Online sports group DAZN is racing to secure its financial future, with billionaire owner Len Blavatnik exploring options to raise money for a business hard hit by the pandemic.
The London-based company has in recent years spent billions of dollars for the rights to live sporting events, including European football matches and high-profile boxing contests. This was to help build a subscription streaming service dubbed the “Netflix of Sports”.
The global suspension of sports fixtures during the pandemic has seen some subscribers pause monthly payments. DAZN has also sought to defer payments it owes to sports leagues, citing the lack of live action.
Mr Blavatnik is exploring ways to inject new money into the lossmaking business, according to several people familiar with the talks, with the sale of an equity stake in the business the preferred option. However, an outright sale would also be considered, the people said.
Just two years ago, the company was valued at £3bn when it sold a 10 per cent stake to Japanese advertising giant Dentsu for £300m. People familiar with its business said it is currently unlikely to reach a similar valuation.
Research group Enders Analysis has estimated DAZN’s financial commitments on securing sports rights total at least £3.7bn.
In recent weeks, the group has approached big media companies over a potential investment, including John Malone’s Liberty Global, but as yet has received little interest in a deal, according to people familiar with the talks.
The company has sought to challenge established sports broadcasters, from ESPN in the US and Sky in Europe. Among DAZN’s biggest deals are the domestic screening rights for the Bundesliga, Germany’s top-flight football league, and Serie A, Italy’s equivalent. It also has contracts with the promoters behind boxers such as Britain’s Anthony Joshua and Mexico’s Saul ‘Canelo’ Alvarez.
But the sporting world has proved to be one of the industries hardest hit by efforts to contain the virus, leading to a crisis at the company.
“[This] is the biggest disaster to hit the sports world in 75 years and the biggest challenge our business has ever faced,” Simon Denyer, DAZN’s chief executive, wrote in an email to staff in April.
Mr Blavatnik’s Access Industries fully acquired UK-based Perform Group in 2014, an umbrella organisation for a number of businesses, including sports betting services and the Opta statistics group. In 2018, Perform group was rebranded as DAZN group.
In 2019, DAZN Group sold its Perform division to US fund Vista Equity Partners.
The sale of the Perform content business to Vista, which owns Stats, a rival sports statistics group, was seen as an effort to focus on the DAZN sports streaming service but also allowed Mr Blavatnik to recoup some of the money he had invested in the business.
The group hired Goldman Sachs last year, seeking to raise $500m, according to people familiar with the terms, but paused that effort at the start of the pandemic.
“They are at a crossroads as a business,” said a leading executive at a rival broadcast group said. “If it succeeds, it’ll be a great story. If it fails, then it’ll be a story of a trying to disrupt the [sports broadcasting] industry too soon.”
DAZN and Access Industries declined to comment.
Additional reporting Henry Foy in Moscow and Arash Massoudi in London