Billionaire Ratcliffe’s big sports bet misfires

Greetings from Weissenhaus, a secluded luxury resort by the Baltic Sea, where the world’s top chess players have gathered to take part in a competition with a twist.

Magnus Carlsen, the five-time World Chess Champion and arguably the greatest player in history, has brought his peers and rivals to northern Germany to do battle under Chess960 or Fischer Random rules.

Popularised by chess legend Bobby’s Fischer, Chess 960 randomises the starting positions of the pieces on the back row. The idea is that it’s impossible to prepare for 960 different opening positions, meaning that players can’t memorise their moves ahead of time.

The idea is old but the execution is new. Carlsen has teamed up with German venture capitalist Jan Henric Buettner, the owner of the Weissenhaus estate, to start the Freestyle Chess series.

The series has already riled FIDE, the game’s governing body, in the sort of clash that happens all too often when investors challenge the status quo. Watch out for more on this fight.

In today’s Scoreboard, we’re rounding up yet another fruitful week for sports lawyers, as two private equity-backed rights holders find themselves heading for court. Do read on — Samuel Agini, sports business correspondent.

Rugby ruck adds to sporting woes at Ineos

In a rather po-faced statement this week, Ineos blamed the “deindustrialisation of Europe” for its (unsuccessful) attempt to renegotiate a sponsorship deal with New Zealand Rugby, the organisation that runs the famous All Blacks team.

NZR, which counts US private equity firm Silver Lake as one of its backers, responded by launching legal action over what it said was a breach of contract.

Tough trading conditions in the petrochemicals manufacturer’s core business certainly make life harder for a company that has taken on major sporting interests across football, cycling, motorsport and sailing.

But the fight over rugby is just the latest in a string of bad headlines for Ineos, and raises fresh questions about what Sir Jim Ratcliffe’s chemicals company is trying to achieve in the world of sport.

In cycling, Ineos Grenadiers, the outfit previously known as Team Sky, is looking for a second major sponsor. “It’s fair to say that Ineos don’t want to spend more money,” Grenadiers boss John Allert said last month.

There has also been a very public break-up with Sir Ben Ainslie, the British sailor who led Ineos’ team in the America’s Cup. He has vowed to fight Ineos in the courts over the company’s decision to cut ties.

And then of course there is Manchester United, the elephant in the Ineos sporting empire. The English Premier League club’s balance sheet was well known to be in need of capital when Ratcliffe bought in. United has failed to post an annual profit since before the pandemic. That’s why the Monaco-based billionaire committed $300mn of fresh equity alongside his purchase of a $1.3bn stake from the Glazer family last year.

What has followed on the pitch has been dismal — the team currently sits 13th in the league table, while brutal cost-cutting has dented morale off the pitch. There have been expensive mistakes along the way too. The decision to replace United’s head coach a few months ago cost £21mn.

It may well be that United has simply become such a big job that other Ineos sporting assets are destined to suffer from a lack of love, attention and money. Perhaps not winning has taken some of the fun out of the various projects too.

But the current turbulence at Ineos offers a timely reminder for investors. As an expensive and unpredictable sector, sport can be painfully exposed when trouble strikes a completely uncorrelated core business. More importantly, unparalleled success elsewhere — in tech, in finance, in petrochemicals — is a miserable indicator of whether you can win trophies.

French football’s never ending crisis

When DAZN stepped in last summer with an offer to buy up the bulk of TV rights to Ligue 1, it looked like French football had been pulled back from the brink of disaster. While the deal offered a bit less money than hoped, it prevented a financial unravelling for some clubs and made sure live games actually made it to air.

But now, that lifeline risks becoming a millstone. This week the relationship between Ligue de Football Professionnel and DAZN broke down after the broadcaster withheld a payment due to clubs last month.

DAZN blamed LFP for failing to address piracy and the clubs for not doing more to promote Ligue 1 matches. LFP responded by taking DAZN to court.

As with Ineos vs New Zealand Rugby, there is a private equity element lurking in the background here too. CVC Capital Partners owns a stake in the commercial entity that controls LFP’s media rights.

The blow-up follows weeks of murmuring about how badly DAZN’s French football deal has been going. Local press reported that the streamer had only attracted 400,000 subscribers for Ligue 1, well below its target of 1.5mn. People familiar with the situation also point out that many subs have been sold at heavily discounted rates.

Recent results show that DAZN has continued to burn through cash. In 2023, it made a loss of $1.4bn, while billionaire owner Sir Leonard Blavatnik pumped in another $800mn.

For French football, the new legal fight will bring back painful memories of botched rights deals from the past. In 2020, LFP sold the bulk of its TV rights to Mediapro, an unproven Chinese-backed company, for big money. The deal severed the league’s ties with its long-standing broadcaster Canal+ but then fell apart after just a few months.

DAZN is no Mediapro. Despite its heavy losses, it hasn’t stopped taking on new commitments, such as agreeing to pay $1bn for global rights to show this summer’s new Fifa Club World Cup, even if an expected equity investment from future World Cup host Saudi Arabia should help pay that bill.

The longer-term risk for LFP is that the fight with DAZN raises a deeper question: perhaps French football rights simply aren’t worth much in the current climate.

Highlights

• Stade Brestois 29 — known simply as Brest — is a minnow by the standards of European football. Yet the Brittany club has been making waves this year as a debutant in the Champions League. Read our dispatch from on the ground here.

• Uefa has picked Relevent, the US-based sports marketing agency owned by billionaire Stephen Ross, to handle its lucrative Champions League broadcast rights. The move ends a long-standing relationship with Swiss-based Team.

• The Democratic Republic of Congo is targeting Rwanda’s international sporting ties in a bid to raise diplomatic pressure over its neighbour’s support for rebels in the east of the huge central African country. 

• Donald Trump’s son has backed a proposed sports event for athletes using performance enhancing drugs, just as the US is locked in a bitter fight with the World Anti-Doping Agency.

• The English Premier League’s current set of financial regulations are to stay in place for another year after clubs failed to agree on a new system to replace the so-called Profit and Sustainability Rules.

Transfer Market

• European Leagues is seeking out a new managing director. The industry body, which represents 39 professional football leagues across the region, is looking for a candidate to replace Jacco Swart, who is leaving after almost six years in the role. His successor will lead European Leagues’ relations with the likes of governing body Uefa, the European Club Association and the FIFPRO players’ association.

Final Whistle

The Business of Football Summit is less than two weeks away. If you want to hear what people running top clubs, leagues and international federations are thinking about the future of the game — from broadcast models and stadium redevelopment to new competitions and M&A — then join us online on February 26 and in person in London on February 27. All the details are here.