Sports Events Business Targeting Families and Communities

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Sports Show

Sports events business targeting families and communities

£2m equity investment for 24% stake in the business. Expected IRR 25%

Strong coinvestor

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Business Summary[pic 4]

Sports Show’s vision is to inspire kids in the UK through the power of sports. A 3 day ticketed sporting event will be organised, initially once a year starting in 2016, that will bring together some of the UK sport’s greatest names. This gives children the unique opportunity to interact with their sporting heroes. They will have the chance to have coaching sessions in a fun family environment aimed at building confidence and teamwork in addition to awareness about nutrition and health. The focus will be in UK at the outset, with the potential to regionalize and internationalise the model after the first couple of years.

Sports Show is a partnership bringing SuperSkills Experiences, who run small to medium sized family sporting events and holidays (part-owned by Will Greenwood and Austin Healey) and the NEC Group. The business has strong backing from well-known sports names as well as Sport England and the likes of Seb Coe.

The essence of Sportsshow (albeit on a smaller scale) can best be understood through the following video link, https://vimeo.com/127586395 (password “show”), which includes clips from Sportsfest, a 3-day family sports festival run by Superskills once a year. Sportsshow seeks to recreate this event and experience on a larger and national scale.  

Revenues and growth

Revenues largely come from ticket sales from the events, sponsorship and exhibition space sales. Although the business will initially be a 3-day annual event, the aim is to position the business as the de facto family sports institutions in the UK, and this will generate strong additional revenues from data, partnerships with private and government organisations.

Tickets for the first event will go on sale in Q4 this year for the 2016. Assuming the business remains a 1 venue, 3-day a year event, and giving minimal credit to any data monetisation, the business breaks even by Year 2 after making a small loss in Year 1. The business does not have high operational leverage, and there are various costs and expenses that can be reduced if ticket sales do not meet target.

Profit for the fund will come from both dividends and either a full asset sale (expected in year 5), and/or franchising the model internationally.[pic 5]

Assuming prudent assumptions and that the business does not move beyond a 3 day annual event business (i.e. No regional and international franchise model), we believe the business will generate a 25% IRR on exit in 5-7 years.

The £2m investment will be in return for a 24% stake, valuing the business at £8.3m. Exit is expected to either be to a private equity firm, or more likely, a trade sale. We have looked at various comparables, which are between 10-14x EBITDA. We have assumed an 8x multiple to be prudent. This delivers a target exit price of £24m using 5-year forecast EBITDA. Additionally, we expect there will be for dividend payments of up to £1m (Massive Capital’s share) over the first 5 years. This delivers north of a 3x return on our funds within 5 years, or an IRR of 23.56%.  If the achieved exit price is less than £24m, Massive Capital will be granted warrants at nominal value, which will ratchet up our equity ownership and compensate for the lower exit price.