Arnaud Lagardère, the general managing partner of Lagardère, said he remains convinced sport will drive growth at the French media conglomerate despite poor returns generated by Lagardère Unlimited, the company’s sports marketing division.
“Of course I’m disappointed, we all make mistakes,” Lagardère told French newspaper Les Echos. “The group needs new business, [and] I remain convinced that sport will drive growth, so I am not worried.”
He added: “I remain convinced of the merits of the group’s strategy. My intention is not to sell [my stake] or go elsewhere.”
Since 2007, the company has invested more than €1.2 billion ($1.58 billion) in Lagardère Unlimited, including the acquisitions of the Sportfive, IEC in Sports and World Sport Group agencies. The disappointing performance of the division was a key reason for the conglomerate announcing earlier this month that it faced a writedown of about €900 million.
Lagardère Unlimited has adopted a more cautious approach in rights negotiations following the 2008 worldwide financial crisis, and this has led to a depleted rights portfolio. Lagardère’s agencies have lost rights properties including the athletics World Championships (rights in Europe and Africa), the English Football Association (rights in France and Germany), and lost in the bidding for other properties including French Open tennis (global rights).
“Some of our competitors are willing to put down a large guaranteed minimum [rights fee], but we do not know if their contracts are profitable,” Lagardère said.
Lagardère Unlimited has been hit by the trend of rights-holders taking commercial rights sales in-house. In 2010 the Fédération Française de Football, the French football association, decided not to extend Lagardère’s deal to sell its rights, which was estimated to have generated €10 million per year for the agency. The Sportfive division will be one of the leading bidders for the package of European Championship and World Cup football qualifiers due to be put on the market in the second quarter this year by Uefa, European football’s governing body. Sportfive was the biggest agency player in the European football federation rights business before Uefa centralised the rights for the qualifiers – the most valuable of the federations’ rights.
“In Europe, rebuilding the rights portfolio will take several years,” Alain Lemarchand, Lagardère Unlimited’s chief operating officer in Europe and Africa, said. Lemarchand added that Lagardère would only be able to compete for the rights again when “the contracts won by our competitors, usually for a period of three to five years, are put back into play.”