NEWSLETTER
You might not otherwise have much occasion to become aware of Special Purpose Acquisition Companies (SPACs), but they’re becoming more prevalent as ancillary businesses in sports. And now the Cubs are attached to one, so why not learn about them today?
Per an SEC filing, Marquee Sports Network and The Raine Group have joined together to create a new SPAC, Marquee Raine Acquisition Corp. (MRAC), which will seek to raise funds via an initial public offering (IPO).
I reckon some of that reads as Greek to you outside of “Marquee,” but the gist is that Marquee is partnering with an advisory firm (Raine) to start a new company whose express purpose is to purchase another company or companies. That’s what an SPAC is, hence it’s name: it’s a way for existing companies to get together to purchase other companies in their field of expertise, and to raise funds to make that purchase by selling stock (IPO). It’s like, instead of getting funding from a bank to buy what you want to buy, you are getting your funding from shareholders. They are all the rage right now, and they’ve really blown up in the sports space.
So that’s the gist of an SPAC, but what exactly is Marquee/the Cubs/the Ricketts doing? Well, here’s the general description from the SEC filing:
“We are a newly incorporated blank check company incorporated in October 2020 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any potential business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any potential business combination target.
While we may pursue an acquisition opportunity in any business industry or sector, we intend to capitalize on the ability of our management team to identify, acquire and accelerate a business in the high growth sectors of TMT. This includes, but is not limited to, opportunities in interactive entertainment and games, real money gaming, digital media, sports and sports-enabled assets, health and wellness, out-of-home and live entertainment, audio content and podcasting, technology, or other opportunities in adjacent sectors that can benefit from our differentiated expertise, global network and capital markets access. We believe the unique capabilities and experience of Raine, Marquee and our management team make us a unique partner to potential target businesses and will enhance our ability to effectuate an attractive business combination. We also believe our management team’s extensive track record of value creation as investors, advisors and operators will position us to drive attractive long-term returns for our shareholders.”
Cubs Business President Crane Kenney is named as Co-CEO of MRAC, together with Brett Varsov, who is a partner at Raine. The entity is looking to raise upwards of $325 million to effectuate whatever purchases it seeks to, you know, effectuate.
To be sure, when you’re forming an SPAC like this, you have no operations, nor can you declare precisely what you’re going to buy. You get only generalities like that (among the legalese and business-speak in the more than 200(!) page filing). So you kinda have to do some extrapolating and projecting if you want to figure out what the deal is really about.
For their part, Marquee Raine Acquisition Corp. does say that it wants to focus on TMT, which is neither an explosive nor an inadvertently mutated reptile. Instead, TMT just means “technology, media, and telecom,” or, you know, internet-and-video-and-phones-and-shit. So, while that doesn’t really narrow things down much, the fact that gaming – aka, sports betting – is mentioned multiple times in the prospectus, and the fact that it is increasingly become a lawful and profitable part of the sports industry, I think we can safely assume much of what MRAC will be looking at is going to be sports-betting-adjacent.
In other words, if I had to guess – and that’s really all I can do at the moment – this new entity is the Cubs’ entree into sports gambling in a more direct, owned-and-operated way, now that it’s up and running in Illinois. The Cubs, themselves, can’t get directly involved, obviously. But an SPAC that is owned partly by Marquee, partly by an advisory firm, and partly by investors? That makes a lot more sense. It wouldn’t surprise me if the entity winds up specifically trying to buy a sportsbook to operate at Wrigley Field (which we already know the Cubs are eyeing down the road). We’ll keep an eye on this, but it could be a minute before it all shakes out – an SPAC has up to two years to spend that investor cash.
Otherwise, if MRAC looks to buy a Chicago sports media site like BN, their $325 million should be just enough to get a deal done.
