The finance industry’s rush toward special purpose acquisition companies is continuing unabated with the development with yet another one devoted to sports and entertainment.
Just weeks after the arrival of RedBall Acquisition Corp., which easily passed its initial public offering goal and garnered $575m, a group of veteran sports industry executives have teamed to create Sports Entertainment Acquisition Corp.
The Florida-based entity, seeking to raise $350m, is led by Eric Grubman, former chairman of premium experiential hospitality business On Location Experiences and former National Football League executive vice president of business operations, and John Collins, former On Location Experiences chief executive and former National Hockey League chief operating officer.
Grubman will be chairman and chief financial officer of Sports Entertainment Acquisition Corp., while Collins will be chief executive of the new entity.
They are being joined in the effort by Shumway Capital managing partner Chris Shumway, NFL vice president of business operations and strategy Natara Holloway, and Hess Corp. chief counsel Timothy Goodell, also the brother of NFL commissioner Roger Goodell.
Grubman and Collins were key figures for On Location Experiences leading up to that company’s acquisition by Endeavor early this year.
Similar to the RedBird Acquisition Corp. – led by RedBird Capital founder, chief executive, and managing partner Gerry Cardinale, and Bill Beane, executive vice president of baseball operations for Major League Baseball’s Oakland A’s, Sports Entertainment Acquisition believes the sports and entertainment industries represent highly fertile sectors for economic growth.
“We believe that many companies operating in the sports and entertainment sectors, and the technology and service areas that enable them, have characteristics that make them attractive targets,” reads a newly filed Sports Entertainment Acquisition Corp. prospectus with the United States Securities and Exchange Commission. “Specifically, many companies in these sectors achieve high growth and have the potential to serve as platforms that can be utilized for future acquisitions.
“These businesses often emerge within the ecosystems of the owners of content and other intellectual property, and require different applications of capital and specific management experiences to grow. The application of third-party capital and expertise has the potential to enable growth outside of the original focus area,” the prospectus reads.
Among the areas adjacent to sports and entertainment that the new SPAC is targeting are media, ticketing, payments processing, travel, gaming, and loyalty programs.
SPACs have soared in popularity this year, with SPAC Research estimating they have raised more than $38bn thus far in 2020 in the United States, by far a record and nearly triple the sum for all of last year. The instrument was notably used in a three-way merger earlier this year that turned prominent gaming operator DraftKings into a public company. RedBall Acquisition Corp’s fundraising also attracted Israel “Izzy” Englander, one of the world’s richest billionaires.
Unlike many other financial and investment vehicles, SPACs provide significant financial upside for investors with sizable downside protections. Sports Entertainment Acquisition Corp., like other SPACs, has two years to find a suitable initial business combination, with investors able to recoup their funds if that goal is not met.
Investment banks Goldman Sachs and PJT Partners are underwriting the offering for Sports Entertainment Acquisition Corp.