Australia’s sports leagues are being held back by a culture of conservatism and need to be more open to private equity investment or risk falling behind, investors say, with Netball Australia’s rejection of a $6.5m bailout cited as just one example of administrators’ aversion to private capital.
Former Australian cricketer turned technology and business investor Ed Cowan tells The Weekend Australian that local sports leagues are being outmanoeuvred by their international counterparts, which are more globally minded and vastly more open to private investment as a general rule.
Speaking ahead of The Sohn Hearts & Minds Summit – the nation’s leading investment conference – in November, Cowan is urging a wake-up call across the local sports sector.
“Private equity investment in sport is coming to Australia in little increments, but there are impediments, particularly with how administrators think in Australia,” Cowan says. “There are some roadblocks. And the overseas mindset is very different.
“I think we are well and truly behind, and one of the reasons is the size of our market, given big PE firms love global brands and we don’t really have that here.
“And the second thing is generally speaking we have pretty conservative administrators. There’s just a general conservatism around all sports in Australia.
“There’s this notion people have of private equity being these 1980s-type corporate raiders, even though private equity has changed fundamentally from that over the last 10 years. They’re bringing operational excellence and efficiencies through shared services to help these businesses flourish.”
Entrepreneur and former cricketer Matt Berriman, the chair of Mental Health Australia, says Australian sports fans and players are suffering because of league administrators not being more open to private equity investment.
Berriman recently led a $6.5m bid to buy out Netball Australia’s debt and take over the Super Netball competition, but withdrew the offer after Netball Australia said it would not be rushed into a deal until it completed a review of the sport.
“We’re seeing globally this is where sport is heading,” he says. “Australia is falling behind and we only need to see the success of the likes of IPL and English soccer to see how private capital can grow massive sports, brands and athlete wealth as a result, not to mention higher fan bases.
He describes the recent bid process with Netball Australia as “disappointing”, adding: “I think that’s more a reflection of their sport, management, and an ill-equipped view of the broader landscape of sport here and internationally.
“Hopefully their ‘review’ shines some light that unless they change their operating model, they’ll lose quality talent to the likes of AFLW and grassroots will suffer over the long run, with the next generation picking sports that can provide them clear career paths.”
A Netball Australia spokesman said in a statement: “Netball Australia has already made clear that it has spoken with a number of people and organisations about wanting to support the sport which shows the strength of the netball brand.
“In line with the State of the Game review, Netball Australia is reviewing the Suncorp Super Netball League which continues to be a huge asset for the sport.”
Berriman is moving on, launching RealVC, a seed-stage and early-stage venture capital fund. He will speak at a Business of Sport panel at the Sohn Hearts & Minds summit in Tasmania on Friday, November 18, alongside Cowan, RedBird Capital founder Gerry Cardinale and Kara Nortman, a partner at Los Angeles’ largest venture capital firm, Upfront Ventures.
Nortman founded Los Angeles women’s soccer team Angel City Football Club in partnership with Hollywood A-lister Natalie Portman and other high-profile owners, including Serena Williams and Eva Longoria. The team began play this year.
“If you have a private equity firm that has high integrity and consistently adds value with operational expertise it can be amazing, but if you have one that comes in and puts a bunch of debt on and never actually shows up it can be bad. So, I look at it that you need values-aligned capital, and does what you’re expecting line up with what I expect to deliver,” Nortman tells The Weekend Australian.
“There’s so much money in private equity and their job is to create capital, but especially for women’s sports and newer participatory sports they have similar risk profiles to other venture opportunities, there’s a lot more upside and a lot more downside.”
She adds that as an asset class, established sports leagues have traded stronger than public market indices over the past decade. She likens investing in sport to investing in tech start-ups.
“It just hasn’t been as liquid,” she says. “I’ve worked in both big businesses and start-ups, and women’s soccer often looks a lot like an early-stage start-up venture. And that’s super exciting.”
Cowan, who will moderate the panel discussion at Sohn, is on the investment team at TDM Growth Partners, a private investment firm founded in 2004, and serves as a non-executive director with Cricket NSW.
He says TDM has been relatively insulated from the ongoing market carnage that has hit both public and private technology valuation. TDM is also a Core Fund Manager of Sohn’s listed investment company, Hearts and Minds Investments.
“There is a lot of pain out there,” Cowan says.
“From a TDM point of view, we’ve been lucky in many respects, though you make your own luck.”
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