September 9, 2022
The brief from today:
Cazoo’s financial difficulties affect sponsorships
Online car retailer, Cazoo, which is based in the UK has been facing financial difficulties over the past 18 months. Despite impressive revenue figures, the company’s excessive need to spend to maintain operations has resulted in drastic measures being taken. With the current model not deemed to be sustainable, the company’s valuation has dropped from a peak of £11 billion in February 2021, to below £1 billion over the past few months. To mitigate any further issues, Cazoo laid off 750 employees in the UK in June, and have now added to that by shutting down their EU operations. This latest decision will result in an additional 750 job losses in Italy, France, Germany, and Spain. The downturn in business will now have football implications, especially in Europe, as Cazoo has been entering sponsorship agreements with various clubs in recent seasons. While they sponsored Everton and Aston Villa last season, they currently only have the one agreement in England with the latter, but Europe is a different story. In an effort to gain exposure outside their home market, Cazoo has been quite active in seeking partnerships with European clubs to appear on their jerseys. They currently sponsor Bologna in Italy, Marseille and Lille in France, Freiburg in Germany, as well as Valencia and Real Sociedad in Spain. Due to the cessation of their EU business, and overall financial health, Cazoo now have to address the various deals in place with the aforementioned clubs. While contracts are in place to at least guarantee sponsorship through the rest of the current season, the multi-year agreements with these clubs will likely be shortened. Cazoo has already reportedly made contact with the various European teams to explore how the contracts can be amicably modified to reflect their business’s changing conditions. Whether similar adjustments with home based club, Aston Villa, will be needed is unclear. At the moment, however, it seems apparent that the European sides will already need to begin exploring their jersey sponsor options for next season.
Marseille, along with other clubs, may need to search for a new sponsor after Cazoo’s financial struggles
Suning exploring sale of Inter
Inter’s ownership group, Suning, who took over the club in 2016, have reportedly given instructions to Goldman Sachs to explore the potential sale of the team. There is nothing particularly imminent, or have there been any formal inquires from interested parties, but the Zhang family, who own the Suning Holdings Group, are curious to check the market’s temperature. Following the sale of city rivals, Milan, to Redbird Capital last week for €1.3 billion, it appears that the valuation Suning is placing on Inter is €1.2 billion. The difference between the two sides, however, is the concerted effort Elliott, Milan’s now former owners, made towards the reduction of club debt. Elliott commenced their ownership of the club in 2018 by settling all external debts and bonds, and over a three-year period ending with the 2021/22 season, Milan’s internal operating losses went from almost €180 million down to roughly €50-60 million. This clearing of liabilities, and an uptick in performances on the field, is part of what made the team an attractive purchase for Redbird. Inter, on the other hand, have some other issues to contend with. While they can also boast recent success on the field—winning the Scudetto in 2021, and the Coppa Italia earlier this year—the debt they carry makes their valuation less appealing. Goldman Sachs being issued the mandate to test the waters isn’t completely random either as Inter currently have a roughly €400 million bond owed to the investment bank. Even though the reports around this move by Inter stress that they aren’t actively trying to sell, surely the exploration is more than a casual one, and it appears that the right offer will change their stance.
Steven Zhang, Inter’s chairman, and the Suning Group may be interested in a sale of the club