On the 7th floor of 2049 Century Park East in Los Angeles are the historic offices of IMG. Founded in the 60s by Mark McCormack, within a few years it became a leading talent agency both for models, Kate Moss among them, and also, more surprisingly for the time, for sportspeople: Björn Borg, Michael Schumacher and Tiger Woods were all sold by the agency, which also represented the image of Margaret Thatcher and Mikhail Gorbachev. It was the arrival of Julian Jakobi in the 80s that took the agency up a level. A friend and agent of Alain Prost, he persuaded Ayrton Senna to join IMG.
Around the same time, IMG opened its Los Angeles offices, on that famous 7th floor of one of the street’s two twin towers. The building is world famous for its TV and film appearances, notably as the main character of the first Die Hard. The film’s other main character, John ‘Bruce Willis’ McClane, is represented by Arnold Rifkin (who would become Willis’s producer) at William Morris, a few hundred metres away, in offices right next to Rodeo Drive.
Around the 2010s, William Morris, under the leadership of Ari Emanuel (in French) buys up its competitors left, right and centre. After the huge merger of William Morris and Endeavor, the group puts up $2.4bn to get its hands on IMG and become WME-IMG. It’s at this time that a diversification department is created within the group. The idea being: we’re the bosses of celebrity agents, what else could we sell the same way? Viners, YouTubers, esports players, live shows, sport, etc. Everything goes. From the very high-profile purchase of the Miss Universe rights from Donald Trump to that of GEM in esports5, via exclusive management of rights for all the US major leagues (MLS, NBA, NHL, MLB) or the purchase of Zuffa, the organiser of the UFC, for $4bn.
All this costs a fortune, and in 2015 Emanuel decides to bring in investors to fund all the acquisitions, boost the group’s value and take it public within 5 years. Fidelity chips in a few thousand… alongside Softbank. On the eve of a $7bn IPO in 2019, the deal is called off because of a possible lawsuit against the UFC. The IPO finally happens at $10bn in 2021, bringing Musk onto the board for reasons I covered in another newsletter (in French).
It’s not really by chance that I told you all that. Besides the fact that I like these stories, SoftBank had them firmly in mind, and at Endeavor (the new name of WME-IMG) the head of diversification looked kindly on this jackpot of more than $650M, which he saw as mostly meant for him.
Because one of the basic ideas was still that the money would stay in a closed loop: SoftBank puts money in, which goes to Sorare, which uses it to buy Endeavor licences, which boosts the value of those same licences, and so on. All the more so since shortly before, the NBA had launched Top Shot, seen as a success that Endeavor was never involved in, and which it would have loved to replicate with other licences, notably Formula 1, for which IMG did a lot to get the Netflix series project off the ground.
At launch, Sorare bought the rights to the Jupiler Pro League, Belgium’s top football division. But the giga round lets it buy rights by the bucketload in every direction:
Rights that are, for a good part, sold directly or indirectly by IMG and its commercial intermediaries. And these rights are expensive. Very expensive. Seriously expensive. NO, BUT REALLY… fine, you get it.
All the more so as these are annual, long-term deals. For the Premier League, it’s €36M a year over 4 years, so €145M6 over 2023-2027, with, as a bonus, an option on a possible equity stake7.
But how much for the other football leagues? A source at Endeavor explains8:
“Going by the figures usually known, we’d probably be at around €20M a year for La Liga, €10-15M for the Bundesliga, and probably €5-10M for Serie A and Ligue 1.”
As for the MLB and NBA deals, the same source close to the matter refuses to give exact amounts, but offers as a comparison the figure of $160M a year for the NBA rights sold to the publisher Take2 for the game NBA 2K, and talks of $100M a year9 in rights paid by EA for its famous FIFA10… just for the Premier League. Is a rule-of-3 extrapolation landing NBA rights at €40M a year right? Probably not, but it’s consistent.
Which still brings us to more than €100M in licences a year, excluding the MLB (one estimate would put it between €20 and €30M11) and a few minor leagues. So €120M at the very least. Which means, over a little more than 4 years, probably close to the entire $680M raised by Sorare.
An early-days VC, without confirming the amounts or even the orders of magnitude, merely says they are consistent. Which Nicolas Julia broadly confirms to me:
“We can confirm that we do indeed hold to date the largest portfolio of sports partners in the video game industry, and only Electronic Arts has also managed to reach that scale. Most of these partnerships (leagues, clubs, ambassadors) were signed in 2022 amid fierce competition and very strong economic pressure.”
Above all, in theory they are not about to go down. Because one of the parameters that can skew this back-of-the-soggy-envelope calculation12 is the huge inflation in licence costs, as with TV rights. So much so that it has become a real business-model problem, as you can see in French football, where nobody manages to come up with a business plan that holds up with €1bn in TV rights. Probably because they’re not worth it. And that may be the line Sorare took. Because in 2023, the company spent nearly €400M, a significant part of it on rights, then half as much in 2024, and that could be halved again in 202513. Even if the company has carried out a few restructurings, it obviously isn’t paying €100M a year in salaries.
Is this down to renegotiating those contracts? That’s certainly what Julia hints at in his reply:
“Three years later, in a very different economic context, we have managed to cut our annual licensing costs fivefold, while keeping the same portfolio of partners.”
My source at Endeavor, who has since left the company14, is surprised:
“It’s fairly common, on big deals, to add licences to keep the deal alive. That’s sometimes the case with secondary or women’s leagues. But it’s very surprising that major leagues would accept such discounts with nothing in return. Especially as the crazy NFT period is over, and it’s no longer a communication angle today.”
So there you go: Sorare has burned through its whole round, the company is going under, see you at the commercial court, between the hearings for Ynsect and Virtuo, two other fallen French start-ups.
Except that… unlike its little pals in the Next40, the French government’s showcase of its 40 most promising start-ups (which it got kicked out of), Sorare makes a bit of dough. And honestly… quite a lot.