Chronograph

Private equity investors often liken sports media contracts to high-performing SaaS businesses. ⬇️ The evolution in the media landscape over the past decade has been one of the biggest drivers of increasing sports valuations. Disruption from streaming services like Amazon, Netflix, and YouTube has upended a half-century status quo of the cable bundle. Today, you can fast-forward or subscribe to almost all entertainment — except sports. As a result, the value of sports media rights deals has skyrocketed, accounting for roughly 40-60% of league revenues. The NFL alone is projected to generate $10 billion annually in media rights revenue from 2023 to 2033, and in 2022, the ‘Big Ten’ NCAA division secured a seven-year, $8 billion media rights agreement with Fox, CBS, and NBC. For PE investors, purchasing a stake in the NFL, NBA, MLB, etc., provides access to the most valuable media IP in the world. Further, these contracts' high price tags and predictable revenue streams — often signed over multi-year time frames — closely resemble SaaS models.

🤝 Private equity is betting big on sports. Driven by the sector’s outperformance, ever-increasing valuations, and loosened ownership restrictions, institutional investment in sports franchises has rapidly accelerated over the past several years. 🔎 Examining the recent announcement of the Celtics being put up for sale underscores several factors driving private equity’s interest in sports: 🏀 Unparalleled customer lifetime value. ➡️Investors often cite customer ‘stickiness’ as one of the most attractive elements of the space. Fans are unlikely to churn even when a team loses or has a bad season. Further, fandom is often intergenerational. Few fan bases rival the passion and customer lifetime value than that of the Boston Celtics. 💧The owners cited "estate and family planning" as reasons for selling. ➡️The average value of an NBA team is $4 billion. As a result, many sports team owners find the majority of their wealth tied up in high valuations. Amid a shrinking group of buyers able to invest in teams at multi-billion dollar entry points, PE is uniquely positioned to provide liquidity and allow owners to cash out significant unrealized gains. 💰 The announcement follows the NBA's recent closing of a record-breaking new media deal worth $76 billion. ➡️ Amid streaming disruption, live sports have proven to be the advertiser’s best bet, paving the way for leagues to negotiate lucrative media rights with recurring revenue streams that are highly attractive to PE. 🔗 Explore our deep dive on private equity’s entrance into North American sports at the link in the comments. We discuss the role of institutional growth capital in the space, the open-ended nature of exits, and valuation uncertainty.

Yesterday, Spain defeated England and Argentina bested Colombia with the largest live audiences on record for both the Euro and Copa finals. Following the COVID-impacted Euro 2020, this event marked the first post-pandemic tournament and a crucial return to normalcy for UEFA's revenues. Euro 2024 is projected to generate €2.44 billion across its 51 games from lucrative media rights, sponsorship deals, and hospitality revenue. Euro 2024’s eye-catching revenue and viewership numbers highlight the attributes that continue to attract institutional capital to European football. With lower entry valuations, a large global fan base, and lucrative deal structures, deal value across Europe's "Big Five" football leagues skyrocketed from €66.7 million in 2018 to €4.9 billion in 2022. However, as more private equity shops direct capital towards Europe’s football leagues, several distinct differences between the European and North American sports markets have become apparent. Performance-based revenue distribution, relegation and promotion systems, and looser ownership structures in Europe create less predictable revenue streams than investing in North American counterparts. Additionally, despite European soccer's massive global fan base of over 4 billion, its total valuation is only around $30 billion, highlighting untapped growth opportunities through value creation and professionalization that private equity can provide. In contrast, the NFL has about 200 million fans but boasts a total valuation of approximately $150 billion. Explore our deep dive on the differences between North American and European private equity sports investing at the link in the comments. Photo credit: Reuters

Storied venture firm Benchmark Capital Partners announced it is raising $425 million for its 11th, AI-focused fund. Dubbed Benchmark I to represent a “new technological era,” the firm noted it plans to maintain the new fund name sequencing until the “odometer resets.” As early backers of Silicon Valley giants like eBay, Uber, and Twitter, Benchmark has maintained a consistent fund size and a low-volume dealmaking pace, even during the ZIRP era. This approach has sharply contrasted with the broader venture landscape over the past decade, characterized by ever-increasing fund sizes that challenge VC’s return calculus. Raising Benchmark I to the same size as its many predecessors demonstrates the firm's continued adherence to its hyper-successful strategy. In a letter to LPs, Benchmark noted that it believes this approach will “enforce accountability and discipline” in a landscape where mega funding rounds in AI startups continue to grab headlines.

With the closing of Q2 in the books, we’re excited to celebrate the outstanding performance of our team and announce promotions for the first half of 2024. Congratulations to all those contributing to Chronograph’s continued innovation and success. The opportunity to accelerate a career at Chronograph has never been better. Please explore our open positions here: https://lnkd.in/egg_Mec3 Congratulations: Ryan C., Huntington W., Nicole Lamp, Richard Wess, Nolan Fennelly, Eric Ekas, Vyom P., Miles Evenson, Alex Jiao, Alexis Opsasnick, Justin Scott, Sean Houser, Michael Stewart, CFA, CAIA, Keaton Goldsmith, Evelyn Nelson, William Ebling, Erica Hetrick, Katie O'Leary, Michael Netto, Will Goldy, Peter Borini, Jeremy Kagan, Jimmy Harrington, Janet Hwang, Joe Lyons, Carter Zwick, Emma O'Connor, Emily Bian, Giovani Bolfarini, Joanna Krzystyniak, Tanner Kellan, Tomas Trenova. #hiring #privateequity #tech 

Last month, we hosted our annual Summer Social event from our Brooklyn HQ. It was wonderful to meet face-to-face with our investor community and enjoy a beautiful summer evening over cocktails. Thank you to everyone who joined us and made the evening memorable! For details on upcoming Chronograph events, visit: https://lnkd.in/gUEUXSf8

Every private equity digitalization roadmap starts with three core questions: What data do I need? How will I collect and aggregate it? Where will it live? While private equity is still in the early stages of technology adoption, the industry is already converging on a tech infrastructure centered around three key data aggregation solutions: accounting, pipeline and investor data, and portfolio monitoring. Making these solutions interoperable then allows firms to establish an ‘ultimate single source of truth,’ unlocking synergies between datasets, significant time savings, swift decision-making, and more effective value creation strategies. Explore more insights from our recent roundtable with Juniper Square on how private equity CFOs are approaching technology implementation at the link in the comments. Charlie Tafoya | Christine Egbert 

In a 2022 analysis, Chris Ailman, the recently retired Chief Investment Officer of CalSTRS, highlighted that private equity fund commitments delivered a five-year IRR of 18.9%. Meanwhile, co-investments significantly outperformed, achieving an impressive IRR of 27.1% over the same period. LPs are drawn to co-investments for this level of outsized savings and net profitability. This said, achieving attractive co-investment returns hinges on excellent deal selection. For example, buyout and venture deals exhibit wide return dispersion, requiring top-notch diligence and underwriting skills to pick the best investments. Diversification is equally important, and ultimately, LPs must build co-investment portfolios across vintages and sectors to guard against underperformance, maximize winners, and avoid overconcentration. In a recent interview, Scott Chan, CalSTRS' incoming CIO, further emphasized the importance of co-investment deal selection against current market dynamics, highlighting that ‘we are exiting the low-interest cycle where everything worked.’ Explore the nuances of co-investment returns and deal selection at the link in the comments.

What's on the minds of private equity CFOs as they embark on digitalization journeys? In partnership with Juniper Square, we recently gathered private equity CFOs for a roundtable to discuss top priorities driving digitalization roadmaps, execution challenges, perspectives on AI, and more. Several key themes emerged: 🔹Serving insights across the organization to provide visibility and limit bottlenecks As firms scale, creating a single source of truth for data is a top priority to enable key stakeholders to access necessary information, reconcile updated data against historical records, and better manage the increasing granularity of LP requests. 🔹Getting disparate data to ‘talk to each other’ CFOs highlighted interoperability challenges as a significant barrier to their digitalization goals, citing inefficiencies and errors resulting from manual data replication across systems. 🔹Unlocking hidden insights CFOs were particularly excited about digitalization due to the valuable insights that centralized data can provide. Revealing aggregate insights CFOs ‘know are there’ but are often hidden across disparate systems is the end goal for many firm leaders. How are firms experimenting with AI, and which use cases are gaining traction? What data fidelity and accessibility challenges do CFOs face in creating a comprehensive portfolio view? Discover all the insights from our CFO roundtable in our post-event write-up. ➡️ https://lnkd.in/gQEVB5Rq Charlie Tafoya | Christine Egbert | Natalie Singer, CFA | Jay Farber | Justine Woo

How did CalPERS revamp its PE strategy after its “lost decade”? In line with new allocation targets, CalPERS will now allocate roughly 50% of its annual private equity budget to co-investments. This increase is expected to have substantial material implications. CalPERS estimates that each $1 billion in co-investments could save approximately $400 million in fees and carry over the investment's lifespan. With these savings, the pension fund anticipates that its private equity portfolio will outperform its public equities portfolio by 150 basis points. Further, co-investments are not only boosting returns but also aiding the pension in addressing liquidity challenges. Anton Orlich, head of the pension’s private equity portfolio, sees the increased emphasis on co-investments as an essential step toward achieving a ‘healthy portfolio,' anticipating the shift to enable the firm to make their PE portfolio 'self-sustaining'. Learn more about the role of co-investments in CalPERS’ portfolio at the link in the comments.