Authentic Brands, Owner of Muhammad Ali, SI and Shaq NIL, Files for IPO

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Authentic Brands Group, an owner of brands and intellectual property including Muhammad Ali, Forever 21 and Sports Illustrated, has filed for an initial public offering with the Securities and Exchange Commission. Authentic Brands made nearly $500 million last year licensing more than two dozen retail and lifestyle brands as well as the images and likenesses of icons that also include Shaquille O’Neal, “Dr. J” Julius Erving, Marilyn Monroe and Elvis Presley.

Authentic Brands didn’t specify a valuation or how much it is seeking to raise in its IPO. Typically, companies will file an initial prospectus without those details and then amend the prospectus later as they get closer to selling.

ABG’s business model is ‘asset light,’ meaning it simply owns the brands and intellectual property and collects licensing fees from about 1,000 organizations worldwide, including Under Armour for the rights to use images of boxing legend Ali in promoting its brand. ABG’s deal for Sports Illustrated, acquired in 2019 for $110 million, is essentially only for its IP. (The magazine’s current publishing operations are controlled by another company.) Overall, ABG has spent about $2.6 billion acquiring brands since CEO Jamie Salter founded the company in 2010, according to the document.

The business model is quite profitable, with ABG reporting net income of $211 million on revenue of $489 million for 2020. It is saddled with debt from its acquisition strategy, however, reporting $2.29 billion in liabilities. The IPO proceeds will primarily go to pay down debt, according to the filing.

The bulk of ABG revenue, 82% in 2020, is from its lifestyle brands, which include Tapout, Prince, Nine West and Barneys New York. The balance, 18%, comes from its entertainment rights. This includes intellectual property, copyrights, music and trademarks of many iconic pop culture figures that also include golfer Greg Norman, Mexican singer Thalia Sodi and jewelry designer Neal Lane.

“Most people look at SI and think about the iconic magazine. What they don’t see is the brand’s huge potential to grow horizontally: digital, sports gaming, event ticketing, and world-class immersive events,” Salter wrote in an introduction to the business included in the filing. “A lot of sports players have big endorsements, but few players are brands. Shaq is absolutely a brand. When we partnered with Shaquille O’Neal, we worked with Shaq to define his brand values and created a long-term vision for his brand.”

Among the brand extensions ABG is pursuing with its sports brands are a SI Sportsbook in Colorado with 888 Holdings, expected later this year, and Shaq’s Fun House, an event held at major sporting events, including the 2021 Super Bowl. O’Neal was paid $1.8 million last year to consult on his brand image, according to the document.

Based on a table in the filing, institutional investors BlackRock, General Atlantic, Leonard Green & Partners, Simon Property Group and Lion Capital each own more than 5% of the business. Specific equity holdings aren’t yet disclosed.

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