Posts Tagged ‘Industry Sources’

US billionaire offers Setanta £20m lifeline

• Businessman Leonard Blavatnik seeks to buy 51%
• Director of sport: ‘The rescue plan is in full swing’

Setanta has won a dramatic stay of execution after finding a potential saviour who may take a controlling stake in the Irish pay-TV company. A billionaire US businessman, Leonard Blavatnik, has offered £20m for a 51% stake in Setanta and discussions between the two parties look set to continue over the weekend.

Blavatnik’s private company Access Industries is a small shareholder in Setanta and knows the business well, according to industry sources. Access also owns a controlling stake in Top-Up TV, which offers Freeview viewers a package of additional channels – including Setanta – for a fixed monthly fee.

The company also owns a ­minority stake in RGE Group, an Israeli media company whose assets include the sports channel Sport 5, as well as a “substantial stake” in the sports rights business Perform, according to its website.

Perform specialises in digital sports rights and its clients include the Premier League. It also manages the digital rights for the Football League and helped it to generate revenue from its online rights by developing a platform to stream games online and over mobile phones. The sports rights business also advised several English and Scottish clubs, including Chelsea, West Ham and Rangers, on their digital strategies.

Trevor East, Setanta’s director of sport, said: “The rescue plan is in full swing and we’re thrilled. The rights holders have been extremely helpful … as have the investors.” East added that a new business plan had been drawn up, although he declined to give details, and said Access Industries would now begin the process of due diligence.

Blavatnik’s executive team are understood to be examining the new plan before deciding whether to proceed. Access Industries issued a statement confirming that it had: “submitted a proposal to the board of Setanta to acquire a majority interest in Setanta, refinancing the company”. It believes that “this proposal would secure the future of the broadcaster for customers, football and employees.” It also said that: “the Access proposal is subject to a number of pre-conditions being met”. If it proceeds, Setanta expects to raise a further £20m from other existing investors.

A £30m payment is due to be paid to the Premier League on Monday but it is unlikely a deal will be agreed before then, however. “There is no way this is going to get concluded by the end of the weekend” said an industry source with knowledge of the discussions. Setanta is confident the League will allow it to make a partial payment or defer the instalment.

Blavatnik left the Soviet Union at the age of 21 and made an estimated $11bn from industry, mainly by buying up stakes in former nationalised industries in Russia.

Endorsements block a ‘major factor’ in Ronaldo’s move

• Ronaldo could earn ‘at least £85m’ in commercial deals
• Sir Alex Ferguson admits winger wanted to leave United

Cristiano Ronaldo’s frustration with Sir Alex Ferguson’s reluctance to encourage Manchester United players to exploit their commercial potential was a major factor in the 24-year-old’s desire to leave Old Trafford, industry sources say.

It is a scenario that echoes the experience of David Beckham, whose departure to Real Madrid in 2003 was influenced by Ferguson’s view that his off-field profile was distracting focus from the team.

Ferguson last night admitted he had been fighting a losing battle to keep Ronaldo from Real’s clutches, saying: “He wanted to leave, it’s as simple as that. He was going to go some time. We’ve done well to keep him for so long.”

Mary-Ellen Field, a leading expert in commercial and licensing rights, told Observer Sport that Ronaldo’s £80m move will open up a huge range of previously restricted commercial options and will allow him to earn “at least £85m” from endorsements over the next decade.

“Ferguson’s view that [commercial exploitation] takes a player’s mind off the game is valid,” Field said. “However, the contract between the player and licensee means they usually have to work 20 days a year at most.

“With any brand building, whether it’s a person or product, the more positive exposure you get, the more valuable your brand becomes. It would have been beneficial for the club and player to get as much exposure as possible.”

In 2002, United signed a 13-year £300m contract with Nike that allows the company to control the club’s ­global licensing and retail operations. believes that if Ronaldo had been able to develop, for example, his own perfume brand, like Beckham’s lucrative Pure Instinct, it would have been mutually favourable. Despite being the world and European player of the year, Ronaldo’s only major deal is a recent agreement with Castrol, in contrast to Beckham’s blue-chip partnerships with Armani and Adidas. “There is no downside. The player is happy with his endorsements, and the club can sell the product and get the mark-up – website sales are huge,” Field said.

Once Ronaldo’s current commercial worth of £18m is added to his basic salary at Madrid – a five-year contract should earn him at least £45m – with the correct off-field management the player could accumulate more than £175m by the time he is Beckham’s age, 34. Beckham is ­currently worth around £125m.

Simon Chadwick, professor of sport business strategy and marketing at ­Coventry University, said: “United have a greater desire for on-field performance, driven by Ferguson. From the people I speak to at Real regularly, there is a much greater sense that Madrid is an entertainment brand rather than a football club.”

Florentino Pérez, Madrid’s president, has said that the deal for Ronaldo will be paid for through improving “our accounts by increasing the club’s ­economic value”. This will be achieved by Ronaldo and the Spanish club’s other new acquisition, Kaká, being aggressively marketed in developing markets, including Asia, as Beckham was when he signed for Real. Madrid estimate that his four years at the Bernabeu boosted shirt sales by 137%.

And in contrast to United, Ronaldo and Kaká will be encouraged to develop their individual commercial activities beyond Madrid’s own in-house deals, to expand their profiles globally.

Surprisingly, Ronaldo has not ­registered his name as a trademark, which Beckham, as most high-profile sports stars do, did early in his career. It is thought Ronaldo’s advisers, acting on legal advice, decided this was too expensive, though it would cost him little more than two weeks’ wages.Last July, Jorge Mendes, Ronaldo’s agent, signed with CAA, the American agency whose clients also include Steven Spielberg, Brad Pitt and Beckham, but has yet to yield any deals. Towards the end of 2007, Ronaldo was approached by a ­consortium, via GE Finance, which was interested in developing his commercial interests. Mendes signed a letter of intent, but by last summer that had been cancelled, which left Ronaldo disappointed.

Madrid’s investment ­strategy appears to be set to continue with reports last night suggesting they are close to signing Valencia’s David Villa in a £34m deal. It would take the club’s outlay on players this month to more than £170m.

Meanwhile Ronaldo has indicated that any negative reaction to his move will merely spur him on. “I love it when people jeer me. I love to see the hate in their eyes, to hear the insults. It doesn’t bother me,” he said in an interview with the French magazine So Foot which was given before his move to Madrid and will be published this month. “It’s true lots of people hate me but there are even more who love me and who support me. I feel bad only when I play badly. Fortunately, that happens rarely.”