Clash of the titans

This week, the long-awaited independent regulator for English football took a big step closer, with the new Labour government announcing its own version of the plan.

There are a few minor changes to the previous iteration, the most prominent one being that the regulator will no longer have to take account of UK foreign policy when making its decisions. That should help ease remaining concerns at Uefa HQ about the long arm of the government.

The Premier League has been quick to voice its concerns, warning that “rigid banking-style regulation” risks harming the competition’s appeal.

Now, whether banking regulation has successfully protected customer interests and curbed excessive financial risk-taking is a question for another time and another newsletter. And questions remain about how the new body will actually work in practice. But its introduction, at last, looks increasingly imminent.

This week we’ve got a guest contribution from Antoine Gara, the FT’s US private & institutional capital correspondent, who is moonlighting from our sister newsletter Due Diligence to explain why this year’s World Series is so epic. Plus we run through a fiddly asset reshuffle involving Endeavor and TKO. Do read on — Josh Noble, sports editor

Major League Baseball reaches its field of dreams

Last night marked the start of Major League Baseball’s World Series, a dream match-up between the New York Yankees and Los Angeles Dodgers that features enough star power to set the national agenda during a busy sporting season.

The 27-time World Series champion Yankees, led by sluggers Aaron Judge and Juan Soto, are seeking their first title in 15 years, while the perennially competitive Dodgers are showcasing their $700mn off season signing Shohei Ohtani. The tilt between the two biggest markets in the sport will ensure record viewership across America and could be a bigger sensation in baseball’s leading growth market, Japan.

Baseball is America’s national pastime — a sport critical to the country’s 20th century ascent into a superpower. Jackie Robinson broke sport’s “colour barrier” in 1947 as a Brooklyn Dodger, a seminal moment in that era’s civil rights movement. Later, the Dodgers became an emblem of the westward expansion of the US when the team moved to Los Angeles.

But this century, defined by the rise of smartphones and social media, has hurt baseball. The sport has no time clock and carries a languid pace when compared to the body crunching hits of the National Football League or the National Basketball Association’s twisting dunks.

Football is now king in America and the NFL’s newest superfan, Taylor Swift, has only cemented its status.

The NBA, meanwhile, is more of a culture carrier and has benefited the most from globalisation, becoming a sensation across Europe, Africa, Asia and Latin America. 

Money goes far in defining the hierarchy of sports in America. The NFL will generate $111bn from TV rights between 2021 and 2032, while the NBA has struck a $77bn deal between 2025-2036. But baseball only draws a small fraction of those TV dollars. This year it has even contended with the financial collapse of regional networks carrying games in smaller markets like San Diego and Cleveland. 

But Yankees-Dodgers is compelling enough of a match-up to level the playing field, at least for a week.

And there is some neat financial engineering at play. The Dodgers ownership group of Mark Walter and Todd Boehly built fortunes selling rote annuities products carrying steady yields. Arguably, the most cash positive financial asset they own is attached to the $700mn they owe Ohtani.

Ohtani is set to make $2mn annually for a decade, but then he will receive $68mn annually for a further decade beginning in 2034. The deal barely made sense in a 5 per cent interest rate world. Now, Boehly and Walter are already cashing in. 

The Dodgers revenues from this World Series alone could reach $100mn, virtually ensuring the annuity they hold with Ohtani will be a winner.

Endeavor’s asset collection gets a reshuffle

Last week, we wrote a bit about TKO, the listed entity that combines Ultimate Fighting Championship and scripted wrestling outfit WWE. Its success holds lessons for other sports businesses — including that a crowded marketplace relies on simple plot lines to cut through the noise.

Investors had seemed happy enough with the story, sending the stock up around 60 per cent this year. That was until this week, however, when a reshuffling of assets gave the market pause for thought.

On Thursday, TKO agreed to pay $3.25bn in stock for a collection of businesses owned by Endeavor, the talent agency owner controlled by Hollywood impresario Ari Emanuel and investment firm Silver Lake. TKO, which counts Endeavor as its biggest shareholder, in return gets sports agency IMG, hospitality business On Location and the Professional Bull Riders league.

Endeavor, meanwhile, is in the process of being taken private by Silver Lake, after three years of lacklustre stock market performance.

So why reshuffle the pack of assets? Mark Shapiro, who is president of both Endeavor and TKO, gave a hint last week when he said that the future of Endeavor was in the “sweet spot” of representation, while TKO would look to add businesses that could “further power what we already do”.

The argument, then, is that the acquisitions will give TKO a boost by supercharging some of its existing revenue lines and adding extra ones from activity it already understands. Presumably, it also helps the company gain exposure to the sports and entertainment world beyond fighting and wrestling.

For example, On Location, which already works with UFC and WWE, will play a key role in delivering some of the biggest sports events in the coming years, including the 2026 Fifa World Cup and the Los Angeles Olympics two years later.

All that certainly chimes with a recent report from Goldman Sachs’ sports banking team, who predicted the rise of “sports holding companies with diversified cash flows”.

And beyond the money, Goldman argues, we are set to see the emergence of more groups that can sway the future of an industry in the midst of transformational change. “Investors deploying capital throughout the ecosystem position themselves at the nexus of strategic decision-making, with the opportunity to shape the future of sports,” the report said.

But the deal does leave some lingering questions. If a diversified sports-facing business was what public markets wanted, why didn’t Endeavor do better? Why not just take talent agency WME off the public market? Endeavor’s share price performance was sometimes blamed on being a disparate collection of assets that undervalued the sum of its parts. Might TKO’s simple storyline of two solid businesses with a huge, young and global audience get muddied?

And if On Location, PBR and IMG are such desirable assets, why not put them up for sale just like Endeavor’s events assets such as Frieze art fair and the Madrid and Miami Open tennis tournaments?

After the deal was announced on Thursday, investors gave their verdict: TKO’s share price sank 8.7 per cent, putting its performance this year now well below the broader entertainment sector.

Highlights

• Ferrari team principal Frédéric Vasseur has led the Formula One racing team back into contention for the constructors’ championship. But the real test of the Frenchman’s management will be whether he can integrate seven-time world champion Sir Lewis Hamilton into the Scuderia and create a winning project in time for the 2026 regulatory revamp. A winning Ferrari could boost F1.

• The chair of Grupo Televisa stepped down amid a US investigation into activity related to the Spanish-language broadcaster’s dealings with world football’s governing body, Fifa.

• Chanel will rebrand the annual river Thames boat race between Oxford and Cambridge universities, in the French fashion house’s first foray into sport sponsorship. The most recommended FT reader comment? “The Thames and Chanel — two kinds of eau de toilet.”

• Annual losses doubled at Sky last year. The Premier League’s biggest broadcast partner sunk to an operating loss of £224mn, widening from a loss of £111mn in 2022. Last year, the UK-based group secured the screening rights for most English top-flight football matches for over £5bn.

Final Whistle

Fenerbahçe manager José Mourinho’s highlight reel expanded yet again this week, with another set of cutting remarks about one of his favourite subjects: refereeing.

Obviously, he wasn’t impressed with officiating in the 1-1 clash between the Turkish side and one of his former clubs, Manchester United.