Sportfive

 

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The sale of Sportfive to French media group Lagardère marked the successful outcome of a complex reorganisation and reorientation process which elevated this Franco/German business to the number one spot in the international sports rights market.

“Having a truly multinational team contributed to Sportfive’s success because it managed to win over the management team at an early stage. This was key to getting the deal done, because management helped Advent International understand the business and convince the banks of its merits.”
- Thomas Rabe, CFO, RTL

The result of a three-way merger in 2001, Sportfive had successfully created a European leadership position in the lucrative sports rights market.  Its niche status, however, made it more difficult for potential backers to identify the core value in the company when it was put up for sale in 2003.  This, coupled with an adverse investor appetite for media businesses at that time, hampered the sale prospects for the business.

We regarded Sportfive’s strategic position of providing “must-have” content for broadcasters and sport sponsors as a powerful platform for international expansion.  Through the close co-operation of our Paris and Frankfurt deal teams, both sensitive to Sportfive’s cultural complexities, we saw further opportunities to strengthen the business through management change and a refocus on its core competencies. A series of changes followed, including multiple acquisitions which broadened Sportfive’s international footprint. 

Winning the contract for the UEFA 2008 European TV broadcasting rights in 2005 was the turning point for the business, elevating it to the top tier of international sports rights management and providing a highly complementary fit with Lagardère’s media interests.

Cross-border co-operation

Created in 2001 by the merger of companies owned by media groups Bertelsmann and Vivendi, and the independent agency business of a French entrepreneur, Sportfive had established itself as Europe’s leading sports rights agency. It marketed the broadcasting and merchandising rights on behalf of sports clubs and organisers. Although its portfolio was starting to show some diversification, its primary focus was the football market.  Its clients include over 250 football clubs, 40 federations and 30 clubs. 

Listed on the Paris stock exchange and operating out of headquarters in Paris and Frankfurt, Sportfive had a complicated operational structure, including two diverse management teams, never having been truly integrated after the merger. 

It was also a global business, with all the challenges that go with being a geographically dispersed organisation, employing some 340 people as well as operating a worldwide network of subsidiaries, representative offices and agents.

In 2003, the business was put up for sale in a process led by Sportfive’s French headquarters. Touted as a French deal and overseen by an influential founder who emerged as a rival bidder, it was hard for potential buyers to identify the value embedded in the business.

Our international office network, was able to spot a German angle in what was being sold as a French deal as a large part of Sportfive’s business was in Germany. Through our Frankfurt office, and with the help of our specialist media deal team in London, we were able to make contact and then build a relationship with, Sportfive’s talented German management team. Our networks also enabled us to join forces with strategic player, Bertelsmann-owned Television group RTL, one of Sportfive’s existing shareholders, in a move that was to help us seal the deal.

Once the deal was completed, our French and German teams set to work on an in-depth restructuring of Sportfive, a process that relied on seamless co-operation and close contact between the two offices.

“The fact that Advent International is strong in Germany and France was key to completing the deal. This gave the firm a real advantage. What they also did really well was to get close to the management to make them feel comfortable and give them faith that they could work together to take this business to a totally new level.”- Matthew Wheeler, chairman, Lighthouse Communications

Access to finance

“I was particularly impressed by the way Advent International took a complicated deal and then presented it to the banks as part of the fundraising process. Advent International wrote an exceptional bank book that led to it being oversubscribed.”- Matthew Wheeler, chairman, Lighthouse Communications

Following the bursting of the TMT bubble in 2001, the media was an unpopular sector for investment at the time. In addition banks were even more cautious about lending to a business in the rights agency market having had the world’s leading player ISL just gone bankrupt.

After joining forces with RTL and gaining the German management team’s trust, we were able to draft a new investment memorandum, highlighting the potential we saw in the deal. Our English and German teams managed to source debt outside France where banks were particularly risk averse. We achieved this by setting out Sportfive’s stall: more than an agency, its value was locked in a portfolio of rights. We were able not only to help the banks overcome their reservations, the debt was in fact over-subscribed. Ultimately, we were the only buyer to convince Sportfive’s main shareholders that we were able to finance the deal and in June 2004, we acquired the business.

Implementing change

“Advent International was well prepared, had a good understanding of the market, worked closely with the management team and always appeared to be one step ahead… it was the best project I have ever been involved in.”- Stefan Ludwig, Deloitte

Following the acquisition, Sportfive underwent a restructuring to ensure the successful integration of the three separate businesses. A large element of this involved changing and strengthening much of Sportfive’s French team.

It was a successful strategy, but one that required careful management of both existing staff and – vitally – clients.

With the rights contracts negotiated by many of the team that had left, the danger was that Sportfive’s client base would walk away at the end of their contracted period. However, the company successfully renegotiated every single major contract on its books. The fact that it was able to prolong its contract in 2006 with one of its most important clients, the French Football Federation, was proof of Sportfive’s excellent and continuing market position in France.

The restructuring also meant integrating systems and - most importantly – cultures between the three businesses. With relations strained between the German and French headquarters, a great deal of emphasis was placed on fostering a rapport between the two offices and ensuring they were working towards a single strategy for building on Sportfive’s success under a single executive management team.

The management team was also strengthened through the appointment  of Laurent Scharapanas general manager, formerly a senior figure in the International Olympic Committee.

The last part of the restructuring saw the sale of a number of non-core activities, enabling management to concentrate on the most important areas of the business.

International growth

Despite the fact that Sportfive operated out of France and Germany, it was essentially an international business, managing contracts as far afield as Africa with still more expansion to play for.

Although it was considered a world leader for football marketing and broadcasting rights, Sportfive had focused primarily on managing European rights. Its management saw an excellent opportunity in expanding the company’s horizons, leading to the creation of Sportfive International in Switzerland, which was set up to manage global rights on behalf of its clients.

Sportfive also entered new territories, expanding into the lucrative Italian market and, using Advent’s contacts to identify and negotiate with targets, acquiring a UK business to give it access to the strategically important Premier and Championship leagues.

The landmark success for Sportfive came in 2005, when it won the tender for the European broadcasting rights for the UEFA EURO 2008 tournament – the first time the football body had used an agency to sell rights to TV companies. The contract underscored Sportfive’s leadership position in international sports rights management and propelled it into the industry’s top tier.

By the end of 2006, Sportfive was managing the rights for over 250 football clubs and 30 federations, making it the number one player in the European market - a highly successful outcome for Advent, management and staff and for the company that acquired Sportfive in 2007, Lagardère.

 

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Contact


Pascal Stefani

Managing Director, Advent International SAS, Paris
T: +33 (0) 1 55 37 29 00

Ranjan Sen

General Manager, Advent International GmbH, Frankfurt
T: +49 (0) 69 955 2700