What was it like on the inside of the Hundred auction?

(upbeat music) Hello and welcome to the latest edition of the leaders worth knowing podcast, the podcast by leaders in sport from leaders in sport. I'm David Kushner. I'm the content director round here at leaders. Just me today, no James Emmett. He will be back on the podcast next time. We have got hopefully a very enjoyable episode for you and an insightful one as well. We will have Jason Shretter on the show shortly. Jason is partner and head of EMEA at the rain group and he's going to be talking us through from his perspective and the rain group's perspective as lead financial advisor to the ECB, the ECB's process to sell various stakes in the hundred franchises, which of course has played out over the last few months. We had news just last week just as the season is getting underway that the first six of the eight strategic investments have been finalized. The other two are well on the way to being concluded too. And this of course, a phenomenally successful process as it played out auction process for the ECB, valuations of the eight teams very nearly tipping over the billion-pound mark, 975 million plus, over 500 million pounds to be plunged back into the development of English cricket. So a big success story and a story that of course has dominated such a lot of the industry conversation since the process got underway. All sorts of new, exciting investors in English cricket from the US and India in particular, rain group very much at the heart of that process alongside the ECB and Deloitte. So we'll get into all of that with Jason shortly. Before that, let me give you a couple of leaders parish notices. First things first, leaders Wheat London is on the way. And it's not long now, the week of the 29th of September to the second of October this year, the week is shaping up really well. Stay tuned to various leaders channels. Next week we will reveal to you all the exciting full leaders Wheat London summit agenda, the summit taking place at Allianz Stadium, Twickenham on Wednesday the 1st and Thursday the 2nd of October and my goodness do we have a lineup for you? Before that, on Tuesday the 30th of September, the leaders sports awards are back. We're delighted to be at the Victorian Albert Museum in the heart of Swanky Central London for this one and have a look at the leaders website and the various leaders social channels this week where you will be able to see the just revealed short lists for this year's leaders sports awards and also the first reveal of our class LU 40, leaders under 40 class of 2025 as we celebrate some of sports next generation of leaders. As we do every year and there are in both areas some fantastic individuals and organizations and work represented there and we will be celebrating them all at the leaders sports awards on Tuesday the 30th of September part of leaders week London this year. Those are the parish notices. Let's get into the 100 and the process by which the ECB sold stakes in the various 100 teams with Jason Shredter, Jason partner and head of Europe Middle Eastern Africa at the rain group. Jason Shredter partner and head of EMEA at the rain group welcome to the leaders worth knowing podcast. - Thank you, thank you for having me. - Now first of all, let's get this clear. Are you EMEA, EMEA, how do you, how do you say it? - I think I say it as EMEA. - EMEA, yeah, okay, we can go with that, we can go with that. Great to have you with us. We're gonna delve into the role that rain group played in the 100 sales process, strategic partnerships auction process that has dominated a lot of the industry conversation over the last year or so in a while. First of all, just maybe for those who are a little bit less familiar with rain group, just place a bit of context around what it is, what you do, and I suppose what you don't do as well. - Yeah, so we started the firm about 17 years ago. It was half Goldman Sachs, half UBS, and we were all in the TMT groups of those various firms. We came together, 10 of us, with a focus on being what's called a merchant bank. So within our sectors, wanting to be a place where people would go to for advice around anything they were thinking about, and effectively a connection place. Now that most often transitions into advisory roles, usually selling companies or raising capital, but think about it as larger strategic things. And for our entire life as a firm, all we focused on is what I call the fun sectors. So sports, media, content, video games, music, consumer internet, all things that people like to get out of bed and do. And so for 17 years, that's what our focus has been. - The sports stuff, a lot of it is sort of reported on and well documented and Chelsea and Manchester United, but also things like the Royal Dull story company to Netflix, so as you say, there's some fun stuff even beyond sport in there. - Yeah, look, probably when I first moved here, people knew us more for the entertainment side than the sports side. And I think the momentum of the sports industry and our prowess in it has helped us build the sports brand. But yeah, we are probably equally known in some of those other sectors. - Some sort of mothership in the US, but you've now got a pretty strong and established London office in Central London. Just give us a sense of the setup that you've got that you lead in London across the region. - Yeah, so we have 200 people globally now across nine offices. And in London, we have somewhere between 20 and 25 'cause we have an office in Barcelona too and we kind of group them in as part of the same setup, even though it's obviously not down the hallway. - Nice places for offices there. I mean, you can't complain, Barcelona, London. It's nice to have options as well. - Yeah, we don't have offices in any difficult places. LA, San Francisco, Singapore, yeah. It's all good spots to go. - Good stuff. I wanna get on to the 100 because it is, I think probably almost more than any other story, the story that has sort of resonated around the sports industry, certainly in the UK, but also as we'll get into beyond the UK over the past year and more. And Rain Group lead financial advisor to the England Wales Cricket Board on this whole process, on the transactions. Just break that lead financial advisor label down for us and maybe give us a sense of how you first got involved in the concept in the project as the ECB was piecing it all together. We first started chasing the ECB about this well before the project really formed. One, 'cause we saw the 100 as a really interesting concept, but then as people may remember, there were rumors about a bridge point, potential investment into maybe even buying the 100. And we went to the ECB at that point and said, don't sell this, you have something really special. We'd love to be involved. And it was really a, maybe a two year pursuit of meeting with Richard Gould, Richard Thompson, Vic, the new commissioner, and just trying to sell him on our abilities to help. And then that transitioned into a process where they were sent out on RFP and selected advisor and we presented like others and then lucky enough to have won, the role financial advisor sounds really specific and narrow, but in this process, it was much broader than that. We really were there from the early stages developing everything, obviously not the product on the field, but structure, the way the teams would be marketed, we built the entire model. So I would kind of call it more of a broader financial advisor and consultant role across the entire project. - And you ultimately had obviously ECB with the product, reign in, as you say, that role that is maybe broader than the lead financial advisor label suggests. And then Deloitte as well, almost as the third part, I was gonna say the third part of the wheel, which doesn't make sense for the third part of the triangle. - Yeah, and just give us a sense of the dynamics that play there. I guess before all the process itself kicked off in terms of the hard yards of arranging the process, arranging the structure. I imagine there's a lot of stakeholders at that point to consult within the game, within the sport. Tell us a little bit about that piece of the puzzle. Deloitte were great partners and collaborators throughout and I think what made us work well together is I think we had complimentary skill sets and I think what you said is really accurate, which is there are so many stakeholders involved in the process. There's the ECB, there's the counties that own teams, there's the counties that don't own teams that are looking to get access to some of the proceeds from our process. And I think the good news is we came into the process with a brand of doing some very high profile transactions, but potentially a little bit scary in terms of what cricket has been in these counties that they've never really done anything like Manchester United or Chelsea or some of the NBA franchises that we've sold in the US. So I think Deloitte was great because that's a name that the other counties knew and got comfortable. They might have in some form done their audits or done their taxes. So I think when we came in with big ideas, the fact that Deloitte was sitting there saying, yeah, we actually agree and we did it collaboratively, was helpful in giving people comfort that it wasn't just some American firm coming with crazy American ideas. Well, when we talk about those crazy American ideas, ultimately as everybody will be aware, you end up with this auction process. And I know you're going to tell me it was much more complicated than that, but for simplicity sake, an auction process that does feel quite US sport, but probably also draws on India and the Indian Premier League to some extent. Give us a sense of the rationale of that auction process and I suppose how you had to sell that into all those stakeholders in a sport that to some extent is very traditional, has such a great heritage, has a cultural fabric that a lot of people are very keen to protect. Yeah, so the first piece was we told everyone we're going to go out to a broad set of people and then we're going to bring them to you the counties so that you can meet them because what was important is that we weren't just striving for maximum proceeds here. We wanted each of the counties to be left with a partner that they felt like they could work with forever because that's the goal is that these teams are now joint ventures between county and new investor and they're going to go and build these amazing brands and you don't do that if you can't get along with your partner. So the first stages of this was really a lot of matchmaking meet and greet and speed dating that these counties were doing in order to actually build relationships with the people and they had the ability to select who made it through various rounds of the process until the end where they would say we are good with any of these parties that we're going to bring through to the final step. And then it's a traditional auction of which it was, you know, as an auction, you'd expect it, you know, first bid, next bid, next bid and some of these these bidding process became, you know, multiple hours with bids flowing through which was, obviously delivered the greater result. And in terms of identifying that pool of potential prospective owners, investors, as the results show, US investors, investors from India, presumably as you went into this process, those were two markets that you had identified as potentially fertile ground here. Absolutely, but we had interest from San Francisco to Singapore or even Sydney to go even further. We really did have broad interest in this process. We went out to over 300 groups. We had over a hundred people in the process. And I think the fact that the US and India one is probably driven by the fact that India is probably the most enthusiastic about the momentum of cricket. And the US is, you know, probably some of the investors are some of the most sophisticated sports investors and see the opportunity around all sport and the hundred being a new opportunity for them. So it wasn't that we were excluding other markets. It's just I think that they were prepared to pay the highest valuations. And I think going back to that matchmaking part, they also showed well in the room with these counties where people got excited about partnering with a massive Indian cricket brand or partnering with a sophisticated sports investor that has built franchises with global reach, which is what some of the ambition of some of these counties have. This is maybe something that isn't unique for rain group as regards the hundred process. But I'm really interested and you talked about the fun areas that you like to to work in sport definitely one of those where to a large extent this by necessity has to be a private process. And yet there's a media spotlight you also because of the nature of the way you did it in terms of the the almost the speed dating that you talked about. I think some counties were a little bit more public than others in terms of who they were talking to and and had their own reasons perhaps for for doing that. How did you balance up the need for for privacy with the fact that there is there was a lot of attention on this in terms of the industry, but actually more widely than that and sort of bleeding into some of mainstream media reporting. Yeah, our preference in our processes across all projects is to keep things confidential. We think that the best deals happen behind the scenes. And so it's always our intention to keep that way in this process. It was impossible. We would literally be in meetings with the various stakeholders. And while we were in the meeting, the documents that we had presented were being leaked to the press. So before we left the meeting, we were reading about it in newspapers, which I don't know the reasons why people do that. But again, it's fine. It's not our typical MO. That said, in this particular process, I think the fact that there was publicity was helpful because there's a lot of people in the world that entered our process and were real drivers of our process that had never really thought about cricket before. And including winners of some of these franchises. And I think seeing that there was a lot of publicity and excitement around it got them excited. And once you dig in and see the opportunity, it was helpful. Now we have relationships with all these people already, but seeing sort of the level of the whirlwind around it, I think was helpful. How much do you have to know about a sport to play a lead advisor role on something like this? Because there's, there's the process, the structure, the numbers that you have agreed on paper. But I suppose with these kind of projects, you also have to layer in fan culture, the history of a sport, some of the nuance, some of the context, some of the color. You don't need to know everything about the sport as proven by I was not a cricket expert at the beginning of this process. Are you claiming to be a cricket expert now? I am definitely of the curve. I was just saying to someone that I think where I need to step up my game is in the folklore. If I think of American context, if you think you imagine Johnson, Michael Jordan, Babe Ruth, I know those people. I need to have those references in cricket, which I'm working through. People are educating me, but I think what's important is you need to have a respect for the sport and understanding of how it commercializes. That's the most important piece, and then an understanding of what drives fandom. And that's something that was 17 years of history at rain and working in enough sports. We have enough things to draw on when we enter new sports to say this looks like something else that we've worked on. What was it like in the auctions? It's funny because the first one went really poorly of the eight where we literally only had, I think it was two bids and then it was done. Right. And so we left that one very nerve. I mean, it was still a good valuation, so we were happy about it, but it was, we sort of thought should we have just done something more traditional? one or two a day over the course of a week to ten days. But when we got into some of the more active ones, it was unlike anything that I had been a part of in sport. The best way I could equate it to you is there were these things called spectrum auctions when wireless spectrum was sold. And it was similar to that in that you'd see these massive corporations bidding against each other in a way that felt more like you're bidding for a piece of art. So it became something that was quite compelling to watch. And we were really pleased, but also a bit surprised about how competitive it was in some of these cases. You obviously have talked to all the organizations, the people involved in this, whether they won or lost. What is your sense of what has driven this incredible competition and then incredible investment in a product that whilst in a sport that has so much history and so much international prestige and potential is still a very new tournament, doesn't necessarily include any real estate, which we know is a big driver of ownership conversations, particularly in the US, but across a lot of the major sports. You said you're a little bit pleasantly surprised. What do you, as you reflect on it, putting down as some of the key drivers? The first foundation was the extreme fandom of global cricket. It is the second largest sport in the world. But that alone is interesting, but what's interesting is despite it being that big in terms of engagement, it's probably one of the lowest from a commercialization per fan sport. And so the opportunity around cricket was is that where there's engagement, there should be commercialization and there isn't. And so that was one. Second, the fact that the IPL has been an enormous success showed people a playbook of what you could build. And it doesn't need to be a winner take all market. There's interesting cricket year round. And the fact that IPL has captured a part of the year as its own, there's many more times of the year. Third is I think that the English summer is a unique experience. It's this is a part, the 100 has quickly become a part of the fabric of that, which I think is what people saw and the people that were able to go to 100 matches last season before the process. They got a sense of what this could be. And then finally, what really moved the needle for people is the fact that the 100 and maybe short form cricket overall, but in particular, the 100 was unlocking a new demographic to the sport. We had a stat in our presentation that really resonated and it's exciting is that of the fans that attend a 100 match, more than 50% of them had never been to a cricket match before. And a large majority of them are women, kids, different demographics than the traditional cricket viewer. And so that was really something that people saw. And look, I was at the match yesterday between over invincible and London spirit. And I have never been to a match with, I thought, more youth at it. I mean, the only thing that rivals it is major league soccer in the US, which I think also attracts a really young audience. But it was really exciting to see versus other sports, which tends to be quite older in terms of the demographic that it attends. - We should of course mention that part of the reason we're speaking now is obviously the 100 is getting underway this season, but also in the last week or so we've had the news from the ECB that the first six of the eight investments have all been finalized, all the detail work that since the auction has been going on to make sure all the eyes are dotted and the tees are crossed. Tell us a little bit about your involvement in that bit because obviously we had all the news when the auctions happened, announcements made. But then there is a great deal of presumably very detailed, very complex work to actually turn those auction results into definitive contracts. - Yeah, we were talking as a team. For each of the eight teams, there is more than 10 legal agreements that we had to agree. So that you're talking about typical transaction as two or three agreements. We had to figure out and negotiate more than 100. Now the biggest part of that was what's called the participation agreement is in that you had the counties now with their new selected partners and then they need to figure out how they are going to engage and govern themselves alongside the ECB going forward because if you're a new investor, you want to have a say as to how the league is going to operate and develop and grow. And that process of negotiating that, we knew it was going to be complicated because you had the ECB on one hand and you had eight different inputters on the other side. But I think the level of detail that we got into just it was probably even more than we expected. And that's great. I think looking back was it a difficult several months of negotiation, absolutely. But do I think that the 100 and the ECB and the investors are set up to build something great together? Now, yeah, the agreement is really going to enable that and fuel the fire of this competition. - And when you talk about that participation agreement, is that at its essence, essentially the framework for how decisions are taken how input into potential changes manifests itself? - Yes, absolutely. Every decision that that league will be made has now been locked down via the participation agreement. And it's as broad as how do you select who the domestic broadcaster is going to be in future right cycles, down to who governs control of the KISCAM during the games? And I know that sounds crazy. But literally, as we have discovered in recent weeks, that's quite important in sports and entertainments. - Yes, we had discussions on all of these topics. And yeah, again, obviously the big ones we knew we were ready for, but I think the level of granularity, like how many patches can be on the kit and where do they go? These are the types of things that you have to think about if you want to get a league moving. - As you look back on this whole process, what do you think if there are any lessons there might be for other sports who might be taking an MVA sclancer at the ECB, certainly in terms of the financial result here, but also thinking about how they structure, restructure, look for investment moving forward. - The first thing is, because we've had people approach us post the 100 to say we want the 100, give us the 100. And I would say the 100 and the ECB had some unique social circumstances that made that be the right solution for them. Now, there's other solutions that work in other cases, but I think it's not a just rubber stamp on the next opportunity because it's the dynamics that drive what the best solution is. And I think that one thing we're good at as a firm is having had decades in this industry is seeing enough things to know what the alternatives are and to guide people appropriately. But I'd say that the second biggest thing is to not underestimate the importance of getting everyone on side and moving in the same direction with consensus. And I think what Richard Gould and Richard Thompson and Vic from the ECB did a great job of is building consensus, not just within the counties that have 100 teams, but within the counties that don't, within the broader game, because when we were going to investors and saying we want to be excited about it, the fact that they were getting a uniform story from people and a uniform ambition. It made people think that while I'm entering something with real momentum and I'm going to be further fuel to that momentum, but I'm not fighting from the beginning of this. And I think as we think about other situations that could be lead transactions going forward, that consensus building up front is critical. And you look, you see it with some of these lead deals that have failed over the past couple of years in other sports. I think part of it is that they didn't have consensus up front and they got to the end of the process where decisions are making and it dissolves because you don't have what you thought you have because you didn't talk to your stakeholders and say, hey, are we all good with this? - Just more broadly, there's obviously such a lot of, conversation, but activity in terms of institutional investment in sport now. And that comes in all sorts of shapes and forms, and it's becoming increasingly part of the day to day for the industry. And I just wonder, as you, beyond the hundred in terms of thinking about all the different things you're working on, the stuff that we know about, the stuff that we probably don't know about, what's your assessment of sports financial literacy. Yeah, it's a good, when you say you're talking from the investor standpoint or from just the overall support. I suppose do sports executives do, do you feel like they, they know what they need to know about the world of institutional investment and what makes them tick in order to, in some cases, set themselves up in the best way possible to, to receive that investment. I think it is improving, but I think there's a lot of, of education in terms of what they're in for. And when we were in the hundred process, we were talking to these counties about, here's the decisions that you're going to need to think about from a governance perspective going forward. This capital is going to come with strings attached. That's why these people are investing. And so you're going to need to have a view up front of what are the things that are important to you. And we're going to give you some guidance as to what's going to be important to the other side. And so you're prepared not stepping into a room cold and somebody asking you 10 questions about things you haven't thought of. So that was, that, that is coming up the curve. I think in general, the presenting the financial capabilities of a league, I think, and teams is something that I also think is on a journey of improvement. And I think the teams are bringing in the right people to help drive that. But, you know, I think that in maturity sometimes does create problems. But it also is one of the reasons why there is interest. Because if these things were mature, financially running engines, then the upside wouldn't be there. But right now, they are not. They're still going in the early stages of that commercial view. And so people that are sophisticated realize there is a chance to help and drive great returns. Which, I guess, all keeps you fairly busy in your team. Yeah, it's, it is an exciting moment in the world of sport that when we started the thought of sport as an asset class, which is what people call it today wasn't, wasn't a thing. It was, it was, you know, we, we, we were working on deals and, and trying to match make buyers and sellers. But there wasn't an institutional asset class. There were the types of sophisticated investors that are looking at these industries now is very different. But it's, it's, it's been exciting to be one of, the one of that we hope, the proponents of, of this transition with sports is, is now a, a very investible sector. Final question, is there a sport in your mind that you would just love to get your hands on and get in and advice? Yeah, that's, that's a really good question. So first, I think there's still more to doing cricket. So I think this hopefully is not the end of our, our, our cricket journey. But my, my sport that I think could really use support is women's football or women's soccer. I think the fandom is there. I think the, um, the quality of the, of the sport has been proven out. The, you see packed stadiums. But I, I think having independent capital go into that sport to help drive teams so that they're not just the, uh, the, the other team from a, a made, you know, like a Chelsea or Man United or whatever, uh, I think that could be really exciting. So, um, yeah, if, if there is one sport that we'd love to spend more time on, it'd be, uh, uh, women's football. Your phone might be ringing after this conversation. Um, Jason, really appreciate you stopping by. Thanks so much indeed. Thank you.