Arnaud Lagardère 'open' to sale of sports division as revenues near €500m
Arnaud Lagardère, general and managing partner at Lagardère, today insisted that he is “open” to the sale of the sports division at the France-based media conglomerate, although reiterated that the unit’s immediate focus is fixed on the ongoing Asian Football Confederation rights tender.
Speaking to analysts as the Lagardère Sports and Entertainment division announced revenues of €496 million ($607.2 million) for 2017, a 3.4-per-cent fall on the previous year, Arnaud Lagardère took the opportunity to flag up that all options are open in terms of the future ownership of the unit.
Asked if selling the sports division is a possibility should the AFC business be retained, he said: “My personal duty is to be open to everything in the interests of the shareholders. As I said before, [Lagardère] Publishing, [Lagardère ] Travel Retail, some assets of [Lagardère] Active are assets that I don’t want to sell for a lot of different reasons and I’m open to the rest. This doesn’t mean we would sell sport quickly.
“It’s difficult for me, if you are in my shoes, to bid on such an important asset like AFC and at the same time to say we will walk away and sell it.
“Let me avoid the answer [as to whether the sports division could be sold]. The priority on sport is to win [the] AFC contract.”
Lagardère Sports holds the AFC’s worldwide broadcast and sponsorship rights from 2013 to 2020 in a $1-billion agreement, and the invitation to tender for rights from 2021 to 2028 was issued last week.
The contracts with the AFC, and CAF, the African soccer confederation, represent the two leading components of Lagardère’s sports business, and Arnaud Lagardère today expressed his determination to emerge victorious in the AFC rights auction.
He is understood to have offered his full support to Lagardère Sports’ bid and is not thought to be actively looking to sell the division.
However, today’s comments suggest that he is now more open to the notion than was previously the case.
In 2014, the sports and entertainment division finally reported a positive Ebit figure (of €4 million) after a restructure of operations and following years of results that analysts perceived to have weighed down the group’s performance in other sectors.
Lagardère Sports and Entertainment delivered Ebit of €20 million in both 2015 and 2016, leading analysts, who have constantly questioned whether sport is a rational part of the group’s portfolio, to now ask whether it is time to sell it (given its improved financial performance).
Arnaud Lagardère, consistently levelled with the accusation that sport is something of a personal ‘passion project’ or ‘hobby’, has now taken the opportunity to let the stock market know that nothing is off the table.
Towards the end of 2016, it emerged that Lagardère Sports and Entertainment was engaged in negotiations about the sale of a minority stake in its business.
Andrew Georgiou, chief executive at Lagardère Sports and Entertainment, told Sportcal last March that China and North America were areas in which he was looking for “strategic partners” although any shareholding taken up would not be able to exceed 49 per cent.
However, with Arnaud Lagardère becoming increasingly receptive to a sale of the sports business, it now opens up the possibility of conversations with potential investors about an investment in a minority stake that could, in turn, lead to a majority ownership (thus making the economics of any deal more appealing and widening the net of potential suitors).
Under the leadership of Georgiou, Lagardère Sports and Entertainment has been overhauled in recent years to reduce its dependency on media rights trading in Europe, shifting much of the focus to other business areas such as athlete representation, creating sports events, consulting and stadium management.
As part of the restructuring, Lagardère sold its endurance division to Ironman, the Wanda Group-owned long-distance triathlon events organiser.
There is an ongoing review of the Lagardère Sports and Entertainment and Lagardère Active divisions, and Arnaud Lagardère said today that there would be news on the future direction of the units by the close of 2018.
He remarked: “Something will definitely happen by the end of the year. I hope some pieces by June, [and] maybe by the general assembly.”
Calendar effects hits revenue Lagardère Sports and Entertainment’s 2017 revenue fall was attributed to an unfavourable calendar effect and the termination of an agreement to operate the Friends Arena in Sweden.
The annual revenues of €496 million represent a 3.4-per-cent fall on a like-for-like basis (and 3.9-per-cent drop on a consolidated basis).
Lagardère said: “The reduction in revenue in 2017 reflects both the termination of the Friends Arena contract in Sweden and an unfavourable calendar effect mainly linked to the 2016 AFF Suzuki Cup and AFC Olympic qualifiers (U23) in Asia.
“This is partly offset by the successful rollout of the contract for the 2017 Total African Cup of Nations in Gabon. However, football activities in Europe (particularly in Germany) as well as consulting activities turned in a good performance.”
Asked about the trading outlook for this year, Georgiou told analysts and investors: “The 2018 year is a challenging year in terms of calendar for football. There’s no Asian Cup, African Cup of Nations or World Cup qualifiers in either Asia or Africa. This negative calendar effect is partially offset by what we expect to be a very strong Commonwealth Games in the Gold Coast in April and the return of the AFF Suzuki Cup towards the end of the year.
“There are no surprises so far in terms of our expectations for the year end. We remain on track.”
Fourth-quarter revenue at the sports and entertainment unit totalled €139 million, a 17.6-per-cent fall on a like-for-like basis.
Expanding on the performance, Lagardère stated: “The comparatively lower revenues are chiefly related to a quieter fourth-quarter sporting calendar than in 2016, which benefited from the Fifa 2018 World Cup qualifying matches and the AFF Suzuki Cup in Asia and, to a lesser extent, to the termination of the Friends Arena contract in Sweden. Moreover, consulting activities enjoyed a good momentum.”
Lagardère’s 2017 group revenues came in at €7.069 billion, a fall of €322 million on 2016.