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Mark Cuban’s Mavericks bet

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The thing about sports investors is that they rarely have just the ball in their sights. That’s the case in the battle for the future of Telegraph Media Group, which as you might know owns a daily newspaper that’s influential in the UK’s Conservative party.

The UK said this week that it will probe Abu Dhabi-backed RedBird IMI’s offer to take the group over. It’s one to watch for readers of Scoreboard.

That’s because Redbird IMI is a joint venture between the US private equity firm run by former Goldman Sachs partner Gerry Cardinale and former CNN boss Jeff Zucker, alongside International Media Investments, which is controlled by Sheikh Mansour bin Zayed al-Nahyan.

Cardinale of course owns Italian football club AC Milan, while Mansour controls City Football Group, owner of Premier League champions Manchester City. Their clubs compete on the pitch but in the race for the Telegraph, they’re very much on the same side!

Like top football clubs, media assets tend to attract attention . . . 

This week, we look at the magic behind the potential sale of the Dallas Mavericks, the British sportswear company that’s raising cash to compete with Nike and Adidas, and why investors love padel.

Do read on — Samuel Agini, sports business reporter

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The bet behind Mark Cuban’s Mavericks deal

Mark Cuban: Maverick through and through © Tony Gutierrez/AP

This week’s bombshell sports franchise transaction is the proposed sale of the Dallas Mavericks to the family of late casino magnate Sheldon Adelson. 

The NBA team has been owned since 2000 by Mark Cuban, a dot-com-boom billionaire entrepreneur who has parlayed his knack for selling at just the right time to a high-profile television career on the business reality show Shark Tank. He bankrolled the Mavericks, once a lacklustre expansion franchise added to the NBA in 1980, into a 2000s phenomenon led by Dirk Nowitzki. The team won their first and to date only championship in 2011.

Cuban himself has become one of if not the most visible NBA owners — at once an accessible billionaire on television each week and an impassioned basketball fan (many will remember his viral reaction to hearing the NBA shut down the league at the onset of the coronavirus pandemic). This makes his decision to sell now, of all times, to the Adelson family, who have no experience in sport, such a shock.

What do the Adelsons bring to the table? Dr Miriam Adelson, widow of the late Sheldon, and her son-in-law Patrick Dumont, are the largest shareholder and president, respectively, of Las Vegas Sands, the Nevada casino empire. In addition to their vast influence in Sin City, Sheldon and Miriam Adelson have been prominent donors to the US Republican party and to Jewish and Israeli causes (Miriam Adelson is a dual US- Israeli citizen). Up until Tuesday, when Las Vegas Sands issued a regulatory filing stating that Miriam Adelson intended to sell $2bn in company stock for the purpose of buying a professional sports franchise, the family wasn’t known to be interested in the industry.

Cuban did not respond to a request for comment on the sale, and a spokesman for the Adleson and Dumont families declined to comment. The agreement is still subject to approval by the NBA board of governors, and the buyer families said in a statement that they hope to close by the end of 2023.

All that said, the clearest reason for the sale is a new initiative in the Adelsons’ long-running interest to establish destination gambling in Texas. The Lone Star state legislature has been subject to skyrocketing lobbying interest by the casino industry — led by Las Vegas Sands as recently as 2022 — to loosen the state’s strict laws against punting. A majority of states, including New York, have legalised sports betting since 2018, launching a new sector in the US and revitalising other efforts to expand the casino business outside of Nevada, such as the Texas battleground.

Cuban told Dallas local news affiliate WFAA on Wednesday that diversifying the Maverick’s revenues away from media rights, with the potential of building a new arena/casino destination, factored into his rationale for selling. The Mavericks have a 50 per cent stake in their arena, the American Airlines Center, which it shares with local NHL franchise the Dallas Stars. 

It was not so long ago that betting and sports mixed like oil and water in the US — now the former industry is influencing sales in the latter. In May, the Texas House postponed a bill to legalise casino wagering until November 29, though no action has since been taken on the legislation.

Can a £1bn British upstart change sports merchandising?

Castore: smashing it. Tennis player Sir Andy Murray with brothers Tom and Phil Beahon © Financial Times

In the world of sports merchandising, it’s hard to look further than the behemoths of Nike and Adidas. Any newbie to the scene also has to factor in Puma and Under Armour, not to mention Fanatics, which produces kit and operates online stores for teams and leagues.

That’s a hell of a competitive landscape for anyone to break into, never mind a start-up founded by a couple of brothers whose early source of funds came from their parents remortgaging their home.

The company we’re talking about here is Castore. Founded in 2016 by Tom and Phil Beahon, it raised £150mn this week to help fund global expansion, adding to the 50 or so partners it has accumulated across football, Formula One, rugby, tennis and cricket.

Its early backers included Scottish tennis star Sir Andy Murray and New Look founder Tom Singh. Mohsin and Zuber Issa, the owners of Asda, are also shareholders. But Raine Group, Hanaco Ventures and Felix Capital are Castore’s first institutional investors, per se, and the theory is that their expertise should help the company scale.

Castore expects to generate more than £200mn in revenue and £35mn in earnings before interest, tax, depreciation and amortisation in the financial year to the end of January 2024.

That would mark an increase from ebitda of £16.6mn on revenue of £115mn the year before, but nothing on Nike’s $12.9bn revenues in the first three months of its fiscal year alone.

Castore also has disadvantages against the likes of US billionaire Michael Rubin’s Fanatics, which has partnerships in the US with leagues as well as individual teams. That means the group manufacturers merch for the likes of Major League Baseball, the National Basketball Association and the National Football League, and then runs online stores to help sell to fans.

Like Fanatics, Castore specialises in increasing online revenues for sports teams and has digital shopping capabilities. The British company’s relationships, however, are largely with individual teams. And in its home market, England, or more broadly Europe, leagues rarely have as much sway as those in the US, which typically have more power over merchandising decisions than teams.

Competition is intense but the Beahons have proved there is at the least a gap in the market for their brand. Castore is small but it’s growing.

Don’t count them out.

Highlights

Padel: investment pastime © Charlie Bibby/FT
  • As investors look to ride the padel wave in new markets such as the UK and the US, what does it take to make money from it? We go behind the scenes with the people who see opportunity in the fast-growing sport in the latest Scoreboard video.

  • The annual revenue generated by women’s professional sport will surpass $1bn for the first time next year, according to a new report from Deloitte. The research shows that football and basketball account for almost three-quarters of the global total, with income highly concentrated in the US.

  • Vail Resorts agreed to buy the Crans-Montana ski resort in the Swiss Alps, in a SFr118.5mn ($136mn) deal that will give the Colorado-based group ownership of an iconic European holiday destination.

Transfer Market

  • The New York Mets hired former Bloomberg Media chief Scott Havens to be president of business operations, reporting to owner Steve Cohen. Havens said he was “thrilled” to be “accelerating the push to modernize our strategy across the organization, driving new digital and media innovation”.

  • Nikki Doucet has been named as chief executive of a new commercial entity that will oversee women’s professional football in England and Wales. Doucet is a former investment banker and Nike executive who will be develop the commercial and media rights for the Women’s Super League and the Women’s Championship.

  • Pedro Proença has been chosen as new president of the European Leagues, an umbrella group representing the interests of domestic competitions Proença, the president of Liga Portugal, fills the vacancy left by La Liga head Javier Tebas, who stepped down earlier this year.

Final Whistle

Mikel Arteta: still got it © @HaytersTV

Arsenal are top of the Premier League heading into the weekend and they’ll be hoping to beat Wolves at home today. But might manager Mikel Arteta be wasted on the sidelines?

The former Gunners captain is 41, but showed he’s still got it by slipping the ball between Norwegian star Martin Ødegaard’s legs in training this week.

Now this is how it’s done!

Scoreboard is written by Josh Noble, Samuel Agini and Arash Massoudi in London, Sara Germano, James Fontanella-Khan, and Anna Nicolaou in New York, with contributions from the team that produce the Due Diligence newsletter, the FT’s global network of correspondents and data visualisation team

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