Len Blavatnik Agrees $4.3 Billion DAZN Recapitalization

(Bloomberg) -- Len Blavatnik has agreed a $4.3 billion recapitalization of DAZN, as the billionaire doubles down on his loss-making sports entertainment company and prepares to woo new investors.

Blavatnik’s Access Industries Holdings LLC, DAZN’s principal shareholder, has converted existing preference shares, retired loans and taken new equity in the company. The move clears the debt from the books of DAZN, according to a statement Friday.

“The recap sets us up nicely to bring in growth capital,” Kevin Mayer, chairman of DAZN, said in an interview.

It also shows the willingness of Blavatnik, who has a net worth of more than $38 billion, according to the Bloomberg Billionaires Index, to back a streaming business that’s struggled to turn a profit since its 2016 launch. Earlier this month, it missed out on a potentially brand-boosting deal in the U.K. 

Pronounced “da zone,” the London-based company spent quickly to buy rights to broadcast sports including football, boxing and Formula 1 motor racing outside of their domestic markets. Initially focused on these secondary rights, the push saw DAZN dubbed the “Netflix of sports” and led to considerations about a possible initial public offering.

It’s more recently focused on winning blockbuster, but costly, football broadcast deals in major markets, including Italy, Spain and Germany. The Italy deal in particular has helped DAZN’s subscriber base grow from nine million to 11 million, a person familiar with the matter said, asking not to be identified discussing confidential information.

To be sure, its ambitions suffered a major setback earlier in February, when DAZN failed to agree a deal with BT Group Plc that would have given it the rights to U.K. Premier League and European Champions League games. 

Loss Making

The pace of its expansion has weighed on finances. DAZN’s last set of published results, for the year to 2019, show a loss of more than $1.3 billion for continuing and discontinued operations. Directors at the time said that the company had sufficient funds to continue given the support of Access. 

“It is unclear if this recapitalization is merely mopping up the losses of the past or if it is providing the cash needed for the next couple of years before they, hypothetically, break even,” said Francois Godard, an analyst at Enders Analysis Ltd.

A representative for DAZN said new accounts have now been filed with the U.K.’s Companies House that will show a 20% rise in revenue but another substantial loss.

Access subscribed to another $250 million in new shares following the recapitalization and DAZN now plans to invest in betting, gaming, e-commerce and NFTs. DAZN’s second largest shareholder is the Tokyo-based advertising company Dentsu Group Inc.

“This backing by Access represents a strong vote of confidence in DAZN’s strategy, progress and future growth opportunities,” Mayer said in Friday’s statement.

Through New York-based Access, Blavatnik also controls Warner Music Group and holds a significant stake in chemicals company LyondellBasell Industries NV, according to its website. 

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