Abu Dhabi United Group, a private equity fund linked to the Abu Dhabi royal family), in November 2019;

Football: Elliott Management's €400m loan-to-own acquisition of A.C. Milan in July 2018, as well as its debt arrangement with French Ligue 1 club, Lille OSC;

Rugby: CVC has a long-running interest in investment into rugby union. This includes its completed £200m deal for a c.27% stake in Premiership Rugby in 2018, as well as widely reported ongoing deals worth £300m for a c.14% stake in the Six Nations and £120m for a c.27% stake in Celtic Rugby DAC – organiser of Pro 14 Rugby;

Tennis: Kosmos Holding, an investment company founded by FC Barcelona player Gerard Piqué, and its $3bn 25-year commitment to the redevelopment of the Davis Cup in 2018, with a promise of new innovative competitions to come

Motorsport: In 2019, Bridgepoint sold its stake in MotoGP owner Dorna to another Bridgepoint fund which now owns it alongside the Canada Pension Plan Investment Board.

Simon Hughes is bullish on how private ownership can benefit the sport, although not without big caveats - ‘CVC were accused of raping F1’ says Hughes on the pod. He also likes the Bundesliga model (who doesn’t?).

Elsewhere, Serie A has imposed a 15% limit on p/e investment in their media rights. And other structural devices will abound to balance the control and ownership issues around the particular sport/event/property in question.

But these limits will come under pressure as private owners will - logically - demand control in return for their investment. This is the hard bit, which gets to the trade-offs that come with getting in to bed with the private equity brigade. Seen through this lens, the governing bodies look very vulnerable; easily sidelined to controlling the rule book and the grassroots in return for a stipend which allows p/e to tick a comms box while harvesting the cash from the rights sales side of the organisation (listen here to Greg Dyke on what the FA should have taken from the original Premier League deal but didn’t).

Beware those offering lessons from the IPL

The Twentification of sport has been the theme of the last decade and the commercial success of the IPL has changed how the sport is played on and off the pitch - Ben Stokes’ remarkable Headingley innings of 2019 would have been inconceivable before IPL. His technique and executional flair were forged in India.

Yet there are enough examples of knock-off Twenty20s across sport to suggest there’s more to it than shoving every event into a football-sized hole and hoping for the best. It’s a theory I suppose, but the mass appeal of gaming and box sets seems to get in the way.

Join the hive?

Simon Hughes has written a book with Manoj Badale, the owner of the Rajasthan Royals, about the business of the IPL, called A New Innings. Simon has a great track record for experimenting with new ways of communicating and he has employed a Hive Learning site to extend conversation around the themes of the book. Have a look, you’re exactly the sort of people he wants to interact with and learn from (fyi, we’re not on commission).

(Btw, IPL related publishing is becoming a minor cottage industry: we had Tim Wigmore on the pod a few months back, talking about his new Cricket 2.0 book, co-written with Freddie Wilde, and then there’s Tim Wright, formerly of IMG, who has written a behind the scenes on the business of IPL, date of publication as yet unknown, at least by me).

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