Venture capital investments in sports and entertainment

The world of venture capital funding has entered a new sector – this is the ever-changing sector of sports and entertainment. Investing in the entertainment world has been around for a number of years, like the huge $100 million investment in the movie Da Vinci Code in 2005. And (humorously) if we recall the book The Godfather, we can you’ll also find an “investment” in the famous singer Johnny Fontane, a Corleone godson, who has come from Hollywood to seek the godfather’s help in getting a film role that will revitalize his ailing career. Jack Woltz, the studio’s head, won’t give Fontane the part, but Don Corleone (The Godfather) tells Johnny, “I’m going to make him an offer he can’t refuse.”

The cost estimates of making and marketing a film given by the average 2005 marketing cost of $36 million per film. (Marketing costs can be higher for larger films, but in many cases sponsors help pay for these costs.) When calculating the return on an investment in a film, it is taken into account that a studio naturally receives the proceeds from about half of the tickets sold at the US box office, and total box office receipts are approximately one-third of the money a studio makes after a film has been played abroad and became a DVD or pay-TV film.

The new sector of sports investment receives millions of dollars. Recent investments in sporting goods manufacturers and distributors include a $68 million investment committed by Allied Capital Corporation to support private equity firm Quad-C Management’s acquisition of Augusta Sportswear Group . Founded in 1977, Augusta is one of the largest suppliers of unprinted athletic uniforms in the United States. The company sells over 52,000 SKUs of team uniforms, athletic apparel, outerwear and school-inspired products to over 40,000 customers including uniform suppliers and custom decorators and promotional merchandise distributors.

Another recent investment is a $2 million equity investment in golf club manufacturer Nickent. “We are pleased to announce this investment in Nickent,” commented Anthony Moore, co-chairman and president of Equus and chairman of Nickent. “Combined with our debt financing in June, this positions the fund to achieve dual benefits of current income and potential capital gains. We look forward to working with Nickent and his experienced management team.”

Nickent is a leader in the fast-growing hybrid club segment of the golf industry and an emerging leader in game-enhancing technology.

All of this investment is happening now. A final example is Seatwave. Seatwave, Europe’s largest fan-to-fan ticket exchange, is an online marketplace for buying and selling tickets to theatre, sports, music and other live events. Seatwave recently announced it had raised $25 million in Series C funding led by Fidelity Ventures. Fidelity Ventures will be joined by existing investors Atlas Venture, Mangrove Capital Partners and Adinvest. Founded in 2007, Seatwave consistently has more than 500,000 tickets on sale, 25 times more than eBay.