The steroid Olympics make their pitch to investors

Happy Thanksgiving to all who celebrate. In the run-up to America’s favourite holiday, President Donald Trump pardoned Gobble and Waddle, two turkeys who might otherwise have spent this week on someone’s dining table.

In a similar vein, Fifa offered a generous reprieve to one of football’s golden geese. Cristiano Ronaldo should have been banned from playing in Portugal’s opening two games at next summer’s World Cup after he was given a red card for violent conduct during a match against Ireland earlier this month. Yet Fifa’s disciplinary committee decided this week that the 40-year old should instead have his sentence suspended for a year due to his previously spotless record.

And so Ronaldo, the most followed man on Instagram, will join Lionel Messi in Fifa’s showcase event. What luck.

This week we look at two curious sports business tales — a steroid-powered Spac deal involving Donald Trump Jr, and a sponsorship tie-up bringing one of the world’s most loved sports teams together with a mysterious, Samoa-based crypto start-up. Do read on — Josh Noble, sports editor

Barcelona’s new mystery crypto sponsor

As one of the world’s most loved sports teams, it’s no surprise that FC Barcelona has dozens of companies lining up to associate with it. Partnerships range from headline sponsors Nike, Spotify and Philips Ambilight to local cava producer Codorníu via toolmaker Stanley and Malaysian lender Maybank.

Those commercial partners get to sell their wares to Barça’s vast fan base and bask in the reflected glamour of the club that gave us Lionel Messi. In return, they get cash.

Earlier this month, Barca made a curious addition to its partnership team sheet: Zero-Knowledge Proof (ZKP). The previously unknown crypto company will be the club’s “official blockchain technology” partner for the next three years.

“This new sponsorship deal, in a cutting-edge area of technology, is yet another example of FC Barcelona’s leadership in the commercial field,” the club said when announcing its ZKP tie-up.

Yet, despite access to Barça’s digital channels and hundreds of millions of fans — there is little publicly available information about ZKP. The company registered in Samoa, appears to have no listed address or public team, no clear disclosures about founding or financing, and minimal digital footprint. ZKP claims it has developed a piece of hardware that lets users verify information without revealing underlying data — a “privacy-first” blockchain/AI protocol. Repeated efforts to contact ZKP have so far been unsuccessful.

“Everyone asks, “Who’s behind this?” the company says on its website. “As if knowing the names would make the code stronger. It won’t. We’re real — engineers, cryptographers, ex-founders, system killers. But we’re not playing the PR game.”

But that secrecy means fans have no idea who they might be dealing with. Criticism of the deal prompted Barcelona to publish a statement on Thursday evening, saying it had “no connection whatsoever” or responsibility for ZKP’s debut coin auction or its associated technology.

Not the greatest endorsement of your latest commercial ally 12 days into a three-year deal.

Football clubs have been dabbling with crypto sponsorships for some time, with pretty mixed results. Clubs including Inter Milan, Chelsea and Atlético Madrid have had to end such deals early, in some cases due to non-payment.

Despite the reputational and financial risks — not to mention the potential brand dilution — such deals keep coming. The money, it appears, is too good to turn down.

It could be argued Barça is a special case. Its vast debt burden makes raising revenue particularly urgent, while its member-owned structure limits some other options — for example, issuing new shares or bringing in major investors. Commercial partnerships remain the most straightforward way to raise cash quickly.

But the need to raise income as quickly as possible is an increasingly common theme across football, and one that could get even more pressing as regulation across Europe ties spending to revenue.

European football doesn’t have a great record when it comes to long-term thinking. So long as crypto companies still have money to spend, expect them to find a willing audience in club boardrooms — no matter how opaque they are.

Enhanced Games, enhanced risks

The competition dubbed the “steroid Olympics” is on its way to the public markets.

Enhanced Group plans to list its shares in the US by merging with a US blank cheque company sponsored by a Chinese businessman. It expects to have an enterprise value of $1.3bn.

Powered by performance-enhancing drugs that are banned in mainstream sports, athletes will compete in the inaugural games next year in Las Vegas.

But Enhanced, which is backed by venture capitalist billionaire Peter Thiel and Donald Trump Jr, isn’t just hunting down world records.

The idea is to launch an entertainment platform that can be used to generate revenue from broadcasting, sponsorships, ticketing and merchandising. It also intends to sell products including supplements, “peptide hormones” and “metabolic modulators”.

Enhanced’s pitch is that the games could unlock secrets of human health and longevity. Anti-doping authorities have warned of risks to athlete health.

Athletes including British Olympic swimmer Ben Proud and American sprinter Fred Kerley have signed up to participate.

Enhanced projects $357mn of revenue by 2028, evenly split between media, prescriptions and over-the-counter products.

But investors should also take heed of the risks highlighted in Enhanced’s presentation.

As the FT’s Lex column notes, insiders can sell some of their holdings a month before the inaugural event next year, and all of them 18 months after the event.

But Enhanced also warns that its business concept is “new, untested and dependent” on the success of its first event.

Allowing athletes to use performance-enhancing substances — even if they are approved by the US Food and Drug Administration — “exposes Enhanced to serious medical, legal and reputational risks if participants misuse products or experience adverse reactions”.

“Strong public or institutional opposition, negative media coverage or stricter regulation of performance-enhancing substances use could severely limit participation, commercial partnerships, and revenue opportunities, undermining Enhanced’s long-term viability,” the document says.

It also warns of potential lawsuits and regulatory challenges from established sports bodies, competitors, or regulators. The risk? Costly changes to the business model, the delay or even cancellation of its event.

International expansion — and therefore scale — could be inhibited by foreign laws, licensing requirements and “enforcement risks” that could “restrict or prohibit” its events.

These risks add up to a serious challenge for Enhanced and its backers. But there is precedent when it comes to controversial sports competitions overcoming major opposition.

Just think of Ultimate Fighting Championship, the mixed martial arts series that is now part of the $37bn TKO Group.

US politician John McCain once likened UFC to “human cockfighting” in the 1990s. The series used to be banned in many states and wasn’t readily available for fans to watch on television. It was even banned in France.

These days, UFC president Dana White is on the board of Meta and rubs shoulders with Donald Trump. UFC is set to stage a fight on the grounds of the White House next year. And even France has embraced the MMA series.

But Enhanced will note, it was a rocky road to the top.

Highlights

• Two outsiders want to accelerate the digitisation of sport. With backgrounds in investment and physics, Sportable founders Dugald Macdonald and Peter Husemeyer are betting that smart balls and sensors can capture more data to unlock new opportunities in player development, tactics, broadcasting and betting. They feature in the latest edition of the FT’s Sports Exchange series.

• Horseracing was given a reprieve from increased online betting taxes in this week’s UK Budget, following a lobbying campaign orchestrated by racecourse owners, breeders and the British Horseracing Authority.

• Chelsea FC has long dreamt of a modern stadium. The question is whether to redevelop Stamford Bridge, its home since 1905, or build at nearby Earl’s Court. This week, Hammersmith and Fulham council approved an alternative £10bn development plans for Earl’s Court, spanning homes, retail, hospitality and offices. It’s too early to say there’s no way back for a stadium, but Chelsea’s owners have some thinking to do.

• The start-up rugby competition backed by former England player Mike Tindall has pushed back its planned launched by two years to 2028, following significant opposition from Test nations and the British and Irish Lions.

• The Fifa World Cup. Imagine a time when businessmen would turn down free corporate tickets to the event. Simon Kuper attended Italia 90 because somebody (the dad of a friend of a friend) at food company Mars had stacks of spare tickets. The FT columnist hasn’t missed a World Cup since. This is why he thinks it’s the perfect travel opportunity.

Transfer Market

• Adrian Newey will take on the role of team principal at Aston Martin F1 next season, with current boss Andy Cowell becoming chief strategy officer. The former Red Bull Racing aerodynamics expert is stepping into the limelight. It’s a big decision by Aston Martin F1 executive chair Lawrence Stroll. The Canadian tycoon, who bought the team out of administration in 2017 and rebranded it as Aston Martin four years later, wants to win world championships.

Final Whistle

Crystal Palace fans continued their debut European tour this week with a trip to Strasbourg. Travelling supporters ran into an unexpected dinner companion on Wednesday evening in the form of former Palace and Strasbourg manager Patrick Vieira.

While the former Arsenal, Inter Milan, Real Madrid and France midfield star left Palace after a string of poor results, he still received a very warm reception.