The View From Asia: How is institutional finance playing a role to grow Sport in Asia
May 25, 2023
In his second View From Asia column, Unmish Parthasarathi (Founder & Executive Director of Picture Board Partners, a Singapore-based strategy & ventures boutique), shares examples of how Venture Capital, Private Equity, and Sovereign Funds are making a play to serve the next billion fans.
The last 24-months have been notable for the variety of sports investments in the US and Europe, be it Private Equity (CVC/Six Nations), Venture Capital (Sapphire/Overtime, Buzzer), Strategics (Endeavour/WWE), Sovereign Funds (PIF/LIV) or Family Offices (Walton-Penner/Denver Broncos). In this article, I cites five trends with ten examples across a dozen markets that promise returns due to a positive demographic dividend, a growing supply of talent, and, rising per capita incomes.
Trend 1: The situation in Asia is similar but different with notable patterns often seen in the West a decade ago:
- Cheque sizes reflects the gap between current value and future potential as leisure in the cities matures;
- VCs were the first movers from the period before the pandemic with PE making a play more recently;
- Sovereign Funds and Family Offices are few & far between, but are curious about rends in the West.
Not subscribed to our weekly newsletter? Click here to sign up and receive more content like this to your inbox every week.
Trend 2: Venture Capital has been led by growth stage investments followed by a more thematic approach:
In May 2021, Dream Capital invested $50 Mn in FanCode, a next-generation digital platform that combines live streaming a la DAZN with match day editorial akin to ESPN.com and a Fan Shop. Dream11, a fantasy sports platform used by 180 Mn fans, raised $840 Mn in late 2021 at a $8 Bn valuation backed by Redbird Capital, Falcon Edge, Tiger Global et al. The other big-cheque recipient is FanCraze, the official digital collectibles partner of the International Cricket Council (ICC). In April 2022, it raised $100 Mn from New York-based Insight Partners (an investor in Calm) and Singapore-based B Capital, co-owned by Facebook co-founder Eduardo Severin and Raj Ganguly of Bain Capital.
Trend 3: Seed/Pre-Seed stage investments are being led by the largest global sports federation in the region.
In mid 2021, Tennis Australia (TA) launched WildCard Ventures, a fund focussed on Sport, Health and Entertainment with their IC (Investment Committee) includes the CEO, CFO and General Counsel of TA. In early 2023, TA launched AO Startups, focussed on three experiential areas (Athlete, Event, Racquet Sports). Such initiatives by a globally-recognised federation based in the region can be a possible playbook for other Asia-based/focussed federations in Cricket, Badminton or Table Tennis.
Trend 4: Much like in the West, PE plays lagged VCs in Asia but has made a notable presence when it did.
In early 2021, CVC paid ~$740 Mn to buy the Gujarat Titans, one of two new franchises brought to market by the IPL. Valuations sky rocketed for two reasons – a scarcity premium as the IPL hadn’t expanded beyond the eight franchises at launch in 2008, and the assured annuity payments from a $6 Billion media rights deal that made the IPL the world’s second most valued league, at $15 Million per match, after the NFL.
In late 2021, Affinity Equity Partners committed $150 Mn to Vidio, an OTT platform owned by the Emtek Group, a market leader in Indonesia. Premium sports rights, such as the English Premier League and the FIFA World Cup have been key to Vidio’s brand development and user acquisition. Unlike DAZN and like Hotstar in India, Vidio has diversified its content, commissioning 100 local language entertainment shows. This dual-genre play recalls a quote by Rupert Murdoch – of “sport being the battering ram of Pay TV” – that was key to Sky UK’s early success consolidated later by Hollywood movies.
In late 2021, Eclat, a Korean Sports TV company, bought most of Fox Sports Asia’s rights. This followed the former News Corp. network being shuttered after Disney bought 21st Century Fox. SPOTV Asia is unique in two ways – being funded privately, not institutionally, and, moving away from the historical reliance of regional channels on football. It’s two pillar content strategy based on motorbikes (centred on MotoGP) and racquet sports (with BWF, World Table Tennis, Wimbledon) is economically viable with a higher chance of break-even.
Trend 5: Whilst most of the digital plays cited above depend on licensing rights from a league, Asia has also witnessed the ground-up build of new sport properties that aggregate talent across multiple countries.
ONE Championship (ONE) is the world’s largest martial arts organization, ranked by Nielsen in June 2021 as one of the most viewed sports properties in the world. It closed a global deal with Amazon Prime Video in 2022 and hosted its first US event in Colorado, recently. The success Stateside was the tip of the iceberg as a new property takes time – and investment – to come of age. In mid 2016, Heliconia, a division of Temasek, one of Singapore’s two sovereign funds, invested an eight-figure sum. A year later, founder Chatri Sityodtong famously met Michael Moritz, Douglas Leone and Shailendra Singh of Sequoia Capital for breakfast to secure $100 Mn. In late 2021, at the peak of the pandemic, the company closed a $150 Mn round that welcomed Qatar Investment Authority (QIA) and Guggenheim Investments on the cap table.
The East Asia Super League (EASL) is another, similar, and more recent, example. It’s aggregated the best basketball talent in China, Japan, Korea, Taiwan and the Philippines; a UEFA Champions League of Basketball! In 2019, the venture arm of Raine Group, that brokered the sale of Chelsea FC, participated in EASL’s Series B. In mid 2020, FIBA granted EASL exclusive recognition and support under a 10-year agreement. Raine’s merchant bank is currently advising EASL on its $ 40 Mn Series C that is looking to close over the Northern Summer.
In summary, there is no going away from the fact that Asia is home to the next billion fan that will be coming online over the next decade. The reality of this demographic dividend is not being lost on investors although they are being choosy – as they should be! Watch this space, closely.