Q&A: Chris Akers, sports entrepreneur - June 2005  

In this month's Q&A, S&T speaks to Chris Akers, executive chairman of Sports Resource Group, a sports sponsorship, consultancy and representation business and organiser of the annual SportAccord Congress. He is also executive chairman of the Extreme Group which runs the Extreme Sports Channel. In 2002, Akers was voted UK Sports Entrepreneur of the Year at the Sports Industry Awards. He was an executive director of Sports Internet Group, the AIM listed sports and bookmaking group which he founded in March 1999 with £25,000 ($46,000) and subsequently sold in July 2000 to BSkyB for £301m, prior to the infamous dotcom crash. He was a founder and executive director of InTechnology, one of Europe's leading data storage companies. He was also formerly chairman and chief executive of Leeds Sporting from 1996 to 1998, the holding company for Leeds United Football Club.

How did Sports Internet Group get off the ground?

“By the summer of 1998, the internet had clearly taken a hold in the market, and I looked at how Sportsline.com in the US was generating revenue through online advertising and sponsorship. It struck me that given how Sportsline had secured a NASDAQ stockmarket listing, there was an opportunity to create a quoted UK equivalent. I left Leeds Sporting in September 1998 and started the concept of creating a new company -  Sports Internet Group, with the intention of creating an integrated internet content and gambling business. Having listed Sports Internet Group on AIM in March 1999, raising some £2m, we quickly consummated a deal to acquire the UK's leading official multi-football [soccer] club website content producer, PlanetFootball in May 1999 from Peter Wilkinson the founder of Freeserve, in a £24m all paper-based deal, beating the Mirror Group, which had expressed an interest in acquiring the company as well, and ended up with a company that ran 12 out of the 20 Premier League websites at that time. The next content asset we went after was data, through securing Opta in a £5m transaction in July 1999, and therefore had a wealth of exclusive official data that could be used not only for pleasing anorak supporters but producing useful form guides for betting as well. After that, we looked at UK and offshore internet and telephone betting companies, including Sportingbet and Surrey Group both of which had offshore licences in Alderney, in the Channel Islands."

Why did Sports Internet Group acquire the Surrey Group bookmaker in particular?

“The Surrey Group was under-performing at that time. It had a dozen or so mainland UK, Licensed Betting Offices (LBOs), an Alderney licence and a basic telebetting service. We saw this as an ideal low-cost platform to enter the telephone and internet gambling market. Once Surrey was acquired for £20m in September 1999, we moved quickly to secure an online merchandising arm so that Sports Internet Group also had an e-commerce division. In essence in just nine months we had put together a vertically integrated sports content, data, betting and e-commerce business.”

What happened next?

“Having secured our four major deals for Sports Internet Group between March 1999 and December 1999, we then realised we should be considering a possible trade exit.There were two obvious protagonists - BSkyB Group and NTL.  Having decided against a deal with NTL because the company was in so much debt, we struck a deal with BSkyB for £301m in May 2000. It was subsequently referred to the Monopolies and Mergers Commission and we then held our breath for two months before the deal was approved. We were certainly fortunate to get the price for the business when we did.”

What has been the Sports Internet Group legacy?

“I take great pride in that we effectively created the platform for SkyBet, which is now the largest non-high street bookmaker in the UK. Furthermore BSkyB has never written down its investment in Sports Internet Group, which vindicates the original sale price.”

Do you think the internet market has settled down now?

“Some of the prices originally paid for broadband internet and 3G rights in particular have been ridiculous. FA Premier League and Serie A spring to mind. As soon as a new technology is ever mooted, there's always an expectation that it will come to the market more quickly than it ever does. There was a big spike with regards to 3G rights, but some of the prices have been much more realistic since. However, although new handsets' content can be crisp and compelling, limited penetration and ongoing costs make 3G a gratuitous consumer luxury at the moment in my opinion. Also, it remains to be seen how much value there really is in goal clips or 2 minute highlights, when there is so much live, delayed and highlight coverage on digital TV. However, if IPTV converges with TV/plasma screens then the proposition of a living room rather than office environment would have major connotations and the EPG as we know it would be transformed.”

What will be the next big thing for sport on the internet in your opinion?

“The gaming side will explode further - companies such as EA Sports have done particularly well from the sports genre and with Sony, Microsoft and other leading players chasing a $28bn market, there is significant growth still to come for federations, clubs and sporting icons. And no question, there will be even more opportunities on the gambling side in particular. Betting companies are already seeking greater visibility in the industry, for example through sponsorships, and it's an income stream that doesn't appear to have a finite capacity. Betfair for example is matching 2m bets a day and football [soccer] is accounting for at least half of the volume. It will be interesting to see whether the Premier League would ever allow a betting company to be a title sponsor in the future. Considering that Carling sold 1bn pints of beer per annum when it was title sponsor, so who can say a betting company handling a billion bets per annum couldn't? Inevitably there will be conflicts with existing clubs, but if the money's big enough…….who knows?"

Who or what do you admire in the industry at the moment?

“The company that has the closest model to the one we had at Sports Internet Group is UK Betting run by Peter Dubens. It has a nice portfolio of content, statistics and betting products. Blue Square is notable for streaming smaller/niche sports such as darts, tennis and football [soccer] and what's happening in racing in the UK at the moment is interesting as well. With 1,400 fixtures and some 10,000 races to bet on in the UK alone, horseracing is still the dominant betting sport. Basically, the industry is coming full circle. The reality is that with so much content that's freely available, there has to be some form of exclusivity otherwise people won't be prepared to pay for it. The rights holders, data owners and quality content creators all have a strong advantage but ultimately it comes down to brands and marketing. Meanwhile, advances in technology can be so breathtaking that often they are ahead of consumers' willingness to adopt as opposed to afford, but what we think is high-tech now will look old-fashioned soon. People will use Google in the same way that they brush their teeth. The internet is part of their lives and has clearly outstripped all other media.”

If you could go back in time, would you do anything differently at Sports Internet Group?

“Like BSkyB, I would also have migrated our internet and off-line services onto digital television and mobile - just look at the plethora of betting channels on TV now and what's in the pipeline for mobile. I would have acquired a portfolio of high-street LBOs for their strong cashflow to fund the new media initiatives.”

What’s next for you?

“I am still investing in new technology companies such as one in search engine marketing and optimisation (Webeventseurope.com) and a push-to-talk telephony one (Mobile Tornado). Push-to-talk telephony will start to become a mass market proposition from next year. I continue to look at investment opportunities in the sports, media, entertainment, leisure, telecoms and IT sectors, which make a wonderful acronym - SMELTIT. I like to think I have a nose for a good deal. That said, I totally missed the Poker phenomenon and yes I must admit turning down the opportunity of investing £1m for 10% of Betfair in July 2000!”

What do you look for in a new technology company?

“Always the management first and the actual technology second, although of course the latter has to be robust. I see myself very much as an angel investor, typically financing at the round one investment stage or pre-IPO. Most investments are made with an IRR expectation of 200-400%, otherwise why bother!”

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