Padel boom lures investors

This week football’s simmering issues around multiclub ownership topped the agenda at a Premier League shareholder meeting. Eight clubs voted to block a proposed ban on interlinked clubs loaning each other players, meaning those in favour fell short of the two-thirds majority required to get their way.

That means Newcastle United is clear to borrow footballers from the four Saudi Pro League teams owned by the kingdom’s sovereign wealth fund when the transfer window reopens in January.

The vote itself shone a light on some of the tensions and contradictions within football over these issues. Some of the clubs that backed a ban have clear connections to other clubs, such as Crystal Palace through its shareholder Eagle Football, which also owns Olympique Lyonnais.

Yet those that knocked down the rule change included teams that have no external ties, but perhaps have aspirations in that direction — Burnley, for example.

The real benefits of multiclub ownership are still a subject of much debate. But this week’s vote supports two recent trends: that the direction of travel remains for more clubs to forge ownership ties, and that the regulatory pushback is going to be modest or non-existent. This is the era of football conglomerates.

Speaking of conglomerates, Ineos and Jim Ratcliffe are still waiting for the greenlight to invest in Manchester United. In fact, Wednesday marked the first anniversary of the Glazer family’s strategic review. How did you celebrate? Let us know at scoreboard@ft.com.

We also welcome feedback on the padel boom that’s taking British tennis clubs by storm and our dive into the $3bn valuation gap at Formula One.

Do read on — Josh Noble, sports editor

Investors look to ride the UK padel wave

If you head down to one of England’s genteel lawn tennis clubs this weekend, you may well be greeted by the unfamiliar thud of a ball hitting glass. That’s because more and more traditional tennis clubs are taking the plunge and investing hundreds of thousands of pounds to build padel courts to tap into rising demand for the fast-growing sport.

Many of them can’t keep up with demand for the racket sport that draws on tennis and squash. Several have introduced waiting lists for padel memberships as they await planning permission to increase the number of courts — some of them built over lawn tennis courts.

The Lawn Tennis Association, which governs padel in the UK, estimated earlier this year that 90,000 people currently play. But that figure already looks well out of date.

Data from Playtomic, a booking app with access to around 60 per cent of the UK’s 350 or so padel courts, shows a steep rise in the number of individuals looking to nab a highly-prized spot at one of the country’s roughly 350 courts. According to Playtomic, the number of people looking to book has more than trebled since this time last year.

Small wonder, then, that investors want a slice, both in the UK and in other emerging padel markets, such as the US.

One model is espoused by Padium — backed by Spotify co-founder Martin Lorentzon — which wants to build fancy clubs in prime locations, such as its new centre in London’s Canary Wharf financial district and charge hourly court booking fees. Returns also come from padel apparel and at some point club memberships.

Others, like Game4Padel, have a different approach. The Andy Murray-backed company typically goes into existing sites — such as sports centres and shopping malls — and takes on the entire building process, including construction costs (an outdoor court costs around £75,000). The venue and the company then split the income the new courts generate.

There are risks. Sweden enjoyed a frantic padel boom during the pandemic, with the number of courts surging from around 500 in 2019 to more than 4,000 currently. But courts are now closing in their hundreds due to oversupply.

The UK is unlikely to suffer a repeat, thanks to one thing above all else: planning permission. In a country where space is scarce, building anything can be a challenge. Indoor padel requires a high roof due to the importance of the lob shot, while outdoor padel is a noisy business. Most planning committees don’t even know what it is, so approvals are slow to come.

The LTA thinks the number of padel players will hit 600,000 by the end of 2026. If that proves right, what’s now a niche investment could soon become big business.

Formula One’s $3bn gap to the top

The F1 season may be drawing to a close this weekend, but the valuations race is still revving up.

Lawrence Stroll’s Aston Martin was valued at more than £1bn in a minority-stake sale to Doc O’Connor’s sports investment group Arctos just last week. It was only a few years ago that the Canadian billionaire bought the team out of administration.

It was a similar tale for Renault’s Alpine, which sold a 24 per cent stake to investors including Redbird and Otro at a $900mn valuation in June.

It wasn’t always this way. Williams, one of the stragglers, went for €152mn in August 2020. MSP Sports Capital and other investors took a minority stake in McLaren Racing at a £560mn valuation in the same year. Sir Jim Ratcliffe was able to buy a third of Mercedes, then the sport’s dominant team, for just £208mn, in a deal that closed in January 2022, albeit with additional sponsorship money exchanging hands along the way.

It’s easy to presume that rising team valuations are solely down to the booming popularity of F1. The sport now races all over the Americas, including new flagship grands prix in Las Vegas and Miami. Resource-rich Qatar and Saudi Arabia have also joined the party since John Malone’s Liberty Media bought F1 almost seven years ago in an $8bn deal. Sponsors can’t get enough of the teams, from Google to Oracle.

One key reform made F1 teams investable and not merely trophy assets: the introduction of spending limits in 2021 to contain how much teams are allowed to throw at developing their cars. Drivers’ salaries, to the relief of F1’s stars, are among the exemptions from the budget cap.

The difference in team finances is stark. Take Mercedes. In 2020, the year before the budget cap was introduced, the team made a net profit of £13mn on revenues of £355mn. In 2022, the team booked a net profit of nearly £90mn on revenues of £474mn. The costs of running the team and generating those revenues, however, only increased from £324mn to £350mn in that time.

The numbers include non-F1 revenues from the team’s applied sciences business but illustrate why Mercedes paid dividends of £130mn in the last two years.

“It is not a trophy investment any more,” Mercedes chiefToto Wolff tells Scoreboard. “There is economic and financial rationale for sponsors, investors and team owners because, otherwise, people wouldn’t do that just for fun.”

“It used to be a no-fly zone for us,” says another investor. “F1 teams used to lose a ton of money prior to the cost cap.”

One F1 veteran, however, told Scoreboard that he’s sceptical about current valuations. He says the teams will never be worth as much as they are today, so selling up now is probably a shrewd move.

Analysts and investors are adamant that there’s still a valuation gap to major US sports leagues — and that it should close. The average F1 team is worth just less than $1.9bn, compared to $5.1bn in North America’s National Football League, according to Forbes.

The race is on.

Read more from our Business of F1 Special

Highlights

• The famous riverside booksellers of Paris are digging in as they battle the organisers of next summer’s Olympic Games — who want to relocate them for security reasons.

• The launch of TGL, a new virtual golf league led by Tiger Woods and Rory McIlroy has been pushed back by 12 months after heavy rain caused severe damage to a new purpose-built arena in Florida.

• Hedge fund billionaire Ken Griffin is in early talks to buy a stake in the Miami Dolphins and the Miami Grand Prix from Stephen Ross.

• Talks between the PGA Tour and Saudi Arabia’s Public Investment Fund are set to drag on well into next year, with a deal to unite golf still facing a number of big hurdles.

• Two activist investors are piling on the pressure at Entain, the UK-based sports betting business, over its performance.

Final Whistle

Remember when Harry Maguire was struggling for form? The slump was so deep that the Manchester United defender became the butt of a joke during a budget debate in Ghana.

But MP Isaac Adongo has had a change of heart, offering an apology to the England star.

“Today Maguire has turned a corner and is a transformational footballer,” Adongo said. “Maguire is now a key player for Manchester United.”

In a post with 5.7mn views, Maguire accepted Adongo’s apology.

“See you at Old Trafford soon,” Maguire said on social media platform X.

Just don’t expect Adongo to soften his stance on vice-president Mahamudu Bawumia, the target of the original comparison.

For sports fans who’d like to add political smarts to their retelling of the Maguire anecdote, you can swot up on Ghana’s economic decline here.