Wanda Sports Group, the sports unit of Chinese conglomerate Dalian Wanda, has said that it will not entertain discussions with the Professional Triathletes Organisation over its takeover bid for the Ironman long-distance triathlon series due to the “lack of clarity and specifics” provided.
The PTO, the body representing the interests of professional triathletes, first announced its audacious takeover bid in September but the proposal was swiftly rejected by Wanda and World Triathlon Corporation, the Wanda-owned company that produces the Ironman races.
Having secured funding from Crankstart Investments, a vehicle led by British venture capitalist and billionaire Michael Moritz, the triathlete body has made a renewed bid to engage with Wanda over a possible sale and simultaneously questioned the owner’s appetite to invest in Ironman.
However, Wanda, which has not engaged with PTO or its financial advisory firm North Point Advisors, has dismissed the latest attempts, questioning the lack of detail provided.
WSG told SportBusiness: “Wanda Sports Group’s Board of Directors is committed to acting in the best interests of shareholders and regularly evaluates all opportunities to create value. The Ironman Group is successfully executing on its growth strategy as evidenced by its expanding athlete and fanbase and ability to add marquee events in key markets around the world.
“We have reviewed the Professional Triathletes Organisation’s vague and highly conditional letter, which is very similar to its first unsolicited letter.
“Based on the PTO’s lack of clarity and specifics, we are not prepared to engage in a discussion with PTO at this point.”
Along with the Ironman business, the PTO is looking to enter into negotiations to acquire Wanda’s mass participation business as a whole.
Speaking to SportBusiness, PTO chairman Charles Adamo said 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.
In its latest letter to Wanda, the PTO said that it would be “happy to work with any other financially stable group who may be interested in acquiring the WTC Business, reducing its debt load and unleashing the value only the PTO and its professional athletes can deliver”.
In 2015, Wanda bought WTC from Providence Equity Partners for $650m (€598.7m), plus the assumption of debt. The takeover came after Wanda’s acquisition of the Infront agency and was followed by the purchase of Lagardère Sports’ endurance division as Wanda ramped up its activities in the mass participation space.
Pressed on its available funding levels for a takeover of WTC, Adamo said that additional “strategic partners” would need to be found.
He said that the business plan to operate new events such as the Collins Cup, a Ryder-Cup style competition to be held in Slovakia May with a $2m prize fund, was funded.
On the need for additional funding, he replied: “There is more than enough adequate capital in this space for us to partner with.”
He added: “It’s not like we’re going to be putting all that cheque in ourselves, but capital is not any restraint in any of these transactions now. It’s just the right partner is the question.”
There is thought to be little interest from Wanda in a sale of Ironman, or its wider mass participation business, which is seen as a major part of the Wanda (and Infront) growth strategy.
Wanda Sports Group 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. Nonetheless, the financial results delivered by the mass participation segment make it a part of the business likely to be viewed positively by investors.
The Ironman business sits within the mass participation reporting segment at Wanda Sports Group. 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.
Commercial plans under PTO?
The not-for-profit Professional Triathlon Union was formed in 2015 before being supplanted by the PTO in 2016. Leading triathletes, such as Alistair Brownlee and Paula Findlay, sit on the board.
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 remarked: “The structure is self-sustaining. We think the Ironman business, management and operations are very good. [But] they are crippled by a capital structure at their parent level. Our goal is to have new capital come in and be part of an acquiring team that unleashes the existing operation.”
Broadcast rights income from Ironman is one commercial revenue stream the PTO feels is grossly underperforming at present.
Adamo claimed: “Where the professionals add value and can expand the business with proper investment is from a broadcast standpoint. If you do look at their revenue base, almost none of it comes from broadcast.”
He said 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.
Adamo maintained: “It will take investment but we think that there is an audience starving for content in this space but there’s just no decent content. It’s way [too] fragmented and they are way too many races. We think there’s a platform where you can get a decent-sized audience.
“We think we can easily do what women’s golf does and those numbers are well beyond anything from a broadcasting standpoint that’s done in triathlon right now.”
Adamo said that “huge amounts” would be invested in the Collins Cup broadcast production, equating to “five or ten times what is done for triathlon right now”, but stopped short of providing any details of which production companies would be involved.
An OTT streaming service would be in place, he said, adding: “We’re not in this for short-term amounts, we just want people to experience the product. We’re not looking to make a return tomorrow and we won’t be charging anyone to see this.”