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

0:03Hello 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 Cushman. 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 100 franchises, which of course has played out over the last few months.

0:57We 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.

1:48All 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 Week London is on the way and it's not long now, the week of the 29th of September to the 2nd 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 Week London Summit agenda.

2:33The 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 shortlists for this year's Leaders Sports Awards And also the first reveal of our class LU40, Leaders Under 40 Class of 2025, as we celebrate some of sports next generation of leaders as we do every year.

3:23And there are in both areas some fantastic individuals and organisations 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 Shretter. Jason, partner and head of Europe, Middle Eastern Africa at The Rain Group. Jason Shretter, partner and head of EMEA at The Rain Group. Welcome to the Leaders Worth Knowing podcast. Thank you. Thank you for having me.

4:08Now, first of all, let's get this clear. Are you EMEA, EMEA? 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 going to 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 RAINN 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.

4:53So we started the firm about 17 years ago. It was half Goldman and Saks, 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.

5:46So 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 in Chelsea and Manchester United, but also things like the Roald Dahl 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.

6:27But yeah, we are probably equally known in some of those other sectors. So 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 because 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.

7:09Barcelona, London, it's nice to have options. Yeah. We don't have offices in any difficult places la san francisco singapore yeah it's all good all good spots to go good stuff i want to get on to the hundred 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 um over the past well actually year year and more and um rain group uh lead financial advisor to the England and 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.

7:58We first started chasing the ECB about this well before the project really formed. One, because 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 maybe a two-year pursuit of meeting with, you know, Richard Gould, Richard Thompson, Vic, the new commissioner, and just trying to sell them on our abilities to help. And then that transitioned into a process where they were sent out an RFP and selected advisor and we presented like others and then lucky enough to have won.

8:57And 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. And 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 that role that is is maybe broader than the lead financial advisor label suggests. And then Deloitte as well, almost as the third the third part.

9:46I was going to say the third part of the wheel, which doesn't make sense, but the third part of the triangle. Yeah. And just just give us a sense of the dynamics at 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 within the game, within the sport. Tell us a little bit about that piece of the puzzle. Yeah. So Deloitte were great partners and collaborators throughout. And I think what made us work well together is I think we had complementary skill sets.

10:24And 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. They've never really done anything like Manchester United or Chelsea or some of the NBA franchises that we've sold in the US.

11:04So 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's sake, an auction process that does feel quite US sport, but probably also draws on India and the Indian Premier League to some extent.

12:01Give 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.

12:51Because 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.

13:34And then it's a traditional auction of which it was, you know, as an auction, you'd expect, you know, first bid, next bid, next bid. And some of these bidding processes became, you know, multiple hours with bids flowing through, which was obviously delivered the great 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.

14:30We really did have broad interest in this process. We went out to over 300 groups. We had over 100 people in the process. And I think the fact that the U.S. and India won is probably driven by the fact that India is probably the most enthusiastic about the momentum of cricket. And the U.S. is probably some of the investors are some of the most sophisticated sports investors and see the opportunity around all sport and the 100 being a new opportunity for them. so it wasn't that we were excluding other markets it's just I think that that 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.

15:37This is maybe something that isn't unique for Rain Group as regards the 100 process. But I'm really interested, and you talked about the fun areas that you like 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 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 had their own reasons perhaps for doing that. how did you balance up the need for privacy with the fact that 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?

16:31Yeah, 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 uh uh meetings with the various stakeholders and in while we were in the meeting the documents that we had presented were being leaked to the press uh so before we left the meeting we were reading about it in newspapers which look i don't know the reasons why people do that but um but again it's it's it's fine it's 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, including winners of some of these franchises.

17:38And 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 it was it was it was helpful now we have relationships with all these people already but seeing sort of the 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 um on a on something like this um 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.

18:30You 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 up the curve. I was just saying to someone that I think where I need to step up my game is in the folklore. You know, if I think of American context, if you think, you know, Magic Johnson, Michael Jordan, Babe Ruth, I know those people. I need to have those references in cricket, which I'm, 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.

19:06That's the most important piece. And then an understanding of what drives fandom. And that's something that with 17 years of history at RAINN 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? So 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 nervous. 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?

19:55Because they all came quite thick and fast. Yeah, we did usually one or two a day over the course of a week to 10 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 much the how competitive it was in some of these cases.

20:49You 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 are you, as you reflect on it, putting down as some of the key drivers?

21:38The first foundation was the extreme fandom of global cricket. It is the second largest sport in the world. Um, but, and that, 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.

22:28There's interest in 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. Um, third is, I think that the English summer is a unique experience. It's, this is a part, the a hundred has quickly become a part of the fabric of that, which I think is, is, is what people saw in the people that were able to go to a hundred matches last season before the process. They, they, they, they got a sense of what this could be. And then, um, and then finally, what really moved the needle for people is the fact that the hundred and maybe short form cricket overall, but in particular, the hundred was unlocking a new demographic to the sport.

23:16We had a stat in our presentation that really resonated because it's exciting is that of the fans that attend a hundred 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 Oval Invincibles 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.

24:01But it was really exciting to see versus other sports, which tends to be quite older in terms of the demographic that 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 I's are dotted and the T's 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.

24:53Yeah. 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 a typical transaction has two or three agreements. We had to figure out and negotiate more than a 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.

25:43and 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, 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?

26:40Yes, 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 KISS cam 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 entertainment. 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?

27:27These 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 envious glance 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 circumstances that made that be the right solution for them.

28:10now there's other solutions that work in other cases but I think it's it's not a just rubber stamp on on the next opportunity because it's 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 right 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 hundred teams but within the counties that don't within the broader game.

29:03Because 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, wow, 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 league transactions going forward, that consensus building up front is critical. And you see it with some of these league 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 not just 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 the day-to-day for the for the industry and I just wonder as you beyond the hundred in terms of thinking about all the the different things you're working on the stuff that we know about the stuff that we probably we don't know about.

30:22What's your assessment of sports financial literacy? Yeah, it's a good, it's a good, when you say you're talking from the investor standpoint or from just the overall sports. 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 education in terms of what they're in for. And when we were in the 100 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.

31:08This 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 upfront 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 um so that was that that is coming up the curve i i think uh 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.

31:51And I think that teams are bringing in the right people to help drive that. But I think that immaturity 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, you and your team. Yeah, 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 a thing.

32:43We were working on deals and trying to matchmake buyers and sellers, but there wasn't an institutional asset class. The types of sophisticated investors that are looking at these industries now is very different, but it's been exciting to be one of the, one of the, we hope the proponents of this transition with sports is now a very investable sector. Final question. Is there a sport in your mind that you would just love to get your hands on and get in and advise? Yeah, that's a really good question. So first, I think there's still more to do in cricket. So I think this hopefully is not the end of our cricket journey.