Conducting business in any foreign country is a challenge and Spain is no different. Sol Sports Invest (SSI) offers a myriad of sports assets to buy and lease for an investor, ranging from brick-and-mortar gym franchises, golf courses to tennis centres and Spanish Football Clubs.
Within this short article, we highlight some of the opportunities and challenges faced when negotiating sports-related deals in Spain.
Economic challenges
I have highlighted the current and future economic challenges Spain faces in 2023 in a previous article (Sports investments in Spain – Sol Sports Invest) and they are well documented within the media, including increased interest rates, the inevitable hike in local taxes and to further add to the mix, rising energy prices and inflation. However, amongst these economic threats, arise opportunities within the Spanish sports market.
Investor
We work with a variety of investors from individuals and family offices to private equity and institutional firms seeking sports-related assets in Spain.
When approached by an investor:-
1) An initial phone/video call to establish a relationship with him/her and to understand their goals and motives for investment into sports-related assets. What type of sports assets are they interested in? Do they have previous experience investing in Spain? How do they propose to fund the deal? Time-scale expectations of purchase. Understand why they want to invest in a particular sports asset class in Spain.
2) Following on from this call we require an NDA (Non-disclosure agreements ) and proof of funding (POF) document to be signed to enable us to send the investment opportunities that we feel match their requirements and needs.
3) Sourcing specific sports assets that are not within our portfolio or on our radar will require a dedicated search and depending on the case we will require a “finder/consultancy fee” or an exclusivity agreement in place to work with us for a set period.
Tracking down the owner (s), gathering the necessary documentation and carrying out initial due diligence takes time and patience, particularly if the asset is bank-owned! It is important to make it clear to the investor what it is we are charging for and the results we expect to obtain from a laid-out road map.
Owner/Seller
Our aim here is to establish an agreement of sale with the owner/seller and to make sure that our due diligence has been carried out, all documentation is at hand and their valuation is in the ballpark of the investor.
(This is where a good percentage of searches end! ) However, with a looming recession, we are now seeing owners willing to reduce prices and be more flexible on other conditions than in the last few years.
Whether a real estate agency, bank, private individual or family office, we will always have a written agreement to confirm the price, commission and deal structure. This can pose a problem for owners that do not want their assets to be disclosed on paper with a price…
Challenges at reaching a deal and fair price
Quite often a major stumbling block is the price and valuation and necessary documentation or certain legal questions not being answered satisfactorily which are always red flags for an investor.
In addition, unrealistic expectations on behalf of an investor and a lack of patience with the seller can de-rail a deal. The main purpose of SSI is to reach a “fair deal” for all parties concerned! If you are looking to sell or buy a sports asset and would like to have an informal chat to see how we can help, please do not hesitate to contact us.
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