Fenway Sports Group in Talks to Take Sports Holdings Public

soxhop411

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Boston Red Sox owner John Henry is in talks to join with an investment vehicle for an $8 billion deal that would take his famed sports holdings public, according to people familiar with the matter.

The deal being discussed would merge Fenway Sports Group LLC, which also owns English soccer team Liverpool Football Club, withRedBall Acquisition Corp. , the people said. RedBall is a so-called special purpose acquisition company launched by private-equity firm RedBird Capital Partners and Oakland Athletics executive Billy Beane.

RedBall, which raised $575 million in August to buy businesses in sports and sports-related media and data analytics, plans to raise an additional $1 billion to purchase a stake that will total less than 25% in Fenway Sports Group and value it at $8 billion including debt, some of the people said.
The talks are in the early innings and could still fall apart. Fenway’s investors had a meeting recently to discuss the potential transaction, one of the people said.
s a public company, Fenway could look to buy up more clubs in Europe, where a number have been on the block, according to a person familiar with the matter.

A publicly traded sports organization would be a relatively untested concept in the U.S. Liberty Media Corp. owns the Atlanta Braves, but the baseball team is a subsidiary of a much larger company. The NFL’s Green Bay Packers is owned by shareholders who mostly consist of fans.

New York-based RedBird, run by former Goldman Sachs Group Inc. banker Gerry Cardinale, made its first foray into European soccer in July by acquiring a majority stake in Toulouse FC, a club in France’s second tier. Immediately after the takeover, it installed a team president, Damien Comolli, who had previously worked at Liverpool and is close to Mr. Beane, who is best known for his analytics-driven approach as depicted in the book and movie, “Moneyball.”

RedBall’s board includes former Premier League Executive Chairman Richard Scudamore, during whose 20 years in charge English soccer turned into a global export and a television-rights cash cow. Premier League matches air in more than 190 countries every weekend of its 10-month season.

Because of the league’s reach, it’s not uncommon for top clubs to be valued in the billions of dollars on the rare occasions they hit the market. Manchester City set a new bar in 2019 after private-equity firm Silver Lake purchased a $500 million stake that valued the club’s sprawling umbrella group at $4.8 billion.
 

bankshot1

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I'm wondering about Beane's conflict of interest with his role in the As and the indirect but significant equity stake in the Sox, through RedBall.

I wonder if its Beane exit from the As, while Henry washes his Sox in public, and monetizes his illiquid assets.
 

Scoops Bolling

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Well, it'd certainly be interesting to get inside their books. And I guess answering to public stockholders isn't all that dissimilar to answering to the existing ownership structure.
 
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a funny quip I saw on Twitter about all rage in 2020 about SPACs (special purpose acquisition corps): "We are a newly incorporated company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective."

A way for JH to start to cash out it seems
 

bankshot1

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Well, it'd certainly be interesting to get inside their books. And I guess answering to public stockholders isn't all that dissimilar to answering to the existing ownership structure.
I'd venture to guess there may be some difference handling irate fans second guessing your moves and questioning volatile and erratic performances on the field and (for example) why you didn't sign Mookie for 12 years-a gazilion $, and the demands of irate hedge fund guys combing over your #s and suggesting ways to spin-off subsidiaries, raise ticket prices, etc. to maximize shareholder returns.
 

Scoops Bolling

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I'd venture to guess there may be some difference handling irate fans second guessing your moves and questioning volatile and erratic performances on the field and (for example) why you didn't sign Mookie for 12 years-a gazilion $, and the demands of irate hedge fund guys combing over your #s and suggesting ways to spin-off subsidiaries, raise ticket prices, etc. to maximize shareholder returns.
I was referring to having to answer to minority owners. From the website, there seems to be about 20 of them, and I wouldn't be surprised if a few of them were other hedge fund guys besides Henry.
 

slamminsammya

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a funny quip I saw on Twitter about all rage in 2020 about SPACs (special purpose acquisition corps): "We are a newly incorporated company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective."

A way for JH to start to cash out it seems
I don't know much about business but it seems like the opposite if the intention is to raise funds to buy more clubs.
 

Ale Xander

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Cashing out/retiring and/or it's not longer a private cash cow. Auto racing, NESN, and MLB are not at their heights. And Salem Red Sox may not have a future at all, who knows with Manfred.

(I'm assuming he's buying out, with shares, Delaware North 20% of NESN and Roush as a part of this)

Maybe he holds back Liverpool?
 

NomarsFool

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As a fan, I like sports owners who run their franchises like a luxury good - a way to show off their wealth and get them access into uber elite circles. If they have to run them like a business, making profit year in and year out or quarter by quarter - you end up with a different way of operating. I don't know if this move makes the Sox like that - but it seems like it could.
 

Ale Xander

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As a fan, I like sports owners who run their franchises like a luxury good - a way to show off their wealth and get them access into uber elite circles. If they have to run them like a business, making profit year in and year out or quarter by quarter - you end up with a different way of operating. I don't know if this move makes the Sox like that - but it seems like it could.
One could argue it's been like that since 2005
 

The Gray Eagle

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We have had the most successful period of ownership in the history of the franchise since Henry took over. (Considering the environment and changes in the game, he wins over the very successful first 18 years.)

I’ve disagreed with many things over the years, but bottom line, I don’t want any changes to this ownership.
 

Harry Hooper

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MLB would be cool with this kind of ownership, or is this something they can't block?
 

Philip Jeff Frye

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MLB would be cool with this kind of ownership, or is this something they can't block?
Baseball teams have certainly been owned by publicly traded companies before - the Angels were owned by Disney, the Braves by Turner Broadcasting and then Time Warner.

I would think they could still block if they were uncomfortable with some aspect of the ownership group but I would think Henry would still end up as the major shareholder of the SPAC after the deal. Most SPAC deals involve large stock issues to the shareholders of the acquired company, even if some cash also changes hands.
 

notmannysfault

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This is a version of the "reverse merger" which is only as good as the assets underlying the shell. With properties like those Henry owns, this doesn't seem like a big deal, other than to say some of ownership wants to take some chips of the table.

What is the old personal financial rule? Once you hit a certain age you should have 100 - your age in certain illiquid or otherwise risky assets?

What percent would (100 - ((reanimated corpse + 15) + 40 year old third or fourth wife)) equate to?

Anyhow, the Beane conflict of interest question is a good one. There's something there.
 

jon abbey

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Looks like you guys were correct about Beane:

“Billy Beane, the baseball executive featured in “Moneyball,” could soon face a straight choice: stick with his long-time franchise the Oakland Athletics or with his investment in the Boston Red Sox, assuming RedBall Acquisition Corp. closes a deal to merge with Red Sox’s owner, according to a person familiar with the matter.”

 

RobertS975

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The Celtics were a publicly traded stock on the NYSE at one point. Of course, many of the stock certificates ended up in frames hung on the walls of family rooms across New England.
 

soxhop411

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Billy Beane Set to Leave Baseball Behind in Fenway Sports Deal

The proposed deal to take the parent company of the Boston Red Sox public leaves Billy Beane, the Oakland Athletics executive of “Moneyball” fame who ignited the data revolution in American sports, with a difficult choice.

He runs the A’s front office and holds a minority stake in the team. He could soon have a financial interest in the Red Sox, part of the sports empire overseen by John Henry, the billionaire owner who has spent nearly two decades courting him

It appears Beane will resolve the conflict by leaving baseball behind in favor of helping Henry build an already substantial sports portfolio that includes the Red Sox and Liverpool Football Club, the champions of the English Premier League.
If Henry’s Fenway Sports Group completes its merger with RedBall Acquisition Corp. , a special-purpose acquisition company that Beane co-chairs, Beane is set to step aside from working in a baseball front office, people familiar with the matter said. He won’t take a role running the Red Sox, these people said.
 

RedOctober3829

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Billy Beane is prepared to leave Oakland if this deal goes through.
The proposed deal to take the parent company of the Boston Red Sox public leaves Billy Beane, the Oakland Athletics executive of “Moneyball” fame who ignited the data revolution in American sports, with a difficult choice.

He runs the A’s front office and holds a minority stake in the team. He could soon have a financial interest in the Red Sox, part of the sports empire overseen by John Henry, the billionaire owner who has spent nearly two decades courting him

It appears Beane will resolve the conflict by leaving baseball behind in favor of helping Henry build an already substantial sports portfolio that includes the Red Sox and Liverpool Football Club, the champions of the English Premier League.
If Henry’s Fenway Sports Group completes its merger with RedBall Acquisition Corp. , a special-purpose acquisition company that Beane co-chairs, Beane is set to step aside from working in a baseball front office, people familiar with the matter said. He won’t take a role running the Red Sox, these people said.”
https://www.wsj.com/articles/billy-beane-set-to-leave-baseball-behind-in-fenway-sports-deal-11602538672
 

CarolinaBeerGuy

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The Celtics were a publicly traded stock on the NYSE at one point. Of course, many of the stock certificates ended up in frames hung on the walls of family rooms across New England.
Ha! I got one of those for my birthday or Christmas when I was a kid. I wonder if it’s still at my parents’ house?
 

SoxinSeattle

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Has a company going public ever benefited the customer? Share holders have a tendency to create a worse product for more money. I hope that is not the case here as sports are different.
 

ColdSoxPack

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Can one of our economics experts weigh in on whether this SPAC and the decision by Henry to get under the tax penalty threshold is a mere coincidence? Also I don't know who to spell threshold.

edit: 1 "h"
 

Philip Jeff Frye

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Can one of our economics experts weigh in on whether this SPAC and the decision by Henry to get under the tax penalty threshold is a mere coincidence? Also I don't know who to spell threshold.

edit: 1 "h"
Hard to know without more details on the SPAC deal. Is Henry cashing out completely (probably not)? What's the split of whatever the cash proceeds are between him and the limited partners? Will Henry and his people be calling the shots after the deal, or will the SPAC sponsors? You can be sure there's a lot of complicated tax minimization stuff going on around all of this too.

The SPAC concept has really taken off on Wall Street over the last six months, so Henry was almost certainly not anticipating this exact transaction when they traded Mookie last year, but he might have been contemplating some deal to begin monetizing his ownership for tax or estate planning reasons at that time. He probably thought the trade increased the value of his business whether or not he sold out in the next year, but who knows?
 

bankshot1

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Just spitballin' but if Henry wanted to cash-out now or in the near-future, the use of a SPAC seems counter-productive to maxing out on sale price. Even in these uncertain times, I suspect the Sox would attract several bidders willing to seriously bid-up one of this country's premier sports franchises. The sale of around 20% to what could be a PitA minority owner (who may want rights of first refusal on subsequent equity sales) would IMO somewhat depress the price to a deep-pocketed buyer.

Also converting from private ownership into a partially publicly traded entity in addition to monetizing the Sox, and possibility taking some dough out, would give Fenway Sports Group a new currency (via Redball equity) to pursue acquistions or other opportunities.
 

JBJ_HOF

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Rumor is the influx of cash is going to buy out some of the Sox minority owners, strengthening Henry's ties to the Sox, and he wants to go big with both the Sox and soccer.