Ian Charles is the founder and Managing Partner of Arctos Sports Partners, a private equity platform dedicated to the professional sports industry and sports franchise owners. He was a previous guest on Capital Allocators alongside his co-founder Doc O’Connor, and that conversation is replayed in the feed.
Sam Kennedy is the longtime President and CEO of Arctos portfolio company, Fenway Sports Group.
FSG is a twenty-year-old global sports, marketing, media, entertainment and real estate portfolio that has taken cherished and iconic sports clubs to new heights. The business includes ownership of the Boston Red Sox, Liverpool Football Club, and Pittsburgh Penguins, and a series of related real estate and media assets.
Our conversation covers the Fenway Sports Group holdings, business drivers, and attractiveness as an investment. We discuss Arctos’ sourcing, underwriting, and perceived risks of the deal, and then turn to Sam’s operating strategy, tuck-in acquisition of the Pittsburgh Penguins, importance of fielding winning teams, impact of private institutional capital, capital structure, on-field product, and future plans.
Long-time listeners likely know about my affinity for sports, so it is a great privilege to share this discussion of Arctos’ investment in FSG with you, and a special bonus to have Sam walking through how it works.
07:23 Fenway Sports Group’s business
08:46 FSG’s attractiveness to Arctos
13:52 Arctos’ ability to add value
16:33 Sourcing and finalizing the deal
17:52 Due diligence process
19:51 Valuation of a trophy asset
21:30 Risk assessment
25:08 Economics of the businesses
27:47 Pittsburgh Penguins acquisition
31:38 Identifying and measuring synergies
34:05 Impact of winning on the field on the business
37:24 Influence of private capital
40:10 Optimal capital structure
43:37 Fan experience in European soccer
46:55 SPACs and exit strategy
49:59 Operational challenges
53:41 Closing questions