01/12/2001
Anne Robinson and Bernhard Langer make strange bedfellows, but the 'Weakest Link' presenter and the former US Masters winner are both on the books of CSS Stellar, the sports and entertainment management business that came to the market last year.
The latest signing is Juan Pablo Montoya ? 'the new hot property in motor racing', enthuses CSS Stellar's chief executive, Julian Jakobi. Montoya joins Allan McNish and Pedro de la Rosa, both of whom have been confirmed as Formula 1 drivers for next year, on the client list.
The firm's broker, Dresdner Kleinwort Wasserstein, has called the company's management 'seasoned': most are ex-IMG, Mark McCormack's business. They are certainly ambitious.
There has been a slew of deals since the company came to the market. The latest ? for up to £22 million ? brings in The Peters Fraser & Dunlop Group (PFD), which looks after some top literary talent, including Alan Bennett, Nick Hornby and Tom Stoppard, and actors and entertainers such as Dawn French, Jennifer Saunders and Kate Winslet.
It follows a similar size deal in the States to buy a consultancy that advises corporate clients of the calibre of Coca-Cola, Sears and Molson on their sports marketing spending. That might look worrisome given the extent of the US downturn but Jakobi stresses the consultancy works on a fee basis, not a percentage of its clients' spend. 'We could even do better because companies may turn to us to make, say, $3 million do the work of $5 million'.
All told, CSS Stellar looks almost recession-proof. Many of its clients have contracts running one or two years ahead. Several have an institutional feel to them. CSS Stellar acts for the UEFA Champions League, the England Football team and Wimbledon, for instance. Only a worldwide shutdown imperilling Formula 1, the PGA tour and most of the western world's television would hurt.
The core of the business remains 'talent repre-sentation'. But marketing consultancy is growing (a CSS Stellar offshoot put Pizza Hut together with Fulham FC, for instance), as is event management and servicing. CSS Stellar pulled off something of a coup earlier this year, buying a number of giant, state-of-the-art outdoor screens from the Dome management for a song. It recouped its outlay in a matter of months.
Boosted by the acquisitions of recent months, profits should more than double this year to £3.2 million. But, as broker Granville Baird stressed in a recent note, 'the real benefit of these acquisitions, together with a number of high profile deals for established properties, should be felt in 2002 and onwards'.
Prior to the PFD deal, the broker was looking for earnings of 11.7p per share this year, rising to 14.4p next. But PFD will be earnings-enhancing and the terms of the deferred consideration provide a big incentive for the vendors to get profits to grow.
CSS Stellar came to the market at 180p and briefly saw its shares up to 350p. They have weathered the market downturn well. Granville Baird says the company is 'the quality play' in the sector. It is hard to disagree with them.
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