PTO: Ironman valuation could be ‘adversely affected’ if Wanda won’t engage

The Professional Triathletes Organisation has written its latest open letter to Wanda Sports Group, suggesting that any plans it has to sell Ironman could be “adversely affected” if it fails to entertain the triathlete organisation’s own attempts to buy the series.

The PTO, the body representing the interests of professional triathletes, announced an audacious bid to acquire WSG’s Ironman series and wider mass participation business last September. This was swiftly rebuffed by WSG and the World Triathlon Corporation, the Wanda-owned company that organises the events.

The triathlete organisation then made a renewed bid to engage with Wanda in February after securing funding from Crankstart Investments, a vehicle led by British venture capitalist and billionaire Michael Moritz.

This second bid was also rejected by WSG with the company telling SportBusiness that it was not prepared to engage in discussions with the PTO due to a “lack of clarity and specifics” in its offer.

It has subsequently emerged WSG could entertain bids from other parties, with Bloomberg reporting that the Chinese company has held meetings with private-equity buyers to discuss a $1bn (€870m) sale.

The latest open letter from PTO, which is signed by chairman Charles Adamo, chief executive Sam Renouf and athlete directors Rachel Joyce and Dylan McNeice claims that WSG ignores the athlete organisation at its peril.

The letter states: “We strongly believe that our involvement in the sale process will enable the WSG shareholders to maximise the value of any sale of the WTC Business, and failure to allow the PTO the opportunity to be part of any sale process will adversely affect the WSG shareholders.”

The PTO plans to operate new events such as the Collins Cup, a Ryder-Cup style competition to be held in Slovakia in May with a $2m prize pot.

The large prize funds have helped it to sign some of the world’s leading Ironman athletes, including Great Britain’s Brownlee brothers and Paula Findlay, who also sit on the PTO board.

PTO chairman Charles Adamo told SportBusiness in February that, as part of a wider consortium, the triathlete body and Crankstart could “give athletes a voice as well as an economic stake” and also invest in the Ironman product. Pressed on its available funding levels for a takeover of WTC, Adamo said that additional “strategic partners” would need to be found.

In the latest open letter, the PTO signals its willingness to “work with other groups who may be interested in acquiring the WTC Business” and suggests the WSG Board has a fiduciary duty to its shareholders to engage with the PTO.

WSG bought Ironman in 2015 from Providence Equity Partners for a $650m, plus the assumption of debt. The company was left disappointed in the middle of last year as its debut on the Nasdaq stock exchange raised a total IPO of $190.4m, down sharply on initial targets.

On the specifics of commercial growth that could be attained by Ironman under PTO ownership, details appear vague. Indeed, the organisation has expressed a desire for commercial operations to continue to be handled by the existing Ironman team.

Adamo claimed that investing in top athletes and broadcast production would allow the series to generate significant broadcast rights fees. Comments that are sure to be viewed with scepticism by those trading in triathlon media rights and given the hitherto Ironman commercial model – and of the wider mass participation segment – of generating revenues from participant fees and ensuring a sufficient broadcast platform to maximise sponsorship revenues.

The Ironman business sits within the mass participation reporting segment at WSG. The mass participation unit generated €100.9m ($109.3m) in gross profit in 2018.

Wanda’s improved third-quarter revenues in 2019 were driven by the rise in the number of mass participation events – from 102 to 120 – and the 37.5-per-cent increase in the number of gross-paid athletes taking part. This came against the overall €31.2m third-quarter loss reported by WSG, chiefly due to variety of fiscal costs, including those related to the IPO.

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