Barron's : Alphabet Has an Nvidia-Like Business. It Could Be Worth Hundreds of B

Alphabet Has an Nvidia-Like Business. It Could Be Worth Hundreds of Billions.

Alphabet has an Nvidia like business inside it. It could be the most valuable part of the internet search giant.

Some investors might not know that Alphabet has an AI chip business among its many segments. But it’s there: Alphabet’s internally designed chips end up in AI data centers and work in concert with products from Nvidia and others.

And, of course, the Google parent also has an AI business: Alphabet’s DeepMind is comparable to OpenAI.

Both businesses could be worth hundreds of billions and aren’t fully reflected in Alphabet’s stock price, analysts say.

“Is TPU [and] DeepMind Google’s most valuable business?” asked D.A. Davidson analyst Gil Luria in a Friday report. (Analysts, and many investors, still refer to Alphabet as Google.)

It’s a good question but requires some explanation.

TPUs, or Tensor processing unit s, are Alphabet’s chips. A TPU is “a matrix processor specialized for neural network workloads,” according to the company. That isn’t much help. Futurum Research explains that AI data centers have traditional CPU chips, GPU chips that Nvidia dominates, and TPU that, essentially, improve the performance of the AI computer. Microsoft, Amazon.com, and Alphabet—three big data center players—all have their own TPUs.

If Alphabet’s TPU and DeepMind were on their own, the value would be substantial.

“We believe the current value of a potential stand-alone TPU/DeepMind business may be over $700 billion, or as much as $60/share,” wrote Luria.

That’s a lot, considering Alphabet’s market value is about $2.5 trillion, with the stock currently trading around $200.

Luria is partially doing a so-called sum-of-the-parts, or SOTP, analysis of Alphabet, estimating what each business inside the company is worth. SOTP can be useful if a company is thinking about selling or spinning off a business—or if one business segment is losing money, masking the health of another part of a company.

Recently, SOTP chatter around Alphabet increased after the U.S. government won an antitrust battle labeling Google Search a monopoly. Remedies the government could try and impose might include a breakup of the company.

Any valuation methodology has its limitations. SOTP isn’t particularly useful when things are going well or when businesses are significantly interconnected. Alphabet’s chips are going into its cloud business and DeepMind’s AI improves its search business.

SOTP also isn’t as helpful as traditional valuations when there is little chance a split or sale is coming. That point is a reason why Luria rates Alphabet stock Hold.

“We are waiting for the company to indicate it is willing to release some of the SOTP value to shareholders, and until then maintain a [Hold] rating.” His price target is $200 a share.

Alphabet stock rose 1.1% on Friday, closing at $200.21, while the S&P 500 and Dow Jones Industrial Average fell about 0.3%.

Still, SOTP can help investors better understand businesses owned—and what’s possible for those businesses.

Barron’s recently wrote positively about Alphabet, believing the value of its various businesses wasn’t accurately reflected in the current stock price. Since the article appeared, Alphabet stock has gained about 22%.

>>> Weekend Papers Summary

FINANCIAL TIMES
-In an animated call with Denmark's Prime Minister Mette Frederiksen, US President Donald Trump expressed his determination to take over Greenland. The call, which lasted 45 minutes, was reportedly marked by an aggressive and confrontational Trump. Frederiksen emphasized that Greenland is not for sale, and America's "big interest" in it. Five senior European officials who spoke on the call said the conversation had gone poorly, with Trump being firm and firm in his determination. The call is expected to deepen European concerns that Trump's return to power will strain transatlantic ties, as he pressures allies to relinquish territory.
-Donald Trump's victory speech in November credited several people, including UFC CEO Dana White, the Nelk Boys, Adin Ross, Theo Von, Bussin' with the Boys, and Joe Rogan. Trump skipped CBS's 60 Minutes during his campaign and spent about 17 hours with a group of podcasters, known as the "manosphere," who have become new media stars. Rogan, Von, and at least one member of the Nelk Boys attended Trump's inauguration festivities in Washington. Rogan sat alongside tech billionaires and former presidents Barack Obama and George W Bush. Influencers Jake and Logan Paul "pranked" Von, causing him to tumble out of his chair. Later, at the "Starlight Ball," the podcast brigade mingled with crypto entrepreneurs, donors, and celebrities.
-Hamas has released four female Israeli soldiers, whom it held captive. The four women have returned to Israel after being handed over to Red Cross personnel. The ceasefire deal in the Gaza Strip entered its second week, and 200 Palestinian prisoners held in Israeli jails were also set to be released. The four soldiers were seized from a military outpost on the Israel-Gaza border during Hamas's October 7, 2023 attack that triggered the conflict. Their freedom has become a central demand of the hostage release movement, which coalesced around the families of those still held captive in Gaza. The handover took place in Gaza City's Palestine Square, amid a rally of hundreds of uniformed and armed militants.
-Pete Hegseth has been confirmed by the US Senate to head the Pentagon despite allegations of sexual assault and alcohol abuse. The Senate voted 51-50 in favor of Hegseth, with Republican senators Mitch McConnell, Lisa Murkowski, and Susan Collins voting against his confirmation. Hegseth's former sister-in-law, Danielle Hegseth, accused him of being abusive to his ex-wife and abused alcohol for years. Hegseth, a vocal opponent of "wokeness," vowed to bring a "warrior" culture back to the US military and emphasized the need to secure the US-Mexico border.
-Private equity-backed companies are facing significant stress due to higher interest rates and lower consumer spending, leading to a record number of 110 bankruptcy filings in 2024. The failures, particularly in the consumer and healthcare sectors, highlight the challenges faced by certain corporate America sectors, despite the low unemployment rate and the S&P 500's higher earnings. The initial reason for filing for bankruptcy is the excessive debt, with private equity and venture capital-backed companies being particularly affected. High interest rates hit the US corporate landscape last year, with bankruptcies reaching their highest level since the financial crisis.
-The Securities and Exchange Commission (SEC) has reversed guidance known as SAB 121, which had called for institutions to treat digital tokens held for customers as liabilities on balance sheets. This move is one of the first pro-crypto moves of Donald Trump's second presidency, as it suggests a more welcoming approach towards the digital asset sector. Mainstream groups are taking more serious interest in crypto assets and technologies, with BlackRock chief Larry Fink calling on the SEC to "rapidly approve" the ability of companies to create tokens backed by stocks and bonds. Trump's executive order outlines his priorities regarding cryptocurrencies and calls for cabinet-level officials to report back with recommendations for regulatory and legislative proposals.
-US private equity executive Steve Schwarzman is acquiring paintings by 18th-century society portrait artists Joshua Reynolds and Thomas Gainsborough at record prices. Schwarzman, who was awarded an honorary knighthood by the UK government, is restoring Conholt Park, a 17th-century estate in Wiltshire. He is building a collection of masterpieces by making private offers to owners through dealers.
-Chinese AI lab DeepSeek, founded by Liang Wenfeng, has released its R1 model, revealing the technical recipe for its cutting-edge model. The model enables a large language model to learn and improve without human supervision. This has turned Liang into a national hero, defying US attempts to stop China's high-tech ambitions. US companies like OpenAI and Google DeepMind have pioneered reasoning models, a field of AI research aiming to match human cognitive capabilities. The release of DeepSeek's R1 model has sparked debates in Silicon Valley about whether better resourced US AI companies can defend their technical edge.
-Target will no longer practice diversity, equity, and inclusion (DEI) initiatives, becoming the first major US Company to do so since President Trump took office. The retailer will stop publicly sharing DEI goals and conclude career-building programs for Black employees in 2025. This follows a trend of US companies like Meta, Walmart, and McDonald's retreating from work on racial and gender equity amid pressure from Trump and other conservatives. Target aims to drive growth and stay in line with the evolving external landscape.
-BHP has lost interest in its bid for Anglo American due to the rise in the latter’s share price, making the deal too expensive for the Australian group. Anglo's share price has risen 40% over the past 12 months, while BHP's has fallen 17% due to lower iron ore prices and a weak Chinese real estate market. Anglo's ambitious restructuring plan would create a smaller company with a more focused revenue structure, with 54% of its revenues from copper and the rest from iron ore. The Australian group believes the Anglo’s shares are too expensive to justify a fresh bid in the near term.

NEW YORK TIMES
-Hamas has freed four female Israeli soldiers held hostage in Gaza, marking a significant step in the ongoing conflict. The release comes as part of a six-week cease-fire deal between Israel and Hamas. The Israeli military confirmed the women's return to Israel, where they will be reunited with their families. The deal is seen as a crucial test of the 42-day cease-fire between the two sides, with mediators hoping it will establish a permanent end to the war. The four women were abducted from a military base near Gaza during the Hamas-led attack on October 7, 2023.
-Israeli Army lookouts watched over Hamas in Gaza, but Hamas was also watching them. Four women released by Hamas after 15 months in captivity are "spotters" for the army stationed at a military base near the border. On October 7, 2023, gunmen attacked the base, killing dozens of soldiers, including 15 spotters. The gunmen also drove seven unarmed female conscripts into Gaza, some of whom were wounded. One of the injured was rescued three weeks later, while another was injured in an Israeli airstrike and killed by militants in Gaza's Shifa hospital.
-The Senate has confirmed Pete Hegseth as defense secretary after a battle with Democrats who deemed him unqualified and unfit to manage the US's 1.3M active duty troops and the Pentagon's $850B budget. The vote, 51 to 50, was the smallest margin for a defense secretary's confirmation since 1947. Hegseth, a military veteran and former Fox News host, has vowed to bring his "warrior" ethos to the Defense Department, which he believes has been weakened by "woke" generals and diversity programs. Republican leaders embraced his confirmation, stating that "peace through strength is back under President Trump and Pete Hegseth."
-President Trump has dismissed 17 inspectors general – they monitor federal agencies - marking a week of significant changes in the federal bureaucracy. The move, which did not affect Michael E. Horowitz, the inspector general for the Justice Department, is believed to have affected inspectors general at several major agencies. Critics argue that the firings threaten the independence of these internal watchdogs and could lead to widespread corruption. Senator Elizabeth Warren, a Democrat, has expressed concern that Trump is dismantling checks on his power and paving the way for widespread corruption.
-Trump's promotion of a speculative digital coin, known as $Trump, has left some crypto investors feeling blindsided and others seeing it as a gimmick that undermines the industry's credibility. The surprise announcement of Trump's cryptocurrency launch came on social media while many crypto executives were attending a pre-inaugural ball. The crypto millionaires and billionaires were caught off guard by the surprise disclosure, which raised fresh ethics and legal concerns about how Trump continues to cash in on his power and fame by marketing a digital asset in an inherently volatile and speculative market to millions of his followers. The announcement has raised fresh ethical and legal concerns about the way Trump continues to cash in on his power and fame.
-President Trump visited disaster zones in North Carolina and California, sparring with Democrats over recovery efforts. He called the Federal Emergency Management Agency a disappointment and promised government help without conditions. Trump embraced supporters in hurricane-ravaged North Carolina and pledged to provide support for recovery and rebuilding. He also pledged to help fire-stricken California, which he lost in the November election, but initially wanted to impose voter identification laws and change its environmental policies.
-Workers from Haiti and Venezuela, who have recently arrived in the US, have been working at Amazon, Toyota, Honda, hotels, restaurants, and assisted-living facilities. However, they have been informed by the Trump administration that they could be detained and deported. A memo by the acting secretary of Homeland Security instructs immigration agents to expedite the deportation of immigrants who have been admitted under certain programs created by the Biden administration. Many of these immigrants have protected status for another year or two. The memo leaves it unclear who could be deported, but some workers, like Haitian migrant Frantzdy Jerome, are concerned about their safety.
-The Department of Homeland Security has ordered a pause for several temporary immigration programs, including a key initiative for Ukrainians. The directive requires an immediate end to "final decisions" on applications related to these programs while the administration reviews and decides whether to terminate them. The pause will block the entrance of immigrants from unstable and desperate places, including Ukraine, Cuba, Haiti, and Venezuela. The decision indicates the Trump administration's plans to conduct an extensive crackdown on these programs.
- Guatemala City has seen two military jets carrying deported migrants from Tucson and El Paso. The US has authorized the military to assist in securing the border, following the Trump administration's executive order. The acting secretary of defense, Robert Salesses, announced that the Department of Defense would provide military airplanes to support the deportation flights of over 5,000 illegal aliens from San Diego and El Paso. The US Embassy in Guatemala cannot confirm the number of military jets expected to transport deportees or the timeline.
-China is experiencing public anger over the quality of domestically produced drugs, with some doctors and hospital leaders accusing domestic drugmakers of fraud. This scrutiny is a rebuke of Beijing's campaign to lower medical costs, which has been successful in driving down drug prices. The policy, which encourages fierce competition between drug manufacturers, has been largely absent from the government list of medicines covered under China's national health insurance and offered at public hospitals. The outburst of scrutiny is unusual in a country where authorities keep a tight grip on public criticism of the government.

NEW YORK POST
-Mexico blocked a plane carrying illegal migrants from entering the country after President Trump increased border security and ordered mass raids and deportations. The deportation flight was blocked from leaving the US after two Air Force C-17 flights successfully took off, carrying around 80 deportees to Guatemala. Tensions between Trump and Mexican President Claudia Sheinbaum have flared since Trump threatened to impose 25% tariffs on Mexican goods in response to migrants illegally crossing the border. The flight rejection was attributed to confusion over the Department of Defense flight manifest.
-Meta has activated an urgent status to address a problem where its AI chatbots on Facebook, Instagram, and WhatsApp continue to tell users that the US president is Joe Biden, despite Donald Trump's inauguration on Monday. Meta's chatbots initially told users that the current president is Joe Biden, but according to the most recent information, Donald Trump was sworn in as the president on January 20, 2025. Meta launched an emergency procedure called a "site event" to troubleshoot major problems. Meta spokespersons stated that they will continue to improve their features. The Post tested three AI chatbots on Friday, asking "Who is the current president?"

The Information : Crypto’s Glory Days Hide An Uncomfortable Reality

Crypto’s Glory Days Hide An Uncomfortable Reality

The most powerful and well-connected people in crypto seem to think they’ve entered a period of enormous prosperity, if the industry’s inaugural balls are any measure.

That prosperity may continue for some time into the future. But I think a little sober-mindedness now might prevent a helluva hangover later on.

Whenever I’ve spoken to someone in crypto lately, they do their best to keep the conversation focused on the market’s boring bits—stablecoins and so forth—in an effort to highlight parts of crypto that are practical, not flashy. (Our Yueqi Yang heard much the same when she wrote a Weekend Big Read last month on the current state of crypto.) They also really like to talk up Donald Trump, and they think his presidency will be great for them. I’m not so convinced.

Trump has signaled to crypto that his administration will take a very light touch to regulation, and he himself, of course, launched a Trump-branded memecoin shortly before taking office that has ballooned his net worth. He’s gotten richer by embracing the lack of rules, which could encourage others in crypto to do the same.

Crypto has gone to some substantial effort to rebrand itself as a safe asset class, but by encouraging an everything-goes attitude, Trump could drive people out of the market who don’t have the stomach for topsy-turviness—or at least it could make them far less likely to hop in. And isn’t that what crypto is hoping to do—encourage more investors to enter?

Since Trump is unlikely to get tough, crypto may need to do what no industry ever wants to do: practice some unpleasant self-policing. If the stablecoin set really does want to win over more investors, it may need to do things like actively—and frequently—speak out against investing in junk such as memecoins, and keep such speculative stuff off trading platforms and exchanges. It could mean losing some business among crypto die-hards in a bid to appeal to a broader market.

I think there’s a political imperative, too. Let’s say crypto parties hard for the next four years, and anything and everything goes. What will happen if a Democrat takes back the White House? That president’s desire to press down hard on a Trump plaything could make the Biden administration’s ham-fisted approach to crypto look enlightened by comparison.

TechCrunch : Stargate will use solar and batteries to power $100B AI venture

Stargate will use solar and batteries to power $100B AI venture

The massive $100 billion Stargate joint venture will reportedly be powered, at least in part, by solar and batteries.

The renewable power installations will be built by SoftBank-backed SB Energy, according to a report from Bloomberg, though they’re unlikely to be the venture’s sole source of energy. Stargate is a partnership between OpenAI, Oracle, and SoftBank Group, which promises to build a slew of new data centers to drive artificial intelligence applications.

The growth in cloud computing and AI in recent years has sent developers and tech companies scurrying to secure power. The U.S. Department of Energy expects that data centers could consume as much as 12% of all power produced in the U.S. by 2028, up from 4.4% in 2023. The looming crunch could leave 50% of new data centers underpowered by 2027.

Nuclear power has emerged as a darling of data center developers and tech companies. Google signed a 500-megawatt deal with nuclear startup Kairos, and Microsoft is restarting one of the shuttered reactors at Three Mile Island. Data center operator Switch announced an agreement in December with Oklo, the Sam Altman-backed small modular reactor company, for 12 gigawatts of capacity.

But nuclear’s recent history has been beset by cost overruns and delays. The fresh crop of nuclear startups were largely founded to overcome those hurdles by modularizing and mass-producing reactor components. If all goes as planned, the approach could speed approvals and construction of new nuclear plants.

But despite progress, none of the startups has yet to complete a reactor, and the first of their commercial reactors aren’t expected to come online until 2030, doing little to ease the near-term energy shortage. Natural gas power plants, another possible source for data centers, will also take years to build.

Solar and wind farms are much quicker to stand up. Compared with nuclear and natural gas plants, they can be completed in about half the time, according to one study of 50 years’ worth of power plant projects. More recent estimates suggest that the average time to completion for a solar power plant is around 18 months. Because of their inherent modularity, they can start producing power before the bulk of the project is complete.

The longest part of any solar project is permitting and interconnection, when the facility is connected to the grid. For data centers, grid connections can be optional — many could take power directly from the source. And given the apparent urgency of Stargate, it’s possible that permitting could be sped along, too, leaving solar as the likely frontrunner for the first data centers.

FT : Mistrust, grumpiness and political deadlock in France

Mistrust, grumpiness and political deadlock in France
Long-term changes in social attitudes combine with the decline of mainstream parties to open a door for the far right


What kind of crisis?
For an incisive summary of how France has trapped itself in political deadlock since last June’s European parliament elections, there’s no better place to start than Blanche Leridon’s analysis for the Paris-based Institut Montaigne.

She concludes:

We may feel that we are witnessing a major political moment. But in reality, what we are observing is a significant erosion, a political deconsolidation of considerable scale.

She identifies three elements of this process: stalemate of political action, erosion of engagement and belief in politics, and the risk of democratic stagnation.

Mistrust, weariness and sullenness
Leridon’s argument finds support in the regular surveys of public attitudes that are carried out by researchers at Sciences Po university in Paris.

In the most recent survey, published last February, they asked people in France, Germany, Italy and Poland to describe their state of mind. (The findings are available here.)


The French responses stand out. It was the only country where the top three moods were méfiance (mistrust, 38 per cent), lassitude (weariness, 36 per cent) and morosité (sullenness, 26 per cent).

Compare that with Poland, where only 20 per cent of respondents cited mistrust, 11 per cent weariness and 3 per cent sullenness.

Perhaps Poles have been energised by their strong economic performance since the end of communism in 1989, by the election of a new government in 2023, and by the need to be on the alert because of the war in neighbouring Ukraine?

Faith in politics and public institutions
According to the Sciences Po survey, France also registered the least trust in politics. Among the four countries polled, only 30 per cent of French respondents expressed such trust, compared with 33 per cent in Italy, 45 per cent in Germany and 54 per cent in Poland.

In France, trust in the government, National Assembly (parliament’s lower chamber) and presidency was especially low.

Other surveys have reached similar conclusions. In this one, reported last August by Le Monde newspaper, every major French political figure, from the radical left to the mainstream centre and the far right, had more unfavourable than favourable ratings.

Brice Teinturier, deputy director of the Ipsos pollsters in France, commented:

“The perception of political leaders is appalling.”

Meanwhile, in this OECD survey, published last July, we see that only 34 per cent of French people expressed high or moderately high trust in their national government.

It’s worth emphasising, however, that some European countries were even lower than France in this table of trust. These included Greece, Latvia, Portugal, Slovakia, Slovenia, the UK and, bottom of the list at a mere 19 per cent, the Czech Republic.

In other words, even if many French people seem to be unhappy or disillusioned at the moment, they are not entirely alone. The reality is that much of Europe is characterised by waning faith in politicians and political institutions.

Political parties and French voters
What impact does this mood have on the Fifth Republic’s political parties and voters?

The snap elections that President Emmanuel Macron called after the far-right’s victory in last year’s EU polls resulted, broadly speaking, in a three-way split between the left, centre and far right.

Writing for the London-based Chatham House think-tank, Sébastien Maillard comments:

Public opinion appears weary of endless political squabbles. In such a gloomy mood, it seems not at all guaranteed that possible new parliamentary elections next summer would bring a fresh majority able to overcome the present stalemate.

The Socialists fade away
However, the decline of the mainstream centre-right and centre-left parties that had held sway since the Fifth Republic’s creation in 1958 has longer-term causes.

Take the Socialist party (PS), on which Philippe Marlière wrote a particularly good analysis in September for The Political Quarterly. He observes:

The 2017 election marked the end of a long phase of political domination, which relied on the PS’s ability to appeal to various social classes. First, working-class support was on the wane from the 1990s. By the 2010s, a third of them voted for the far-right Front National and many had simply stopped voting. The party still had around 170,000 members in 2012. Today, there are barely 40,000 …

The dwindling number of PS members had another negative effect: it became what Angelo Panebianco labelled an “electoral-professional party” — that is, a publicly funded party, media-driven rather than based on a mass membership and with its electoral performance its main objective.

The rise of the far right
Similarly, the rise of the far-right Front National, now known as Rassemblement National (RN), owes much to long-term social change and its impact on public attitudes.

In this essay for Geopolitical Intelligence Services, Emmanuel Martin says:

. . . economic and social concerns raised by the far-right party are shared by a growing part of the French population that demands more national sovereignty.

From the start of the 1970s, a major source of voter discontent in France has been immigration and its related economic and cultural integration challenges.

In a survey published in October by the Elabe pollsters, 61 per cent of respondents said there were too many immigrants in France, and 69 per cent said French immigration policies were too lax.

However, Martin argues that the discontent extends well beyond immigration:

The French population’s sense of loss of national sovereignty is also related to Europe and globalisation . . . there is a feeling that . . . European integration was forced on to French citizens in an anti-democratic manner …

There is some truth that globalisation has shaken things up for the French, causing the deindustrialisation process and trade deficits. However, globalisation could have been viewed as an opportunity to thrive, had the French accepted . . . reforms and adapted.

Premature forecasts
If France’s next presidential election were held now, rather than in 2027 as scheduled, opinion polls suggest there is every chance that far-right leader Marine Le Pen would “romp to victory”, as Paul Taylor put it in a recent column for the Guardian.

However, she could be banned from running for the presidency if found guilty in a trial in which she is accused of embezzling European parliament funds in a fake jobs scheme.

Moreover, Taylor cautions:

“ . . . it must be said that these are only snapshots of a politically paralysed country in a grumpy mood, not an infallible barometer.”

France’s political future depends on how this “grumpy mood” — another way of translating morosité, the term used in the Sciences Po survey — expresses itself in elections.

Could it be that RN’s electoral programme will not be convincing enough for voters even in a grumpy mood?

In this report for the European Center for Populism Studies, Gilles Ivaldi contends that an important factor in RN’s failure to win last year’s legislative elections was its incoherent policies:

“The election was punctuated with hesitations and U-turns on some of the party’s key economic and immigration policies, such as lowering the retirement age back to 60 and restricting access to public jobs for people with dual citizenship.”


‘To dream a little’
On the other hand, the sheer desire of millions of French voters for something different, coupled with their grumpiness, may work one day to RN’s advantage.

Political scientist Jean-Yves Camus, quoted in this FT report from Paris, captured this point well:

They’re surfing on something a lot of people do not seem to understand, that there is something irrational in the vote for the RN …

The question is not so much about which is the most competent [party] . . . people want to be able to dream a little, to be told things can change.

FT : More growth, more losses for DAZN

More growth, more losses for DAZN

Speaking of lossmaking enterprises, DAZN is set to post its annual results at Companies House next week, but we’ve been given a sneak peek.

The UK-based sports streamer enjoyed a healthy increase in revenue to $2.9bn in 2023, up from $2.2bn a year earlier. Shay Segev, DAZN chief executive, said most of its top ten markets are now profitable. Its recent deal to acquire Foxtel for $2.1bn resulted in Rupert Murdoch becoming the company’s second-biggest shareholder at a valuation of close to $10bn

But that’s about where the good news ends. Losses at the group widened to $1.4bn from $1.2bn a year earlier. Company insiders say DAZN now has around 300mn monthly customers, but only 20mn are paying subscribers. Sir Leonard Blavatnik, DAZN’s controlling shareholder, pumped another $800mn into the business in 2023, taking his total outlay to $6.7bn.

DAZN has been in aggressive expansion mode for a while now, and shows no sign of slowing down. Aside from the Foxtel acquisition, it has also agreed to pay $1bn for global rights to Fifa’s new Club World Cup. It has future rights commitments of more than $9bn.

Segev expects revenue this year to be around $6bn, more than double that of 2023. The goal remains to become the “Spotify of sport”, and build a $200bn enterprise. He declined to comment on a widely-expected investment in the company by the Saudi state. “We will need to see what happens,” he said.

Many sport executives will be crossing their fingers that his bullish projections come good and that the company stops burning through cash.

Although DAZN’s foothold in the UK and US is largely related to boxing, the streamer’s fortunes increasingly underpin the health of European football. It is now the main broadcaster for the beleaguered French football league, as well as an important player in Spain, Italy and Germany.

Football has a long and frankly miserable track record of aggressive new media players seeking to shake up the status quo, only to run out of money and leave the sport facing a painful financial hangover. Many are now banking on Blavatnik staying the course.

FT : Revenue still rules in football

Revenue still rules in football

It’s a been a rather tempestuous week for the sporting empire of Sir Jim Ratcliffe. Following a 3-1 home defeat to Brighton last weekend, Manchester United manager Ruben Amorim labelled his team “the worst” in the club’s history. United now sit 13th in the Premier League, closer to relegation than the Champions League.

Amorim’s appointment was a key moment in Ratcliffe’s stewardship of the club. Since buying a minority stake last year, the UK chemicals billionaire has overseen a mass clearout of senior executives and cut headcount by 250 people. This is now his operation, and things are not going to plan.

His sailing operation has also run into choppy waters. On Thursday, Ineos announced that its America’s Cup team was parting ways with legendary British sailor Sir Ben Ainslie after failing to “find agreement on terms to move forward”. Ainslie responded soon after, saying he was “astounded” and threatened legal action.

Having built a sprawling sports business that also includes interests in Formula One, cycling and rugby, it looks like Ineos and Ratcliffe will be battling on several fronts in the coming weeks and months.

This week we’re having a look at the financial picture among European football’s top clubs, and run through the numbers at DAZN after another year of heavy losses. Do read on — Josh Noble, sports editor

VIPs and sponsors power growth for football elite
It’s that time of the year when Deloitte releases its annual appraisal of the elite football business, and the headline figures look pretty rosy.

The main takeaways from the 2023/24 season are quite straightforward: match day income is where the growth is, while for several top teams commercial revenue has become more important than TV money. Total revenue across the richest 30 clubs in football rose 6 per cent to a new record. So far, so good.

Real Madrid, ranked top in the wealth rich list again, became the first club to breach €1bn in annual revenue. Match day income more than doubled last season to €248mn, thanks in large part to the €1.3bn revamp of the Santiago Bernabéu. Aside from adding seats, the renovation has increased the club’s premium hospitality offering, and opened up a range of non-football events — from NFL games to Taylor Swifts concerts. Many others are trying to follow suit.

Real’s commercial income surged to €482mn, compared to €316mn for broadcast, helping the club achieve topline revenue growth of 26 per cent.


Several other teams booked big jumps in revenue too, with Arsenal, Newcastle and Aston Villa all enjoying steep increases.

But, as always with the Deloitte report, there’s one key metric missing from the data: profits. Even after breaking the €1bn mark, Real managed to eke out a profit of just €15.6mn — and that’s excluding any spending related to the stadium.

City, ranked second in the Money League, also booked profits, but made a loss on an operational basis. United made record losses of £113mn, and a number of others are expected to do the same when they report in the coming weeks. Football is great at earning money, but even better at spending it.

Perhaps none of that matters. Football finance regulation is undergoing a shift — moving from a model that punishes losses to one that, in effect, rewards revenue. So juicing income is, for now, the name of the game. Investors see football as a valuation play, and asking prices are still based on revenue not profit.

But at some point, you have to think, would-be owners will start asking more pointed questions about what a successful business model looks like.

FT : ‘Leveraged to the hilt’: PE-backed firms hit by wave of bankruptcies

‘Leveraged to the hilt’: PE-backed firms hit by wave of bankruptcies
High interest rates and thrifty consumers pushed record number of portfolio companies into bankruptcy last year

Higher interest rates and lower consumer spending are squeezing debt-laden companies backed by private equity groups, forcing them to either restructure through bankruptcy or buy time to recover via out-of-court settlements with creditors.

The stress on private equity-backed companies shows up starkest in a recent study by S&P Global Market Intelligence, which shows that a record number of 110 private equity and venture capital-backed companies filed for bankruptcy in 2024.

These failures, concentrated in the consumer and healthcare sectors, show how even as the US unemployment rate remains low and the S&P 500 ploughs ever higher, certain corners of corporate America are hurting, with many companies struggling to survive under the pressure of high interest rates, lower consumer spending and crippling stacks of debt.

“I think the initial reason why companies file for bankruptcy when they’ve been a subject of an acquisition by private equity, is there’s too much debt,” said Lawrence Kotler, a law partner that focuses on bankruptcy at Duane Morris. “Everything is leveraged to the hilt.”

High interest rates took a toll across the US corporate landscape last year, with bankruptcies hitting their highest level since the financial crisis. But PE and VC-backed companies have been particularly hard hit, with portfolio companies comprising a rising — and record — share of corporate bankruptcies, according to S&P data.

The data, which dates back to 2010, includes private companies with majority private equity ownership and it also includes some publicly traded companies with minority strategic investments by private equity shops.

A narrower analysis by FTI Consulting focused on larger private equity filings does not show a similar rise, but notes the out-of-court tactics suppressing the number of private equity-related bankruptcies in recent years.

Overwhelming debt loads were made tougher to shoulder by the Federal Reserve’s rate hikes, which directly affected the cost of paying back floating-rate loans taken out by private equity-sponsored portfolio companies. Those high interest rates have now remained elevated for nearly three years, and the odds of relief in the form of aggressive cuts have diminished.

The software company ConvergeOne, taken private by CVC Capital Partners in 2019, exemplifies the trouble facing private equity portfolio companies.

The software group, known for its cloud and cyber security products and now called C1, went on a buying spree in the years following its last takeover, taking on debt to snap up seven companies just before interest rates started to rise.

In the end, the debt proved too much to sustain. Last spring, ConvergeOne filed for bankruptcy with just $21mn in the bank, and $1.8bn in debt. CVC declined to comment, and ConvergeOne did not respond to a request for comment.

“Consumers search for ways to find value when inflation bites,” said Mike Best, a high yield portfolio manager at Barings. “The market is littered with bankruptcies in the consumer products and retail sectors,” he added.

While most private equity-backed companies fail from a combination of too much debt and operational troubles, some cases stir up acerbic allegations. One prime case: Instant Brands, which makes the popular Instant Pot pressure cookers, has emerged as one of those hotly contested corporate failures.


In 2019, Cornell Capital bought Instant Brands for just over $600mn. By 2023, the kitchen appliances maker had filed for bankruptcy. Shortly after the company sought court protection, creditors accused Cornell of siphoning large amounts of cash from the company’s coffers.

Creditors sued Cornell Capital and certain executives in November for having “plundered the portfolio company” by taking out a $345mn dividend for its investors, which the complaint alleges left Instant Brands insolvent.

A trial over the allegations is scheduled to start later this year. A spokesperson for Cornell Capital in a statement called the lawsuit’s allegations “baseless attacks” and disputed that the dividend recapitalisation led to Instant Brands’ bankruptcy, instead citing “uncontrollable macroeconomic events.”

Meanwhile, out-of-court manoeuvres to stave off insolvency, commonly called liability management exercises or LMEs, have shot up as companies seek to avoid Chapter 11.

“Private equity sponsors have a heightened interest in LMEs,” David Meyer, head of law firm Vinson and Elkins’ restructuring and reorganisation group, said in an interview. “The primary focus is: how can we address a situation out of court?”

While popular, the solution rarely lasts. Just under half of respondents to an AlixPartners survey from October described liability management exercises as successful. Only 3 per cent said they turned out to be permanent fixes.

Despite efforts to stave off insolvency, some companies have earned the dubious distinction of entering “Chapter 22” or “Chapter 33” proceedings, a sobriquet indicating their second or third successive bankruptcy.

One of the most recent such cases is Joann, an Ohio-based fabrics and sewing supplies retailer with hundreds of locations, thousands of employees and two separate bankruptcy filings in the past year.

Joann was taken private for $1.6bn in 2011 by private equity firm Leonard Green and Partners. The firm then took Joann public in 2021 while remaining its largest shareholder.

Business boomed in 2020 thanks to the popularity of crocheting and other crafts during Covid-19 lockdowns. But sales slowed as the pandemic ebbed, higher rates more than doubled the company’s interest payments and supply chain issues snarled its inventory — even as 96 per cent of its stores were cash flow positive, according to filings.

The company filed for bankruptcy in March. It emerged a month later after slashing half of its $1bn in debt, but ultimately returned to Chapter 11 earlier this month, this time blaming the difficulty to keep vendors shipping products. Joann and Leonard Green did not respond to requests for comment.

“The tide has gone out, and a lot of boats are rocking over,” said Jerrold Bregman, a partner at BG Law. Private equity companies prefer to sell or float their holdings at a profit, he added. “Typically, all they’re looking to do is get to a liquidity event and make some money.”