Kraken Co-Owners in New SPAC Seek Sports Team or Media Business
The stock market still seems willing to back sports-focused SPACs.
ESH Acquisition, a special purpose acquisition company focused on “sports, including professional franchises, online gaming, media and esports,” according to its prospectus, raised $100 million in an initial public offering. The blank check business sold 10 million units at $10 a piece and began trading on the Nasdaq Wednesday.
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“The pace of change and dislocation across these industries has accelerated in recent years, creating meaningful opportunities for sponsors and operators to fund and pursue organic growth and consolidation, and take advantage of the significant pent-up demand for live entertainment, sports and travel,” the company stated in its prospectus.
In addition to its sports focus, the SPAC listed music and entertainment businesses as potential targets along with luxury resorts or travel ventures. “There continues to be an increasing global demand for both live and streaming sports and entertainment, accelerated by significant pent-up demand following the COVID-19 pandemic and the continued growth of online and mobile applications and connectivity.”
Requests for comment to a SPAC representative didn’t get a response.
The SPAC’s focus areas reflect the expertise of the sponsors and executives involved. From sports, Seattle Kraken limited partners Ted and Christopher Ackerley are on board, Ted as an advisor and Christopher as a board member. Ted also is a limited partner of Major League Rugby’s Seattle franchise. The Ackerleys are the children of the late Barry Ackerley, a longtime owner of the NBA’s SuperSonics and WNBA’s Storm who sold the teams in 2001. The Ackerleys now engage in venture capital and private equity investing.
Also a director of the SPAC is Christina Francis, the president of Magic Johnson Enterprises and former vice president for marketing and events of the NFL Players Inc., the licensing arm of the NFL Players Association.
SPAC management is led by James Francis, who is CEO and one of the SPAC’s sponsors funding its creation. He is an executive with a long history leading real estate investment trusts. The SPAC’s chairman is Allen Weiss, currently chairman of Global Blockchain Ventures Fund and formerly an executive at Disney for nearly 40 years to 2011, including leading the parks division.
ESH hits the market as one of just 16 SPACs to successfully hold an IPO this year. In a nod to the reality of trying to keep investors committed to the company through a merger, ESH’s units consist of one share and one right, each right representing the automatic award of 1/10th of a share in a merged business. In the past, SPACs typically offered shares and warrants to buy additional shares in their units, leading to a situation where investors would redeem the shares for the IPO capital and sell the warrants as profit, without having to back the business the SPAC brings public.
The ESH IPO could be a sign the overhang of SPACs from the market’s peak two years ago is abating enough to encourage new participants to enter the market. A number of potential SPAC sponsors have been sitting on the sidelines waiting for the number of existing SPACs to thin out. Nearly three dozen sports SPACs have dissolved operations in the past six months alone, and the number of current sports-related SPACs is now less than a quarter of the number at the peak, according to Sportico’s data.
Now that ESH has hit the market, it has 18 months to consummate a merger or else return the IPO funds to shareholders.
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