Unofficial Partner Podcast
Unofficial Partner Podcast
UP454 Other People's Money: Why P/E wants to be a football agent
Other People's Money is our series on the sports investment marketplace with regular co-host Matt Rogan, co-founder of Two Circles.
Bruin Capital, George Pyne's private equity firm, has launched a new international soccer agency called As1, representing more than 300 players and coaches as clients. The list includes Bruno Fernandes, Man United, Moises Cascedo, formerly of Brighton, now Chelsea, and Luis Diaz of Liverpool. The company takes a number of acquisitions, including Nomi Sports, Position Number, and Promoesport and puts them together into one big unit.
So why? What's happening here? What does private equity see in the talent market around European football? And what are the implications for the game, the players, the money and the regulators?
To help us answer these questions, we've invited Daniel Geey to come back onto the Unofficial Partner Podcast.
Daniel is a Partner in the Sheridan Sports Group focused on helping clients in the sports sector, including rights holders, leagues, governing bodies, clubs, agencies, athletes, sports technology companies, broadcasters and financial institutions.
Daniel has significant experience in the football industry and has worked on a variety of club takeovers, high profile transfers, commercial endorsement deals and disputes.
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Hello, Richard Gillis here and welcome to Unofficial Partner. Today, it's other people's money, which is our series on the sports investment marketplace with our regular co host, Matt Rogan, co founder of Two Circles. Today's conversation was. Kicked off by a news story just before Christmas which had Bruin Capital, George Pine's sports business, has launched a new international soccer firm called As One. To represent some of the biggest names in the game. Bruins first athlete representation platform will launch with more than 300 players and coaches as clients. The list includes Bruno Fernandes, Man United, Moises Cassido, formerly of Brighton, now Chelsea, and Luis Diaz from Liverpool. The company takes a number of acquisitions, including Nomi Sports, Position Number, and Promo Sport. And puts them together into one big unit. So why? What's happening here? What does private equity see in the talent market around European football? And what are the implications of what's happening here? To help us answer these questions, we've invited Daniel G to come back onto the Unofficial Partner Podcast. it's not the players that are making any losses on anything. It's clubs. Clubs are basically subsidizing agencies. So the real point actually, is to some degree, PE is coming into club side quite a lot. Ironically, there's an argument that it's PE subsidizing PE, indirectly. Daniel is a partner in the sports group at Sheridan's London based law firm. His practice includes helping clients in the sports sector, including rights holders, leagues, governing bodies, clubs, agencies, athletes, sports tech companies, broadcasters, everyone. Daniel has particular experience in the football industry, and he wrote a very good book, Done Deals, which if you're a student of the sports business, you probably have read already. So, let's get into it with Daniel G. and Matt Rogan.
Richard Gillis:So other people's money. Is our series that myself and Matt have been going around thinking about sport and investment and, you know, money in a broader sense and its impact. And we've talked to, you know, in terms of private equity and sovereign wealth has been a subject matter. And we keep bumping into various topics. And this one, I think is a really nice opportunity for us to go into a specific. area, because quite often the conversations are that can be a bit abstract because obviously any, you know, money can buy anything it wants. And it's different for clubs to leagues to agencies and all of those things. This is a great opportunity because one of the things, and I'm going to sort of just set us up by giving a bit of, Sort of industry context, which is so Brewing Capital. I think this was the kickoff for the conversation in terms of just before Christmas, buying four, player representation firms and forming what will be, I suppose, one of the biggest agencies in Europe, Nomi Sports, N O M I, position number, football division worldwide, promo sport. And they're going to merge under and Matt have a go at this name. Is it a one? Is it A S One or A S
Matt Rogan:As one, as one, just like the seamlessness of our presentation together, as one.
Richard Gillis:As One, right. So there's a sort of Dazone aspect to that, isn't there? In terms of people going to have to learn, they're going to have to take five years to learn how to say it. so As One. and the press release was talking about its strength in La Liga. More La Liga players than any other agency on day one of operations. And that is in context where other agencies are buying each other and merging. And, I guess it's consolidation, your base being bought by CAA, Stella being bought by ICM and then subsequently CAA, WME buying BDA sports management, Wasserman buying CSM, Excel sports management acquiring Rep one football and octagon buying out pro sport internationals rugby division. So Dan, that's the context for the conversation. And we're going to be starting to talk about why what's happening, why it's happening in your opinion. Now, we just need to frame you a bit. I need a bit of like a minute and a bit on Daniel and his biography, because actually I know you as, the sports lawyer around deals, and you're very, very good book, done deals, got into the detail of that. And you've really sort of built a very interesting personal brand around that. Which so congratulations on that, but this is going to take that conversation from the micro to the sort of bit broader than that, but just give us a bit of context on you in terms of what you do all day and what's your relationship to the sort of context that I've just outlined.
Daniel Geey:Yeah, no problem. So, uh, yeah, in short, I would probably say I am, a talent agent and talent across a few different spheres. So I'd say my core areas primarily are working with high net worth individuals that, effectively, uh, own different types of sports properties, including football clubs. my core sweet spot, I would say then is working with players across their on field and off field issues, if that might be employment contracts and endorsement deals or disciplinary and dispute matters. And then, uh, alongside agents with their players and talent. So, uh, I think it's probably fair to say that probably 90, 95 percent of my work is working with players and their agents across all of the great stuff that happens, and then also sometimes the stuff that needs to be resolved behind the doors.
Okay. So Matt, let's just bring you in here. So I'm going to take you broader and ask what do you think's happening here? Obviously you ran an agency, two circles that was bought by Bruin Capital, George Pine's business, so just frame the conversation for us. What's happening in the, broader marketplace.
Matt Rogan:Well, well, I guess if you, if you start with, you know, why do we invest in anything we inve, we invest in anything because we have aspirations that will grow, right? And it, the value of, of, of what we're investing in will grow. Uh, and there's two ways in which things that you're investing in can grow. You can grow the multiple of profit. that an investor would would believe they can generate if they then look to exit, or you can grow the absolute profit number. And actually I think with, with player agencies, you've got the opportunity to do both. So if you think about layering up the profit to start with you know, you have the, but you're putting, when you're buying four player agencies, you're putting four player agencies profit lines together you get a better multiple off a bigger profit number. Just full stop. So put four levels of profit together, you know, let's say you get a multiple of eight on a total of one million pound, one million pound, one million pound, one million pound profit. It offer pure multi offer a total number of four million, you might get 10, right? So you just create value by layering up profitable businesses. And you also get value when that profit is being laid up It's pretty sure. So the lovely thing about player agencies, just like actually sponsorship sales agencies, if you get 10 percent of a deal, You get 10 percent of a deal every year that that payment is made, so 10 percent of a, 10 million a year player contract as an agency, you get that every year of the contract. So they're really nice, relatively low risk businesses in sport, if there is any such thing as a low risk business in sport. So that, in terms of getting a decent multiple on, on businesses you're buying and putting together, you For a PE perspective, private equity like Bruin, that's a pretty sure thing. The other thing is to say, well, you know, if the world is changing, and maybe we'll get into the way in which player agency Uh, are changing and the services they offer are changing, you know, you can, you can, as a private equity company, if you bring the right skills to bear, you would hope you could really help with the effectiveness of the businesses. So, you know, a lot of the player agents that I know well are excellent salespeople, really strong in relationships, but probably not the most savvy of business managers don't really enjoy being behind a desk managing cash flow and the operational side of the business and that's somewhere else that a PE firm or an investor like Bruin might speculate they can help. So if Bruin think okay we can make this business more inherently profitable because we can make it more efficient so that will grow the profit line and we can layer up profit, recurring profit to increase the multiple line, we've got a double whammy there. And that's where we can really grow the value of our investment by scaling a player agency rather than having a lot of fragmented operators.
Yeah. So I guess there's a question then Dan is, is what, when you're looking at this through the eyes of the investor, what, what is a player agency? I mean, I guess there's a few things in play. There's sort of, this is a scale play. I've got a very romanticized view of what a football agent is. And this is a sort of corporatization of the marketplace. There's risk involved here, be quite interesting to get into what an agency is actually and what they do, and there's a line between contractual work. And commercial work there's a vulnerability to superstar agents who get the best prizes and bring in the most money. And you're trying to sort of balance that down. Let's talk about it at the, just the, what an agency is for a minute. Well, I think Matt can probably talk to a lot of that again in terms of the financials, but I think there's just a few maybe fundamentals that I've seen over the years, which is buying agencies with whatever inventory. They have by way of asset generation is a way of de risking really. That's what we're talking about here is de risking at scale because when I was sort of making some notes in prep for the session, I've got this thing around the football industry in particular, where, you know, there's some incredible agents and agencies doing fantastic work, but the agency is, the agency business is inherently. unstable or somewhat lacking in stability because if the fundamental point is the majority of agency's revenue on the football side is going to be driven by on pitch commission, what that is underlayed by in terms of foundation is a two year representation contract for the player. So, What you don't want to have as an agency is three or four incredibly good players on two year deals. You want 500 players, or maybe there's actually a sweet spot of however many is in ratio to the agents that you have, constantly renewing two year deals. To ensure that you're de risking your client base across the transactions that are then being carried out at a particular time. Now, I know football is a basket case in loads of different ways and the two year deal, two year rep contract deal is another point. But the other thing that I'm sure you and Matt will have appreciated as well on the football agency side is there's a growing brokerage market. For football agents, which is football agents aren't really representing footballers anymore, or to a larger extent, there is a much bigger, some would say bigger market in brokering deals, because then you don't need to have the relative insecurity of two year player contracts, but what a football agents and the best football agents will have are extremely strong sporting relationships with the sporting directors, chief executives, chief scouts uh, whatever, whatever that title is given to the decision maker of the, the transfer committee or otherwise. And what they are effectively doing is smoothing the pathway for players going in and out of particular clubs in particular jurisdictions, especially jurisdictions where uh, there is big money flowing out, sorry, flowing into there, i. e. Premier League out. So if I hopefully I've said that correctly, what a lot of the bigger agencies are now doing, as well as obviously having very big global superstars, sometimes their most lucrative deals can be the relationships that they have with selling clubs and their role then is to be able to get the Best price for a selling club's player usually into the big selling, the big buying leagues, one of those being the Premier League. So that would be someone like, um, Giorgio Mendes, uh, Gestafutti and, and with their relationship or his relationship with wolves. Is that an example of that? Yeah, I was actually thinking more in terms of, for example, if Mendes or someone else, and I don't know Senecio for sure, who obviously has strong relationships in Portugal with Benfica or uh, Lisbon, for example, and they are incredibly good exporters of talent into the top leagues, primarily because they buy from South American and undervalued markets, usually because of a work permit. Leverage or the, the ability to be able to get work permits at a easier uh, easier level. Compete in the Champions League against the top buying clubs, realize those players are pretty good, and then they move on relatively quickly. And some of those agents in different ways can be the gatekeepers to or the enablers really to some of those deals. So what I mean in terms of the first thing I said on the de risking. De risking is also the case because of that two year instability, but also because you, you don't want to just be dependent on one, you know, income source, line, line revenue source, which is player stuff. You want to be, and which is exactly the point why maybe PE and others are coming into the football agency and sports agency spheres, which is we can add lots more value here, which is on the commercial side, which is on the efficiency side, which is on, you know, every footballer wants to be a musician and every musician wants to be a footballer. you know, that, that intersection of entertainment. And, and I, I guess that's where the bigger entities see things. And the last point I would say, and I'd only say it because I don't have as much experience of the wider entertainment sphere in terms of TV and film agents and the top Hollywood stars, but really football is just another silo of a sector for these larger entertainment agencies now as well. You know, we're talking about why consolidations happening in football. There's an argument that football is just a byproduct of the other entertainment sectors that they're actually using for lots of different multi use reasons.
Matt Rogan:You know, my perception would be, if I think of agents, I think, you know, Eric Hall, Jerry Maguire in the start instance, which is I'm purely repping the player. I'm out there trying to find, as Rich described earlier on, trying to find sponsorship deals, trying to make sure they're at the right team, using the annuity of that income to build a business. And my assumption had been, okay, well that means you need 500, 500 players because it is lumpy. And because there is the risk that the England Centre Forward goes and s t on someone else just before their, their contracts expires. But I think what you're saying is actually, because that is so inherently risky, that the agencies, the bigger ones, have been looking elsewhere for sources of funds. And if you can find yourself also representing Sporting Lisbon, as well as the, uh, Uh, the Portuguese centre forward and you can find a way to sell them to Premier League club for 10 percent of 60 million quid, then that's an easier way to do risk of business. Is that, we got that right?
Yeah, I think I think that's exactly right. And especially if I can sing
Matt Rogan:or play electric guitar, then you're really in.
All in good time. Yeah. I I think there's lots to be said there. Uh, the, there is a real, I'm not sure if it's evolution or revolution. But, yeah, the days of, uh, an agent just undertaking player services, a big agency agent undertaking player services, it's just, that's just one, that's just, in my mind, one piece of the overarching pie, but the other thing that I'm seeing more of is, you know, actually everybody to a degree is Chipping away at agents in my mind clubs with image rights deals are basically limiting the ability of agents to be able to find commercial deals for their players because there will be restrictions on who clubs, uh, who players of particular clubs can enter into commercial deals with because they could be competitors of club partners. There might also be in particular instances that some clubs as it sort of been articulated by Real Madrid is when you go to Madrid, for example. It's been reported that they take 50 percent of your, of a player's commercial image rights revenue. Anyway, now I would be surprised if that's not the case with a number of other clubs around the world at different times, which means that agents sometimes if it's commercial, on field, digital, We're talking about commercial off field agents as well, might have to share a bit of a piece of the pie with other entities now being football clubs as well, because I guess those clubs would consider themselves possibly uh, agents that can go and find deals for their players as well in certain capacities.
Matt Rogan:So is there a bit of a jigsaw puzzle that says, actually, These agencies are layering up private entities layering these up firstly because there's a profit growth opportunity, but also because the market's getting tougher Actually, so it's it's a case of either you represent one person and that's your income or you've got to be scale There's the squeeze middle of agencies just, just can't survive.
Well, I also think it leads back to the fundamental question that I see all the time with, with talent and age and, and, and their families, which is. Why do we need an agent? Like, what's the fundamental principle why you need an agent in the first place? And some people have looked at the De Bruyne, for example, negotiation and said, well, De Bruyne has done it by himself with his lawyers and his tax advisors. So why, you know, why, why does X, Y and Z need an agent? I'm not in that camp. I usually see the, the, the significant value that agents bring. And usually in my mind, it's comparable valuation, i. e. making sure that the player's on a good market salary for where they are at the club. But more importantly, the network that they provide when a player's looking to move on and go somewhere else is really where you make that make that value. But if the overarching point is, do you need an agent? I still think the point is yes. Then the question is, uh, that a lot of people ask, a lot of the families ask is, why can't we do it ourselves? which is why can't the people around the player that have the trust, have the relationship, think that they can do it? And sometimes the answer is, well, have you ever done a commercial negotiation of any type of asset? Nevermind the family's asset. The answer usually is no. But at the same time, you know, you had this period where FIFA effectively deregulated the market and anybody could be an agent that's changed again now. So I think that's actually a fundamentally. Interesting time in terms of the football agency market because now The the drawbridge has risen again, unless you pass the exam you can't undertake uh agent services and that means the power falls back into the hands I think a little bit of the more established agents who are the ones that have got the experience, expertise and it means the families can't really go about doing that anymore. Which I guess brings in the question of the line between a lawyer and an agent in terms of how much of that work could you do and or a law firm do, is it easier for a law firm to become an agency or is it, is it better off that you're just to the side of that, you know, it's an easier, not easier, but just a, a more straightforward relationship because the, I can sort of see a blurring of the lines there. Well, I think it's probably fair to say I'm compromised because a lot of my clients are football agents and I know all my bread's buttered to a degree, but that's not to say there's, uh, times where I'll tell the agent, you know, I think we should do it like this or this should happen, but ultimately it's for the agent to deal with, uh, the player as they as they see fit. I'm always at pa sorry, go on, Mark.
Matt Rogan:No, I was just going to say, I think there's also, uh, You can be the best possible lawyer, but if I'm a, this is going to be hard to imagine, but if I'm an up and coming La Liga footballer and I'm looking for an agent and I need a new boot deal, the attraction of scale, so the attraction of as one, for example, would be to say I want somebody that knows 50, the scale and scope and revenue on the table for 50 current boot deals with Adidas, Nike, Puma, and all the, so I make sure I don't get fleeced. And you'd be the best lawyer in the world, but you might not know that, but that's where the market knowledge I would have thought of the big players is. That's where his scale is good in this kind of a market. Yes.
So I think this is, there's, there's a whole discussion around Uh finite scale and infinite scale so infinite scale being there's always room for another boot deal So they will have a good understanding of the market and know where those parameters parameters and barometers might be but finite scale is when you, uh, one, when, when one very big agency has 14 different left backs and only one of them might fit. So there is a distinction sometimes to be had between whether scale is an advantage or scale is a disadvantage. And then how do you prioritize one over the other? And how do you ensure that your fiduciary duty to each one of your players as their agent or otherwise is, is met?
Matt Rogan:It's a little bit like the WPP advertising agency model, where your argument was, we've got all the scale of WPP in terms of buying power and things, but we have smaller agencies underneath that, where we can, we can work with Pepsi and we can work with Coke, you know, without conflict and compromise, because we have some smaller sub brands underneath.
it's all of that and even more so, which is, you know, sometimes, uh, and I've seen it work both ways seamlessly and with difficulty, which is the bigger you get, the harder the comms pieces. So how does everybody know what everyone else is doing? It can sometimes be seen as a great thing where you're saying, well, actually we're the agent for this player and we're also the agent for this player. So how about we all get around the table and work out how it's. In everyone's interest to do it in a certain way. And there's also the exact opposite position, which is, you know, football agents are a certain type of personality as well in truth. And there's a high level of competition between agents even in, you know, particular the same agencies in different times. So there's something to be said for whether there is perfect. information asymmetry as well. So does everyone know what everyone else is doing? Probably not. Just sometimes that might be purposely or not purposely done probably at different times too. So I sometimes think, you know, you always get the, the grass is always greener, which is scale or flexibility or pragmatism. And, uh, the, the truth is somewhere right in the middle of all of it. Yeah, it's interesting. We had a conversation a couple of weeks ago about media rights auction strategy. And one of the points that was made was that the sports industry is, is really opaque in terms of just the information, you know, and trustworthy information and market information, whether that's unusual. You know, within a sector. But what you're saying is actually that opaqueness is can be within an agency walls as well as out. You always assume that, you know, there's a team working together seamlessly behind the wall, but actually, um, they're in competition with each other as much as they are with someone on the outside.
Richard Gillis:Isn't that what happened in Cherry Maguire, if I remember right? Well,
well, it wasn't yet. So if you remember, the start basically is he's only left with one client, isn't he? Because everyone else has taken all the rest of his clients and ends up being quite a good one in the end. But I think that's exactly right. It's the internal competition can lead to sometimes very aligned incentives and sometimes very misaligned incentives.
Richard Gillis:That's the interesting thing I think, and maybe the opportunity with realign people. So, you know, there's different ways, there's a privately held player agency or talent agency, you know, can give profit bonuses. Everyone's on payroll doing their own thing if they're a private organization. Then all of a sudden private equity comes in and they don't care how one agent or another agent performs. They care about the inherent value of the whole. You can get to a position where you can align the whole senior team against an exit value in four years time, give them all shares in the upsides. You know, and actually you could create an environment where there's a lot less competition. Then it, then in sort of another environment where it's kind of salary and bonus based on individual performance. So without being too idealistic about it, actually some external private equity investment can help create more of a socialist kind of culture internally. It's interesting. The accountancy firm Grant Thornton got invested in, weirdly, the partnership Grant Thornton got invested in by Sidman, big PE firm, and a lot of that is about aligning the partners around a three year transition to grow their value and every one profits. Take away that individual partnership sales behavior and try and get everyone to bat for the hole a little bit more. So I wonder if, if, sort of in a brewing type setup, you might see a little bit of that actually.
So we've got this marketplace then evolving into, you're essentially going to get a few very big agencies. And I wonder, I guess the question we could then roll this into is, well, how would you attack it? What would, what's, what next? So once you get to a sort of oligopoly, then you've got these big corporates and I guess there's a sort of, the counter will be bespoke, small, if I'm going to, Mbappe and saying, look, you should don't go to one of those big corporates, you'll get lost in that, you should come to us and we will create a whole sort of thing around you. What do you think about that? I'm just wondering about if we sort of invert it and just say, how, how would you go up against what are the weak spots of this sort of, mega. agency model that we're going to see evolve. I'll let you go first, Mark. I had a couple of bits, but I saw you just, uh, frothing at the mouth in a positive way. A positive froth.
Richard Gillis:Look, I think, ultimately, I think you just lack agility. I think one of the most interesting things that, uh, Yeah, the most interesting thing that agents can bring to any athlete is the ability to sort of bespoke a service around them that works. And you can't afford to bespoke something when you're, I would have thought, when you're CAA and you've got 3, 000 athletes under management. You know, so if I think about last weekend relatively small story on a global basis, but for rugby in this country. To have a female rugby player, Lennon Meyer, come over has more social traffic than any other rugby player in the world, male or female. Joins Bristol Bears, one of the franchises, three months. She's a social phenomenon. Bristol Bears go from one and a half, two thousand people at every event, and they had nine and a half thousand people at Bristol this weekend. because of the, Ilona is just a natural in terms of the way she connects to a young female audience who filled that ground. Right, so the agency service you might need for somebody like Ilona Mayer, to go to completely the other spectrum, you know, what are the services you need to put around something like Ryan Reynolds, natural entrepreneur, albeit a very different walk of life, but who flips aviation gin for 610 million quid in two years, you know, probably needs his own little P. E. support operation around them as opposed to a social media support operation different athletes need different things to indulge their talents and their passions and I think that if you get to the scale of being a cookie cutter agency where you have one way of doing things one type of talent that supports the athletes one way of working Yes, you might get a better day boot deal, but I wonder whether you actually, you really are able to support some of the uniqueness of each individual athlete.
Dan, what do you think? I think, uh, yeah, my, my bit was actually just probably a small portion of that, which is When you're talking about a talent market, there's constant talent renewal. So either the, the incumbents and the larger entities become attractive to the constant churning of the new talent or, uh, the disruption that occurs through the constant renewal means that the incumbents need to change their approaches in order to attract the next generations or otherwise because usually, you know, things can become stale quite, quite quickly or otherwise. Now, in my experience, what talent usually wants is a track record of Getting deals done, really. That's always what happens whenever you hear of beauty parades where players are looking for the next agent or otherwise. It's very difficult for a newbie just to come along and say go with me. It's always going to be the big ones that are going to be with a very good shout because they're the ones that can say we did these 17 deals with Man United or Chelsea or Atletico Madrid or otherwise. And I, I think the other thing that got me thinking about a few things Matt was saying was I actually think there's a very straightforward thing of the rationale for acquisitions actually for agencies that if they're de risked well enough and query how exactly you, you, you define that. There's a great few pieces I was reading recently, which is, it's not the players that are making any losses on anything. It's clubs. Clubs are basically subsidizing agencies. is my indirect view on things. Clubs continue to make losses over a significant period of time. It's only the few PSR years before COVID where clubs were more or less breaking even again, unless you're Daniel Leeve and a few others. So the real point actually, uh, is to some degree, PE is coming into club side quite a lot. Ironically, there's an argument that it's PE subsidizing PE, uh, indirectly. So, I'm quite interested in that approach to stuff uh, because the players are still, you know, the money is arguably not seeping out of the game to talent. Talent is getting the biggest portion and pie of everything without risk. And the clubs are still happy to, to fund those losses for the exact same reason that they think it's asset appreciation because of the stability of the, of the broadcasting deal and the other commercial stuff that can come off the other side.
Richard Gillis:I wonder if they ever get to, some of these agencies ever get to the size that, in the UK, that they, not the clubs, become the target of inquiry of the football regulator.
Yeah, I thought that was a really interesting one I really was trying to rack my brains on because if the question is, do certain agencies get so big that they have market power, i. e. it becomes a competition or antitrust issue that they, uh, have too much power in being able to, to, uh, Dictate price, wage, salary, whatever else it might be to the detriment. My view apart from the very few outlier deals that we see is in most cases, it is the entity that has the money has the leverage and the bargaining and the control. And whilst that entity that has the money that has the leverage bargaining and control always has an alternative or should have an alternative. And if that alternative may or may not be at that agency or otherwise, that for me is always the best alternative option to a negotiated settlement. That's in my view always the case, which is Clever clubs, although they will always have favorite agents for no other reason. Usually that they know those agents will get deals over the line because they're clever enough to handle difficult situations and difficult people. And when push comes to shove pressurized situations, my view on the whole is that the best clubs know the value that's attracted to a particular player. And if that deal's not happening, they will go second choice. And they will go third choice or they will have a number going on at the same time. Now they may or may not have the resource to be able to undertake several negotiations for one particular position or number of positions, but the best ones do do that because they do know that there are alternatives. Yeah, I guess there's another question, which is about multi club ownership and sort of, I guess, geographies or jurisdictions, because one of the, you know, one of the cliches running around multi club ownership and Brexit was, you know, it's a route around Brexit or route into the marketplace, or you can, you can move people within, move players within the, the, uh, ownership group. And. When you then look at a lot of agents or some agents sort of sell themselves as being particularly strong in a region in a South American players or African players or Scandi players or Eastern European player, whatever it is that they have a particular knowledge and understanding of the marketplace going back, you know, and that's not easy to do Replicate. And that's the sort of source material. But then how that plays in and what the relationship between those networks and these big ones is going to be. I was trying to give this some thought because I'm actually giving a talk to FIFA on this at the FIFA Congress, the legal congress at the end of February, uh, talking Yeah, MCM. It's all been publicized, but I'm actually worried now people will listen to it, which will be quite concerning, but it's a different story. Yeah, if the, if the principle is that you have a number of MCO groups that for different tactical, financial, practical reasons, will be picking particular clubs in certain jurisdictions, then I can, I can definitely see some advantages to that. Like you said, Rich, if it's for immigration and work permit reasons, then You can see why a particular set of agencies would want to get friendly with the particular groups to be able to move certain players into a work permit friendly jurisdiction for the reason of getting them into Europe or otherwise into the high paying jurisdictions and then working a route to one of the big five leagues or otherwise. And if you can do that at scale and the group knows that there is a. Good talent line coming from South America or Africa or Scandinavia or wherever else it might be. I know I'm talking in generalities. You can see why that would make complete sense as an economies of scale in the same way that there would be an MCO economies of scale for finding brands to go across their clubs or a medical team that is top of its top of its game across all of the different clubs or, you know, particular types of. Data analytics tools or otherwise that would work as well. So you'd almost see it as another, uh, another efficiency or scaling point, which enables clubs to be able to maybe create leverage as well for themselves. So let's take this. There's a, there's a couple of themes here that I just want to mash together with this conversation. First one is American money. And we've talked about this on, in the podcast on the, you know, in the past in terms of the, you've got this sort of label, but okay, here's a, let's just have a quick thought experiment. if I was. An American investor looking at the European football market, I'd look at clubs. It's a basket case, as we always say. There's a lot of money wanting to come into the market. Now, you either buy a club with all the problems and challenges that that brings. The other theme is the rise of the star, the superstar athlete as brand, all of that trope. So this feels like this is those two trends coming together. And if I'm an investor, there's a lot of American names in that list that we read out at the beginning. So you obviously got George Pine and Bruin. You've got Endeavor, you've got Wasserman, you've got, CAA. the American talent market. I'm assuming it's slightly different. It's not quite as Wild West as it is over here. There is a more of a professionalization going on. So there's that trend and they're looking here. This is a way in of hedging against the sort of daftness or the volatility of European football, knowing there's enormous value there, but not wanting to buy clubs. Actually, this is not a bad way of capitalizing on two quite significant trends. What do you think that is a sort of You know, thought starter. I, my initial thoughts on there is what are you hedging? So, uh, You're hedging that the European football market is buoyant enough to keep going in the right direction for a certain amount of time and what is going to Ensure or maximize that buoyancy. It's pay TV subscriber numbers on the whole is the thing that's keeping everything afloat. Uh, I've got a few theories around whether that, that is a sustainable business model or not. And I know you guys have I think a lot is premised on that. And we've seen in France and other countries of where that's being problematic. For me, Uh, I've got a, I've got a theory which is the younger generation, whether their attention spans are decreasing, increasing or not, I'm not so sure on that, but they're definitely not paying premium amounts for for, uh, uh, high profile sports on a regular basis, which means, you know, As the oldies are dying out who have the subscriptions And the youngies are getting slightly older and still paying for subscriptions because that's what my generation and above have been doing what actually happens is Uh, it's not the broadcasters that suffer in the end, it's actually the rights holders because their rights are less valuable than broadcasters will only do in the end what the market, uh, wants and what the market will hold. So if rights holders in the medium to longer term um, are losing out because subscriber numbers are decreasing and revenue isn't as as high and things aren't as popular, then Then there's a re equalization of the assumptions and if one of those assumptions is broadcasting rights keeps on going for the next 20 years in the right direction query whether that's an actual proposition. Okay, so let's interesting. So let's just build on that slightly or just go in a slightly different direction. Another big trend that we talk about a lot is the you've got this sort of generation of superstars who are earning enormous amounts of money or not even superstars. People across and we see it. In the NFL and the NBA and the IPL, obviously, and you've got the Premier League, the big European soccer leagues, the wages are enormous or, you know, much bigger than they were, which a question that keeps coming back is, well, what happens to that money if we follow that money? And that sort of becomes liquidity for, I don't know their investments. I'm, you know, forever being you get press releases every other week of players are investing in this sports tech company or you know, a new startup and they like to define themselves in that way. They want that part of their sort of post career thing. It's not buying a pub anymore. It's buying a sports tech business. That whole process presumably leaves them very vulnerable to bad advice. And it means that there is a role for proper wealth management and is that part of the service that's being offered here. And again, I'm wondering how that plays, who's best to do that. And that maybe that's an argument back going back to our sort of scale versus the individual athlete. That's an argument for that. I don't know. Help me out. Go for it Matt.
Richard Gillis:Well, I think there are examples already of interestingly, a lot of the slightly smaller agencies working with athletes whose monthly salary bills won't necessarily be Mean they're good for ever and a day. Starting to help around things like financial services advice. A lot of cricket agencies do that. For example, you know help cricketers Make long term smart decisions with their income Almost like an IFA type scenario and You know, that's attractive as a business model for all the same reasons that being a player agent generally is attractive Which is if you're an IFA, it's long term annuity income on Anything that you sell or at least used to be or it's a big upfront slug of a pension you sign them up to whatever It might be So more and more of that happening at a just general financial advice level, at the more premium level, so the You know, the, I gave the Ryan Reynolds example, but, uh, you know, the NFL player or the NBA player or the Premier League soccer player, you know, helping them think in a strategic way about how they use their funds that they've earned for the, to set themselves up both for long term financial security, but also to have things that they will find rewarding in their long term career, I think is super interesting. You look at You know, Andy Murray has done all sorts of things pre retirement and post retirement in terms of investing in Castora, in terms of setting up his own agency. Yeah, Aleph and Felix, the track star, actually launched their own player agency, you know, which I thought was interesting last year. So, I do think that financial counsel and advice and longer term relationship than just purely through the, you know, the time that they've got their spikes or football boots on is, is going to be an increasingly important part of the jigsaw. But yeah, I, I would just say that for at the smaller end of the market, salary wise it's necessity and at a premium level, you know, the Tiger Woods, Rory McIlroy, Andy Murray type level, it's opportunity.
Yeah, I would even go one step further. And I wrote about it at the end of the, uh, last year. And I'm trying to think about it in more detail, which is we see lots of examples of uh, inter player investment or inter talent investment, which is, uh, talent investing into other entertainment brands or sports which aren't their own. I've got this feeling that Based on me just plagiarizing some U. S. ideas that I've seen, which is, for example, the NBA, uh, collective bargaining agreement, which allows then the players association to have funds which players can invest into in their own teams effectively. Now, I love that idea for loads and loads of different reasons and the U. S. are usually five to seven years ahead in the sort of innovative side of stuff, but why couldn't you see a situation where the next big player for Arsenal on a renewal deal with their agent says, well, Arsenal, you're going to offer me 250 grand a week, but what I actually want is a hundred grand a week and 0. 5 percent in Arsenal Women's.
Richard Gillis:It's all performance related pay, isn't it? If you bend your head in the right direction.
Yes, exactly. But what, yeah, so what you're effectively saying is at what point are you willing to defer what could be higher amounts of upside for short term pain like in a lot of things in life, perhaps. Yeah, there was a good piece in the FT by Michael Moritz, wasn't there, around, the Messi transfer out of Barcelona, where he was saying, well, what Barcelona could have done, should have done, was offer Messi equity in the club as a long term, sort of, tying him in, rather than there's that, sort of, end of career Messi, which has been Messi, frankly. and obviously the, PTO, there were suggestions of that in terms of the, the way in which players, uh, the athletes are part of a group which is part of a sort of investment group. Yeah, exactly. And then they're, and then they're bought in. So I, I, I think the next few years are the years of players realizing they're a much bigger piece of the of the, team landscape than just actually talent on pitch or on court and how you translate and how agents begin to translate that into equity. I think we saw the equity 101 play, which was fine, we'll give the player or the athlete some skin in the game for, you know, some type of startup that may or may not do well or otherwise. But I wonder whether The equity 2. 1 player. Otherwise, I'm using numbers which don't make sense anymore. Sorry. Which might be like, well, actually, how do you give equity, uh, when you're in a very, in a highly leveraged position which could see considerable upside. But you're deferring that gratification for quite some time.
Richard Gillis:And in that environment, who better to have as your ultimate owner than the private equity firm with the skills to do that modeling for you. Maybe you end up in a world where The private equity owner is saying to the athlete, Okay, we'll give you the 250 grand a year, you give us the equity. It's actually, there's all sorts of different structures to bend your brain that would be possible. I think if I was Ryan Reynolds, right now I'd be using Interbrand to value my brand and value the potency of that brand in terms of the uptick in the sales of gin that enabled me to create that exit. And I'd then be wandering around every other FMCG brand Selling the story based on the upsell I can create around any of the products. I think that's, that's the future actually in terms of where it can go for the, at the top end.
Dan, what is the deal? What sort of deals do they get? Do you, if I'm Lewis Hamilton, or if I am Rory McIlroy, or if I'm Kevin Durant, do I get a better deal? Is there a value in kind aspect to this? Or am I just another name? Do they care that I'm famous, a famous athlete? Am I doing any other job? Is there an intangible that I'm trading on to try and get a better deal for the investment? I'm assuming there is, but I just don't, don't really know what, how that works. And what we've seen over the years is a mix of that. investment piece by athlete plus ambassadorial responsibilities and how you value and measure what is required. And a lot of the time it's you know, uh, positivity by association. If you have a number of high profile individuals you know, I think it's still fair to say it is attractive to others to know that, that those individuals are part of a particular fund, setup, company. LLC, whatever, whatever it might be. And it does certainly open doors. I mean, if there's, you know, potential for a particular, uh, player, talent, athlete to be able to go and approach certain people because they have some skin in the game, then, you know, I think we need to be, uh, cynical enough to say that that can be of advantage in particular situations. so when you're starting back to the player brand thing, if they really start to think of themselves As brands and the agencies do that work, essentially they are pieces of our intellectual property, aren't they? That that's what we're talking about. And the problem is valuing that in the sense that, I mean, brands find that difficult as well. So player athletes will also find that difficult.
Richard Gillis:Would agree with that. I would agree with that. Ultimately, bricks IP is, I'm not sure Dan does.
Yeah, I'm not, yeah, yeah, yeah. I'm not set up to answer questions quickly or easily. Yeah, I'll write you a really good memo in two to three weeks.