One thing to start: This weekend’s Lunch with the FT interview is with Marcus Rashford, the Manchester United star striker turned food poverty campaigner. Over salmon and pasta, the footballer discusses the next stage in his campaign, battling with politicians, the downsides of media attention and what makes Lionel Messi great. Read it here.
In this edition of Scoreboard, we explain how the decision to resume Big Ten college football affects Donald Trump’s re-election hopes, look at the pressures that informed the Mercedes Formula One team’s push to diversify its revenues beyond racing, hear a stark warning about the dire finances of English rugby clubs, and more.
Trump targets election swing states with return of college football
On Wednesday, the Big Ten collegiate sports conference — worth $1.8bn in revenues in 2018 — announced it would begin staging American football games in October, roughly five weeks after the conference said it would postpone the season due to the pandemic.
Covid-19 is still with us. What changed?
For starters, the initial Big Ten decision to punt the autumn sports season was met with near-immediate criticism, not only from member schools, but from fans in the conference's largely Midwestern base.
Within hours of the announcement in August, college football fans began blaming the season cancellation on the current administration's pandemic strategy. “Mr Trump just blew it”, an Ohio State fan told the New York Times the next day.
The shutdown was bad news for Donald Trump’s re-election hopes. More than half of Big Ten universities are in states where polls currently show a toss-up between the US president and his opponent Joe Biden.
So in recent weeks, there were 300 phone calls between the White House and Big Ten officials, players, and families to rescue the season. Not incidentally, the games will restart a few weeks before the November election.
This could ease financial pressures in key voting districts for Trump. Big Ten football games attendance totalled more than 6 million people in 2019. The loss of matches is devastating to businesses in schools' largely suburban and rural communities.
“The hotel sector in these college towns will probably face unprecedented revenue deterioration”, according to analysis by DBRS Morningstar. Nearly $470m is outstanding on commercial mortgage-backed security loans secured by hotels within a five-mile radius of Big Ten schools, the research group found.
The conference said it can commence a football season thanks to improvements in health protocols, including daily antigen testing as well as cardiac screening for any players who may test positive.
Given the reversal, two important issues follow.
First, unlike others in the “Power Five” — the most dominant collegiate conferences contesting autumn sports — the Big Ten is only proceeding with football, the main cash cow for universities. At a time when lawmakers are reviewing college sports’ governance, will its move be perceived as a money grab over public safety?
Second, Trump is now urging the Pac-12, another conference in the Power Five, to rethink their pandemic postponement. The concept of keeping politics out of sports is all but dead.
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New York Times: Ohio State football is cancelled. Will Trump take the hit?
Why Mercedes F1 is seeking revenues off the track
Toto Wolff has a problem.
The Mercedes Formula One chief must comply with new budget caps designed to even the playing field across the global motor-racing series, while also finding a way to replace prize money that will be more fairly distributed to support lesser teams under revisions to the so-called Concorde Agreement that governs the sport.
So even though Mercedes looks set to win a seventh consecutive F1 constructors’ championship, with British star driver Lewis Hamilton comfortably leading the standings, Wolff isn’t resting easy.
There’s a silver lining for the Silver Arrows: a new Applied Science arm looking to monetise years of engineering expertise and intellectual property. Wolff wants to grow the division’s revenues from £30m a year to £100m by 2025, the FT reported exclusively this week.
That would carry added benefits for Mercedes-Benz Grand Prix, the UK entity that houses the team, which recorded a £14.7m net profit on revenue of £363.6m in 2019. The catch is that Daimler, the German automaker and majority shareholder, contributed about £30m on a net basis last year.
Making a success of Applied Science, which has a partnership with team sponsor Ineos, the chemicals group controlled by British billionaire Jim Ratcliffe, could set the company on to a path to profitability even without Daimler’s contribution.
Another motivation is that Mercedes spends well over the budget cap. Meeting revenue targets would also allow Wolff to reallocate staff from F1 activities to the new division, meaning the costs associated with them wouldn’t count towards the $145m limit due to come into force next year.
Sceptics wonder if such a division could be used to conceal resources that are actually geared towards the F1 team in a sport where pushing boundaries is commonplace.
Wolff insists “Chinese walls” are erected between the Applied Science business and the F1 team to adhere to the sport’s rules, and would do nothing to “potentially harm our reputation, our legacy and integrity.”
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Without fans, English club rugby is on the brink
2020 was supposed to be a breakout year for Premiership Rugby.
Sure, only this January, the top tier of English club rugby union relegated Saracens, the league’s top team, as punishment for breaches of player salary caps. At least tough enforcement of the rules showed a well-functioning governing body
And the league’s 13 shareholder clubs could look forward to making spending plans. Premiership Rugby sold a 27 per cent stake in the league for £200m in 2018 to CVC Capital Partners, the European private equity group.
It is the first deal of many for CVC, which subsequently completed a deal to invest in the Pro14 tournament played between European and South African clubs, and remains close to signing a £300m deal to acquire a stake in the Six Nations, Europe’s top national team competition.
CVC wants to package up media rights for rugby events, then find broadcasters to pay ever higher prices to reach a growing legion of fans. Last year’s Rugby World Cup in Japan, which had record global television audiences, suggested it was a smart bet.
Then the pandemic struck.
Despite restarting action in August, rugby clubs are bleeding because of the lack of supporters in stadiums, as the majority of their income is from gate receipts rather than TV deals.
A new setback came this month, when the UK government said plans to partially reopen sports stadiums from next month are under “review”.
Darren Childs, chief executive of Premiership Rugby, told the FT that further delays to having supporters in grounds will create the “very real” risk of clubs going bust.
Rugby club finances were already in a perilous state before the pandemic. All except Exeter Chiefs make a pre-tax loss. Many rely on wealthy benefactors to sustain them. But these owners tend to be millionaires who feel losses more than the billionaires who control leading football and US sports franchises.
Some Premiership Rugby clubs are burning through the roughly £15m each received from the CVC deal, money once set aside for infrastructure and marketing spending. Growth plans are being scrapped in favour of survival.
Childs said CVC is not planning a financial rescue. Instead, the private equity group has been busily negotiating down its Six Nations deal to take account of the pandemic.
The possibility of future growth remains. Amazon recently bought the UK rights to screen the Autumn Nations Cup rugby tournament, raising hopes for a competitive bidding process for Premiership Rugby’s next TV rights deal. Its UK contract with BT Sport expires next year.
How many clubs will survive until then? That is the question shared across all sports franchises that do not play in the world’s truly big leagues.
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Lamine Diack, the former head of the world athletics governing body, was sentenced to four years in prison after a French court found him guilty of corruption charges related to the Russian doping scandal that has rocked the sport.
Hedge fund manager Steven Cohen agreed to buy the New York Mets after outbidding rivals including Alex Rodriguez and Jennifer Lopez to take control of the Major League Baseball team from the Wilpon family.
The Premier League found a new partner to broadcast English top flight matches in China, signing a one-year streaming deal with internet giant Tencent, after abruptly terminating its $700m contract with retail conglomerate Suning earlier this month.
England’s top club football competition also secured “enhanced” powers to shut down illegal pirate streams that pose a threat to the value of its £5bn UK broadcasting contracts. But there are doubts over the effectiveness of its anti-piracy efforts.
The US billionaire Krause family has acquired a majority stake in Parma in a deal that could value the Italian football club at more than €100m.
Julius Baer, the Swiss bank, is in “advanced” talks with the US Department of Justice that could see the Zurich-based group pay tens of millions of dollars to resolve corruption allegations in connection with Fifa, international football’s governing body.
Amanda Mille and her watchmaker father Richard have assembled the first all-women’s team to compete in 24 Hours of Le Mans, the endurance car race, due to take place this weekend.
CSM Sport and Entertainment, the marketing and brand agency, said Christa Carone will lead its North American operations, replacing Dan Mannix, who will become a senior adviser to the business. Carone joined CSM from Group Nine Media in January.
There were many ensuing questions from the Big Ten's reverse-course decision this week to stage an American football season, and still others remain: why does the Big Ten have fourteen schools? What do you mean Rutgers is one of them? Annie Agar, a local sports reporter in Michigan, used TikTok to imagine some of the reactions of fans.
Scoreboard is written by Samuel Agini, Murad Ahmed 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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