After a short break this summer, The Student Investor is back! Welcome to any new readers, as well as old. This year we intend to start where we left off, publishing three articles per week on investment topics. These will include Investing 101 articles, where we break down financial jargon, and Equity Focus articles, which aim to educate students on particular equities (however, our information is not investment advice).
Who are CVC Capital Partners?
To kick things off for the year, I will be deep diving into the activity of CVC Capital Partners. CVC is one of the world’s leading private equity and investment advisory firms. They invest in a range of industries, using numerous strategies. For example, their Growth Partners strategy looks at high-growth technology related companies, whilst their Strategic Opportunities strategy aims to invest in high-quality businesses that may not suit a traditional private equity mandate. Notable current investments include Hermes, Paysafe, Premiership Rugby, and Icario.
What is immediately apparent is the breadth of investments, ranging from business services to consumer/retail, to sport. With the Olympics having just passed, I thought it would be interesting to look into some of CVC’s sports investments, as they are less typical than the football-centric investments that grab the headlines these days, and more connected to less popular, less televised, sports.
CVC has extensive experience in the sports, media and entertainment sectors; previously investing in Moto GP, Formula 1, Premiership Rugby and Pro14, among many others.
Recent sport-related investments: Volleyball World
In early February, CVC began a new partnership with Fédération de Internationale Volleyball, volleyball's international governing body, with the intention to “drive innovation, growth and investment in volleyball around the globe” through Volleyball World, according to Freshfields Bruckhaus Deringer LLP.
This investment may seem strange to anyone situated in most European countries. Why would such a large PE firm in CVC invest in such an unpopular sport? Well…
Volleyball is the fourth most popular sport globally.
That fact surprised me too. But what makes the investment even more attractive is the level of participation in attractive markets. There are over 800 million fans worldwide, according to Freshfields, with the majority coming from Italy, Brazil, Japan, Poland, China and the U.S.
Looking into the actual investment, Volleyball World oversees commercial operations for all major volleyball and beach volleyball events; including, but potentially not limited to, the World Championships, Olympic Qualifiers and the Volleyball Nations League. The partnership itself focusses on long term commercial revenues through sponsorship, to ensure the long-term success of the sport, alongside event hosting, media, fan experience and data/digital opportunities.
As such, it seems that CVC is a major participant in the overall commercial running of all major volleyball tournaments – much in the same way Sky has a major grip on Football in the U.K. and Western Europe. This is good news for several parties:
- Volleyball spectators - As has been mentioned time and time again, sport is nothing without the fans. One just needs to observe the football fans’ backlash to the European Super League, and the subsequent effect to the proposed league to understand this. With the financial backing of a firm like CVC, Volleyball World’s fan experience will vastly improve. Take for example, football: 360-degree cameras, multi-screen matches, and VAR all make the experience better for the viewer. The same can be done for volleyball, and this will enhance the experience, as well as entice more fans to watch one of the world’s most popular sports.
- Volleyball competitors - If large sponsorships are brought in, which was agreed as part of the deal, this bodes well for the athletes of the sport. Again, using the example of football, the TV rights brought in by Sky Sports, BT Sport and others has given the athletes an enhanced status. Marcus Rashford has the platform to push the government for change. Lionel Messi is reportedly going to make £600k a week at PSG. If volleyball competitors get increased salaries and visibility through sponsorships, it will only enhance the sport further.
- CVC Capital Partners - As an investment, sport is always attractive. CVC’s €2.7bn proposed deal for a 10% stake in La Liga shows the value of sports. As a sport, football had over three billion viewers in the 2018 World Cup, according to FIFA. If the partnership between CVC and Volleyball world can double their viewership in the next 5-10 years, it will be near half the viewership of football. With such exposure, large sponsors will be attracted to the sport, leading to Volleyball World’s value increasing. CVC will be an obvious beneficiary.
CVC’s venture into sport has been broad. Their move into volleyball this year is a surprising one at first glance; but it’s clear that there is a potentially great opportunity here. The viewership is mainly based in China and the U.S.; an attractive prospect given that they are two of the most populous nations around the world. If CVC and Fédération de Internationale Volleyball’s partnership captures the hearts and minds of fans, it will be beneficial not only for the parties involved, but for volleyball as a whole.