VENTURES: Calling The Marc
Recent Western Cape Business News
THE resurgence of Western Province and Stormers rugby (even if the Trophy Cabinet at Newlands is still short on silverware) surely must have boosted the fortunes of the Marc Group, SA’s most prominent sports brand investor.
Marc – formerly known as SAIL – holds a 25% stake in Western Province Rugby. It’s fortunes would also have been helped by the 50% owned Blue Bulls and Bulls in the Currie Cup and Super Rugby Tournaments in recent years.
But here’s the funny thing. Marc’s results for the 12 months to end December 2010 actually show a decline across most performance measures.
Turnover dropped 18% to R507 million, operating profits were down 6% to R31 million and headline earnings fell a sharp 23% to R30 million. And that was the year that the Bulls won the Super 15 rugby tournament…and the Stormers were runners-up!
It’s perhaps even more surprising to see the figures down since the 2010 financial year included once off World Cup related earnings of R10 million.
Obviously the 2010 figures would not include the windfalls from this year’s relatively successful Super 15 rugby campaigns by the Stormers and the Bulls – who both made the play-off levels.
But one does worry that this year’s Currie Cup – even if it features a dream final between Western Province and the Blue Bulls – and the home leg of the TriNations rugby tournament will largely be overshadowed by the Rugby World Cup in New Zealand.
It’s difficult to see exactly what profits are chipped in by the two prominent rugby brands, or what they comprise of Marc’s underlying value. Marc also has entertainment, marketing, travel and African operations.
Marc is not listed, and the only available financials are the abridged performance figures provided by 33.7% shareholder Remgro.
Stellenbosch-based Remgro values its 33.7% stake in Marc at R192 million – which gives the business an enterprise value of some even of around R570 million.
CBN suspects the rugby brands are valuable even if profits - depending on team performance - are seasonal (so to speak). The trick probably lies in leveraging off these brands, an effort that might take a few years to bring to fruition.
Remgro, the second biggest investor in Marc, certainly remains enthusiastic for rugby brands, having recently bought control of Premier Team Holdings in the UK.
The main asset is Saracens, a respected club rugby team that won the English premier division this year (with the help of a few South African players).
Despite Saracens recent successes (it was runner up in the premier division last year) Remgro’s latest results to end March show Premier Team Holdings running at a loss of R37 million.
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