Even with a worldwide pandemic, there are hedge funds that have been doing quite well in 2020. If one looks at the examinations performed by https://www.bestbrokerreviews.com/, one will find that there are hedge fund operators who have separated themselves because of the bonuses and specials offered, the level of compliance, pavement options available, and awards they have received.
These hedge funds have continued to find ways to succeed throughout 2020. They have done so by developing strategies that have not only been beneficial for clients, but have helped the brokers to become even more successful themselves. Now, these hedge fund operators are looking to expand their influence, even into the world of sports.
A Golden Opportunity Presents Itself
The Covid-19 pandemic has decimated many industries, including a significant number of sports leagues. With shelter in orders in place and leagues being unable to take to the pitch, several teams found themselves struggling to keep afloat. Many were even concerned about going under.
Now, a lifeline has been thrown, as many private equity firms are looking to purchase major sports teams, especially within the Serie A, Italy’s top football league. There, hedge fund operators such as CVC Capital Partners, Cinven, and Bain Capital have been looking to purchase teams, adding a massive influx of new capital into the league.
Significant Losses Caused by the Virus
For Serie A, the influx of this new capital could not have come at a better time. The league is expected to lose somewhere between €2.1 billion and €2.5 billion from the previous year. This according to a forecast by Deloitte.
This is just a start. The English Premier league is expected to see their revenues plummet by as much as €5.9 billion from the previous season. It is the complete shutdown of these leagues and all of the sponsorships and advertising lost that have caused such a sharp decline in the overall revenues of these leagues.
These hedge fund operators jumping into the sports world is a significant difference maker, this according to Andrew Umbers, a partner at Oakwell. “COVID-19 has left leagues across the world—and their stakeholders—with significant revenue shortfalls and working capital needs, and third-party capital can fill this gap.”
Already, CVC has put in a bid to purchase a 14.5% stake of the Six Nations Rugby tournament. Now they are looking to jump into the Serie A, making bids to purchase a share in at least one club.
Silver Lake, a Silicon Valley based firm, was allowed to purchase a 10% stake in Manchester City, one of the most significant and highly recognized clubs on the planet. They purchased the stake for $500 million.
A Change of Heart
The decision to allow hedge fund operators to start purchasing stakes in leagues and teams is a change of heart for many of these operators. For years, private equity firms had been denied stakes or ownerships in franchises in most of the top leagues across the globe. However, that changed when Major League Baseball not only allowed these operators to own a share in a team, but to also hold positions across multiple teams.
Major League Soccer has opted to allow for this as well. This is a significant shift, as these leagues had denied hedge fund investors from being involved in the ownership of clubs, but the pandemic has created a desperate situation.
With this acceptance, it is likely that hedge funds will advise their clients to get involved in purchasing and supporting more teams throughout the world. There is simply too much money involved, and this currency could be the very lifeline that these leagues need to stay in business.