TheChek News Flow

UFC’s reverse takeover of boxing

Plus, the venture capitalists shaking up sport

It’s been a good week for Gianni Infantino. On Wednesday, Fifa’s president finally filled in one of the key missing pieces in the Club World Cup jigsaw: how much clubs will be paid for taking part.

The $1bn prize pot should certainly help drum up a bit more enthusiasm for the project — a few months ago clubs had been budgeting zero from the competition. How the money is divvied up could still be contentious, particularly for the smaller clubs. Handing tens of millions of dollars to a team in New Zealand or Egypt could be hugely disruptive to domestic competitions. European giants such as Real Madrid and Bayern Munich will demand the lion’s share.

Fifa expects revenue from the CWC of $2bn, thanks in no small part to the contribution from the now Saudi-backed streamer DAZN, which is forking out $1bn for global rights to the 32-team tournament. That in turn has led Fifa to boost its revenue projection for the four-year period ending with the World Cup next summer to $13bn, close to double what it earned from the cycle ending in Qatar.

What exactly all that money is for remains to be seen. Fifa already has reserves of $3.5bn.

This week we’re looking at another Saudi-backed project — in boxing. And we speak to a VC fund with investments in chess and volleyball. Do read on

Dana White teams up with Riyadh for boxing revolution

The idea of a new boxing league modelled on the Ultimate Fighting Championship has been discussed for some time. But this week those behind the plans broke cover, with UFC-owner TKO teaming up with Saudi events company Sela, and Turki al-Alsheikh, a royal court adviser and now the most influential man in boxing.

Details so far are scant. The tie-up will create a “highly structured system” for developing talent, give boxers access to the UFC’s performance centres in Las Vegas, Shanghai and Mexico City, and bring TKO in to handle the media operations.

However, TKO president Mark Shapiro hailed the agreement as a “strategic opportunity to reimagine the sport of boxing globally”. UFC’s Dana White and WWE’s Nick Khan will both be involved. More information on the new set-up will be released “in the coming months”, the group said in a statement this week.

Saudi Arabia has already established itself as boxing’s new power broker — able to bankroll the biggest fights and get rival promoters to set aside their differences.

In an age where storytelling is key, boxing’s complex web of federations and promoters has made it hard to build narratives and organise top fights. That the summer bout between retiree Mike Tyson and YouTuber Jake Paul was the most watched in history says a lot about where the sport is these days.

Boxing has been crying out for a revolution. Here it comes.

Q&A: the venture capitalist disrupting sports

Inspired by the search for the next UFC, New York-based venture capital firm Left Lane has invested in former FC Barcelona star Gerard Piqué’s Kings League, a football competition tailor-made for social media; Freestyle Chess, a tour featuring world No.1 Magnus Carlsen; League One Volleyball, a professional women’s competition; and Olympic gold medallist Shaun White’s winter sports company Snow League.

We recently caught up with Harley Miller, chief executive of Left Lane, which is betting that new business models can shake up sport.

What’s the Left Lane approach?

There’s been historically a lot of private equity money and/or billionaires who own teams in the Premiership or the NFL or whatever. But there hasn’t really been much in the form of institutional venture money to lead the seed Series A rounds.

We’ve got a handful of really interesting sports IP investments in the ground, and also a really good understanding of the derivative technology and assets that might be related or adjacent to a Kings League, whether it be sports betting or daily fantasy sports or merchandise or e-commerce or youth assets.

Where are the opportunities?

Our thesis has been we want to invest in leagues, not teams because we think that there’s more upside value, more alpha to be driven. Our [limited partners] aren’t investing in us to make a safe 2x [return] on buying into a franchise of a big four sport. That’s just not what our product is.

We look at the UFC as a brilliant case study of something that was born in the last couple of decades. And that is something that has scale globally with single market sort of economies of scale, and very, very high Ebitda margins. 

I didn’t mean to suggest that Left Lane is focused on combat sports, but more on what are the mechanics and merits and attributes of the UFC that allow it to be so successful, so large and frankly so darn profitable. 

How crucial are media rights to your investments?  

We certainly don’t need media rights deals to make the economics or the math of the things we invest in work. We view that as big upside, not as conditional on the viability of the business because it’s not something you can take for granted. 

What’s different about the new breed of sports investor?

Historically, making money was perhaps secondary. It was vanity. They were trophy assets, right. And they were oftentimes teams or it was investing in teams. They were loss making. Owners made money from the disposition of those investments because there was always a wealthier person on the other side who wanted to own whatever it was. That’s starting to change both at the team level but also at the league level.

We can’t afford to do things for vanity purposes. I’d be out of business quickly if that were the case. You could, of course, absolutely go public if you get to meaningful scale and can be an enduring standalone asset. 

What’s the exit?

You have multiple paths to exit liquidity. You have private equity, the mega billionaires who own teams in different leagues that have the scale of small sovereign wealth [funds] who could be acquirers. You have a lot of money in the Gulf. 

And the future?

We think that we’ve tied up with a handful of unbelievable founders and legends of the game, and partners and advisers and other co-investors that we think will lead to some of the next really large big IP properties out there that hopefully can stand one day toe to toe with Formula One, Liberty Media, as opposed to just getting acquired by a group like that for a couple of billion dollars.

Commerce secretary has been in tense calls with foreign leaders over a gyrating trade agenda

Howard Lutnick called Doug Ford, the leader of Canada’s Ontario province, hours after U.S. tariffs on Canada and Mexico took effect Tuesday with an urgent demand: He wanted Ford to back off his threats to retaliate against the American levies.

“I told him where we stand: We will not budge,” Ford said.

That wasn’t the only tense exchange Lutnick would have with a Canadian leader. Several days later, he was also on the call between President Trump and Canadian Prime Minister Justin Trudeau that descended into yelling and swearing, a person with knowledge of the call said. The Commerce Secretary also earlier had a tense meeting with Mexico Economy Minister Marcelo Ebrard on tariffs that yielded no resolution to the U.S.’s threats.

“I would say that we started a dialogue with very different positions,” Ebrard said standing alongside Mexican President Claudia Sheinbaum on Friday, referring to his meetings with Lutnick.

These conversations are the behind-closed-doors work of Trump’s new Commerce secretary, who has asserted himself—with Trump’s blessing—as the lead negotiator of the president’s gyrating trade agenda, as well as its public face. The former CEO of Wall Street firm Cantor Fitzgerald has at times appeared several times a day on different cable news shows to unveil details of tariff moves and partial reversals. He has sometimes gotten ahead of the president, like when he told CNBC on Thursday morning Trump would likely suspend 25% tariffs on Mexico and Canada for a month, reassuring investors who were rattled by the uncertainty.

So far, the president has approved of Lutnick’s approach, and has privately praised the Commerce secretary’s interviews with news anchors. Lutnick made at least eight television appearances this week to explain Trump’s tariff policies. Officials say Trump trusts Lutnick, an old friend from Manhattan who is frequently in the Oval Office with the president or on Air Force One when Trump flies home to Palm Beach.

Lutnick, no stranger to business TV and a familiar face on Wall Street, is seen by some within the White House as credible in the business community and as someone able to translate Trump’s tariff policy, a White House official said.

While Trump moves quickly and deliberately, it is up to senior officials and Cabinet members to explain his decision making to the public. Lutnick has not always been the smoothest communicator, an administration official said, pointing to the tariff tug-of-war over the past week.

Steve Moore, an economist who served as a senior economic adviser in Trump’s first term, said that while Lutnick seems to “echo what Trump says,” he sometimes “leads Trump on the declarations, so it’s hard to figure out whether he’s the one driving the policy or articulating it.”

White House spokesman Kush Desai said in a statement: “Secretary Lutnick is an accomplished business leader who has demonstrated courage and tenacity in the face of tragedy throughout his life,” adding: “His immensely successful private-sector career makes him an invaluable asset to negotiate with foreign leaders and implement President Trump’s America First economic agenda that has already ushered in trillions in historic investment commitments from industry leaders such as Apple and TSMC.”

Lutnick quickly warmed to the tariff issue before and during his time serving as the personnel coordinator on Trump’s presidential transition team. In December, shortly after he was nominated to the Commerce post, Lutnick met with Charles Benoit, the lead trade lawyer for the Coalition for a Prosperous America. The organization is a little-known coalition of U.S. companies and labor unions that has become one of the most influential outside groups on the Trump administration’s trade agenda.

Benoit was ready to sell Lutnick on an aggressive trade agenda, pushing higher and more broad-based tariffs than in President Trump’s first term, as well as using tariff revenue to replace some income taxes. He found Lutnick required no convincing; he was already on board with every plank of an unabashedly protectionist trade agenda.

Lutnick was “very high energy, very excited,” said Benoit, adding that other officials, like Treasury Secretary Scott Bessent, are “coming around” to a protectionist agenda, “but no one had that passion that Trump had except for Lutnick.”

Though Lutnick has been a lead on Trump’s trade agenda, he also has responsibility over a sprawling federal agency of more than 48,000 people and has been at the forefront of other policy decisions. For instance, Lutnick was a leading proponent of Trump’s “gold card” for U.S. citizenship for a $5 million fee to replace the government’s EB-5 immigrant investor visa program.

The secretary, Benoit and others say, exhibits many similar personality traits to Trump, from brashness and affability to his TV-friendly showmanship and talkative nature: During a trade call with U.S. automakers, he went on for almost an hour about tariffs and supply chains, say those with knowledge of the matter.

Lutnick is “very much like Trump,” said Sen. Kevin Cramer (R., N.D.), a Trump ally in the Senate. He added that the Commerce secretary shares many of the same policy positions as Peter Navarro, the president’s senior counselor for trade, but “wears on you less”—referring to Navarro’s tendency to ruffle feathers on Capitol Hill.

Several people described Lutnick as genial but also like a bull in a china shop, citing his bold style. At times it has prompted confusion.

This week alone, Lutnick was at the forefront of

imposing 25% tariffs on Canada and Mexico on Tuesday, before pulling back Thursday and exempting much of the continental trade flows from the new duties. The current exemption covers all goods that comply with the U.S.-Mexico-Canada Agreement that Trump signed in 2020.

The on-again, off-again nature of the tariffs sparked a selloff on Wall Street and stoked anxiety on Capitol Hill, even among Republicans.

Some leaders in the auto industry have privately expressed concern that Lutnick might not completely understand the tariff authorities he is using or the supply chains for critical industries such as automobiles. On a call with automakers before the Canada and Mexico tariffs were imposed, several people said Lutnick didn’t seem to grasp the intricacies of the continental supply chain for cars, where parts move across borders several times before being assembled into a vehicle—hence, exposing them to multiple rounds of tariffs.

Days later, Trump decided to grant a carve-out to USMCA-compliant goods, including cars, after White House officials said U.S.-based automakers made commitments to relocate manufacturing back to the U.S.—commitments that haven’t been confirmed by the automakers.

Trump appears set on keeping his fellow billionaire at the helm of his trade policy. Lutnick, Trump has said, is a “relationship person,” and is “the best at it.”

On Friday evening, Trump boarded Marine One at the White House, headed to Palm Beach for the weekend. Lutnick was walking a few paces behind the president to join him for the trip.

A pair of Millennium portfolio managers and their teams lost about $900 million on index-rebalancing trades

About $900 million in losses spread across two teams at hedge fund Millennium Management contributed to the firm’s worst monthly performance in over six years in February.

Millennium lost 1.3% last month, people familiar with the matter said. The losses, while modest in absolute terms and relative to other hedge funds, stand out in light of Millennium’s long record of consistently positive returns and sharp risk management. The firm has only had one down year since Chief Executive Israel “Izzy” Englander founded it in 1989 and hadn’t lost more than 1% in a given month since late 2018.

February was a choppy time in markets. Concerns over slowing economic growth and the impact of President Trump’s tariff and other policies added to volatility and helped erase prior gains.

A broad hedge-fund index compiled by research firm HFR declined 0.47% in February. Only about half of hedge funds that HFR tracks made money in the month, down from nearly 80% in January.

With about $75 billion in assets under management, Millennium divides money across more than 340 semiautonomous teams of investment professionals to produce returns that aren’t correlated with broader markets. Each team has its own specialty, from trading tech stocks to betting on the convergence of bond prices.

The firm imposes strict limits on risk-taking. Teams’ buying power can be cut in half once their losses reach 5%, The Wall Street Journal previously reported. When losses reach 7.5%, a portfolio manager likely is out of a job, though Millennium sometimes can make exceptions.

Millennium’s trouble in February included some wrong-way bets on which stocks get added to and subtracted from market indexes. Portfolio managers Glen Scheinberg and Pratik Madhvani and their respective teams each lost hundreds of millions of dollars last month on these so-called index-rebalancing trades, people familiar with the matter said.

Scheinberg and Madhvani have ranked among Millennium’s biggest moneymakers in the past. Index rebalancing has accounted for billions of dollars of the firm’s investment gains over the years, people familiar with the matter said.

Artificial intelligence and defense were the key buzz words of the week in the venture world. Three startups in those sectors raised massive rounds, however, there were big rounds elsewhere too — including biotech, healthcare and robotics.

1. Anthropic, $3.5B, artificial intelligence: Anthropic, a ChatGPT rival with its AI assistant Claude, raised a $3.5 billion funding round led by Lightspeed Venture Partners, valuing it at $61.5 billion. Anthropic was last valued at $18.5 billion in February 2024. The round values Anthropic at more than Elon Musk’s xAI, which was valued at $50 million in November after its $6 billion Series C. However, the new round values Anthropic well behind OpenAI, which is closing in on its own new $40 billion funding from SoftBank that will value it at a mind-blowing $260 billion.

2. Epirus, $250M, defense: Startup Epirus raised a $250 million Series D led by 8VC and Washington Harbour Partners in the latest example of a defense tech raising big. The Los Angeles-based company has developed a high-energy, high-power microwave technology to counter drones, drone swarms and other electronics. The new round included a strategic investment from General Dynamics Land Systems. Epirus — founded in 2018 — did not release a valuation after the new round but has raised more than $550 million, per the company. Epirus plans to use the new funds to expand into international and commercial markets, and grow its workforce.

3. Shield AI, $240M, defense: The direct hits just keep coming for the defense tech sector as defense and aerospace startup Shield AI locked up a $240 million F-1 strategic funding round at a $5.3 billion valuation. The new valuation is nearly double the company’s previous $2.7 billion valuation after it raised a $200 million Series F in October 2023 (it later added another $300 million in debt and equity to the round). San Diego-based Shield AI creates an array of intelligent, autonomous systems for the defense sector. Its software, for instance — Hivemind Mind — enables aircraft to operate autonomously in high-threat environments. The new funding received what the company called “major participation from strategic investors” Hanwha Aerospace and L3 Harris Technologies, as well as participation from existing investors including Andreessen Horowitz, US Innovative Technology Fund and Washington Harbour Partners. Founded in 2015, Shield AI has raised $1.3 billion, per Crunchbase.

4. Peregrine Technologies, $190M, law enforcement: Law enforcement startup Peregrine Technologies locked up a $190 million funding round led by Sequoia Capital, minting the San Francisco-based firm as a new unicorn at a $2.5 billion valuation. The 7-year-old startup develops data analytics software that allows state and local law enforcement agencies to put together unstructured and disconnected data in order to help understand it better and make decisions. The company’s platform was used last month in New Orleans at Super Bowl LIX by safety officials. While defense tech funding has exploded among VCs, law enforcement tech specifically has inched along slightly slower — with investors likely drawn to the big federal contract potential of startups developing military tech moreso than selling to police departments. Peregrine’s raise is the largest by a law enforcement/public safety startup since Dataminr, an artificial intelligence platform designed for real-time event and risk detection, raised a $475 million Series F in 2021, per Crunchbase data. Founded in 2018, the company has raised $250 million, per Crunchbase.

5. Callio Therapeutics, $187M, biotech: Cancer therapy drug developer Callio Therapeutics raised a massive $187 million Series A led by Frazier Life Sciences. The biotech company — based in Seattle and Singapore — is creating multipayload ADC’s, or antibody-drug conjugates, that deliver multiple agents to tumor cells. The newly formed company intends to use the proceeds to achieve clinical proof of concept for its first ADC and a second undisclosed ADC program.

6. 4C Medical Technologies, $175M, healthcare: Minneapolis-based 4C Medical Technologies, a medical device company developing minimally invasive therapies for structural heart disease, closed a $175 million Series D led by Boston Scientific. Founded in 2015, the company has raised $258 million, per Crunchbase.

7. Turing, $111M, artificial intelligence: Palo Alto, California-based Turing, which contributes code to AI projects, secured an $111 million Series E financing at a valuation of $2.2 billion led by Khazanah Nasional. Founded in 2018, Turing says it has raised $225 million.

8. Odeko, $96M, business development: New York-based Odeko, a software platform for local coffee shops, cafes and other food and beverage businesses, raised a $126 million Series E — comprised of $96 million in equity led by B Capital and a $30 million credit facility. Founded in 2019, Odeko has raised more than $280 million in equity, per the company.

9. Aescape, $83M, robotics: Aescape, an AI robotics startup for massages, raised $83 million in a round led by Valor Equity Partners. Founded in 2017, New York-based Aescape has raised $128 million, per the company.

1o. PetScreening, $80M, pets: Mooresville, North Carolina-based PetScreening, a pet policy management software developer, took in an $80 million Series B led by Guidepost Growth Equity and Volition Capital. Founded in 2017, the company has raised nearly $85 million, per Crunchbase.

Sweden saw the largest deal of the week outside the U.S.

Scale is useful, but the freedom to sprawl is not limitless

Like the exquisite yarn of the Andean vicuña, the conglomerate is becoming an exotic rarity. The corporate need for nimbleness means such beasts seem increasingly headed towards extinction. There is an exception, though: the world of luxury goods.

While consumer groups Reckitt and Unilever moult divisions, and industrials Honeywell and BP bow to pressure from activist fund manager Elliott Management, companies that cater to the style-conscious elites have resisted the deconstructionary trend.

Luxury multi-brand portfolios share features with industrial conglomerates. There are often few synergies to be had in sourcing materials or distributing products. Unlike multi-brands in home and personal care, luxury maisons tend to have specialised suppliers and dedicated shops.

Yet there is barely a monobrand left on the rack. Bernard Arnault’s LVMH showcases Louis Vuitton, Dior, Céline, Bulgari and Tiffany, among others. Francois Pinault’s Kering holds Gucci, Saint Laurent, Bottega Veneta and much more besides. Moncler recently bought Stone Island. And reports that Italy’s Prada is running its slide rule over Versace have sparked talk of the birth of an Italian luxury conglomerate.

What, then, explains the enduring appeal of the luxury behemoth? Scale is still useful, albeit in less obvious ways. When LVMH negotiates store space in a new luxury mall, for instance, it can use its big brands to get a better deal for the smaller ones. Ditto advertising rates. Hotshot designers joining a conglomerate know that, if they shine at a maison, they will be moved up the pecking order. See, for instance, ongoing speculation that Jonathan Anderson may move from Loewe to Dior.

Being big is also helpful given luxury groups appear to be involved in a giant game of Monopoly, buying expensive real estate in prime locations. Smaller groups like Prada are playing this game, but it is surely easier for the likes of LVMH — with a market capitalisation of almost €320bn — to buy up Bond Street. 

The freedom to sprawl is not limitless. While LVMH’s stable of fashion and leather goods brands may well belong together — and, indeed, provide a model for the other would-be luxury conglomerates to follow — it is not entirely clear that its drinks and retail divisions do. 

Wines and spirits accounts for 7 per cent of LVMH’s group operating profit in 2024 which, as Bernstein analysts point out, is down from about 40 per cent in the late 1990s. And their continued existence may turn off some investors — particularly in the Middle East — from investing in LVMH. Meanwhile, retailers Sephora and DFS have lower margins than luxury goods. It’s not clear they belong in the clutch. 

Sloughing such divisions off might not unlock big share price increases. But simplicity, speed and management time are precious resources. Fashionistas can make an ensemble out of unlikely items, but sometimes a clash is just a clash.

Postcard from Switzerland: the lure of the ghost resort

Super St-Bernard closed in 2010 — so why are skiers still flocking there?

The restaurant door was unlocked, so I pulled it open and went inside. Once this was the busy hub of the Super St-Bernard ski resort — next to the car park, the start of the cable car, and with a wide terrace for alfresco lunches and après-ski drinks. Now, it was a scene of desolation. My ski boots crunched on broken glass; old brochures, magazines and lift passes littered the floor; there was graffiti on the walls and the charred remains of a fire in the kitchen. The wind rattled the few shards of double-glazing left in the window frames.

Super St-Bernard, about 22km south of Verbier, opened in 1963 and became renowned for its high, long slopes, including one that dropped over the border into Italy. But by the turn of the century it was struggling financially, limping from one season to the next, and in 2010 the lifts finally ground to a halt. Abandoned ever since — the buildings slowly decaying, the lift towers rusting in the blizzards — it has become one of a growing number of so-called “ghost resorts”. Some are the victims of climate change, others of simple economics, usually unable to afford to replace lifts that have reached the end of their natural lifespans.

No accurate global figures exist, but in Switzerland alone 20 resorts have closed in the last 25 years, according to ski industry consultant Laurent Vanat. In Japan, at least 200 resorts have closed since the country’s ski boom of the 1980s. Most of the infrastructure has been dismantled or repurposed, but a few of the resorts have been left as if the staff simply walked out.

At Super St-Bernard, the strange thing, given the wreckage around me and a wind that was gusting up to 60km/h, was that I wasn’t alone. Beyond the smashed windows, I could see more brightly clad people emerging from their cars and getting ready to go skiing. A surge in the popularity of ski-touring — using skins attached to skis, so users can walk uphill rather than relying on lifts — is raising the prospect of some kind of afterlife for these abandoned resorts.

I was here to take part in a public event organised by the French ski brand Black Crows, joining about 25 others for a day’s touring led by mountain guides and some of its sponsored skiers, including the pioneering French alpinist Liv Sansoz. We gathered for a briefing in the shattered restaurant, (“watch for frostbite in this wind,” warned Sansoz), fixed our skins beneath the cable car machinery, then set off slowly climbing the hill.

Super St-Bernard sits at 1,900 metres, close to the top of the Entremont Valley and the Col du Grand-St-Bernard, a key pass into Italy. It had three lifts — the longest running right up to 2,770 metres on the ridge separating the two countries — but no hotels. The previous night we’d stayed 6km down the road at the Bivouac Napoléon, a hotel in the village of Bourg-St-Pierre. Before a fondue, we’d watched a short film produced by Black Crows about Super St-Bernard, the latest in a series it has made about ghost resorts around the world.  

Quite why a young, vibrant brand would want to link itself to stories of ski history, of decaying infrastructure and financial ruin, isn’t immediately clear. Partly the idea is simply to reach people who wouldn’t watch conventional ski action movies. “But also for us skiing is not just about practising a sport, it’s a culture,” says Camille Jaccoux, the brand’s co-founder. “And a big part of that culture is the boom of skiing in the 1960s, 1970s and 1980s.”

With snow becoming more unreliable in lower resorts, and higher resorts getting more crowded and costly, a sense of wistfulness, of yearning for a more optimistic past, increasingly seems to hang about the sport. After the film, one attendee became emotional as he talked about his memories of growing up skiing Super St-Bernard, “a playground” that typically gets 14 metres of snow every winter.

Later the hotel owner, Claude Lattion, showed me an old black-and-white photograph of the smugglers who used to take cigarettes over the pass from Switzerland to Italy, and for whom the opening of the lift was a boon. He pointed to a young dark-haired woman resting on the snow beside boxes of cigarettes in hessian bags: “My mother-in-law.”

In 2002, the village, which by then owned and ran the resort, decided it should be shut down. At a council meeting Lattion argued against the closure. “The mayor said, ‘well, the only solution is if we sell it to you for a franc’. I had 30 seconds to make the decision — I must be mad.”

Lattion laboured on for another eight years. “I found partners, put in money from my pocket, a huge amount of time. It was a great, experience, very enriching from a human point of view . . . financially, not at all.” By 2010, a SFr25mn investment was needed to update the lifts, a sum Lattion was unable to raise.

Back on the mountain the wind kept blasting our group and fog swirled around the valley. The topography of the surrounding peaks funnels storms towards these slopes, guaranteeing good snow until late in the spring, but also raising the likelihood of high winds and lift closures (“it was our number one enemy,” Lattion had told me).

The snarling wind, and the exertion, made conversation difficult — instead I mused about the pull of Super St-Bernard and others like it. If modern skiing means standing in line at a resort owned by a vast corporation, or queueing to enter a couloir while those ahead adjust their selfie-sticks, then a trip to a ghost resort might offer a joyous alternative, perhaps even a sort of rebellion.

We pressed on, making it to the top of one of the lifts and seeking shelter in the lee of a large boulder, where the guides finally made the call to retreat. Then we blasted back down in an unlikely swath of colour, enjoying wild snow and a whiff of nostalgia.

Heathrow looks at building shorter third runway in bid to cut costs

London’s hub airport is preparing a detailed expansion plan after winning government backing

Heathrow airport is exploring ways to cut the cost of its multibillion pound expansion plan, including whether to build a shorter third runway than originally planned.

The airport is preparing a detailed proposal for a third runway to present to the government by the summer, after chancellor Rachel Reeves threw the government’s weight behind airport expansion in a bid to boost economic growth.

As part of the process, Heathrow’s management is reviewing whether it should make changes to its previous expansion blueprint to cut costs, people familiar with the matter said.

The previous master plan was costed at £14bn in 2014 prices, but was shelved in 2020 when the pandemic struck. A hugely ambitious project, it involved diverting the nearby M25 motorway into a tunnel, demolishing 750 homes, a primary school and an energy plant.

Heathrow’s management have said they would like to stick with this “north-west runway” plan, which has been through years of scrutiny and preparation.

But the airport is considering all options before making a final decision, one of the people said. One option would be to still expand to the north west, but to build a shorter third runway to avoid the need to divert the M25 motorway through a tunnel.

The airport is exploring whether this option is feasible, the person said. One problem is that it could give the airport less operational flexibility, as some aircraft might not be able to use it, depending on its length.

The north-west runway was the preferred choice of the government’s 2018 Airports National Policy Statement, and making material changes to it could add years to the project if the ANPS has to be rewritten.

Since the plan was shelved in 2020, Heathrow has hired a new chief executive and undergone a significant change in ownership, and it is natural that the new leadership would want to fully understand its options before undertaking a hugely expensive project, one of the people said.

Last month Heathrow set out proposals for a “phased expansion programme”, which will start with improvements to its current site but ultimately “lay the groundwork for a third runway”.

The airport has said it will only proceed if the government also agrees to reform planning rules, airspace and the airport’s financial regulation.

“The government has been clear, expanding Heathrow will bring huge economic benefits to the whole country. We are looking at our plans for how to deliver this privately funded project and will present them to the government this summer,” Heathrow said in a statement.

Under the current regulatory model, Heathrow is allowed to recoup spending on airport improvements through the landing fees it charges airlines, which are typically passed on to customers through ticket prices.

Airlines led by British Airways owner IAG and Virgin Atlantic have launched a campaign to persuade the Civil Aviation Authority to review how Heathrow is funded, amid fears over the final costs of a third runway.

The head of Emirates airline has also warned that Heathrow’s plans for a third runway could face a legal challenge if airlines were forced to pay significantly higher landing fees in order to finance it.

France and Germany clash over ‘buy EU’ weapons

Berlin says new €150bn funding for defence industry should be open to non-EU partners, but Paris disagrees

A proposed €150bn injection into the EU’s defence industry has become a new flashpoint in a long-standing battle between France and Germany over the continent’s rearmament drive and whether it should include countries outside the bloc.

Spooked by US President Donald Trump’s threats to end generations of American protection, Europe has pledged to increase defence spending dramatically and scale up their domestic capabilities that have withered since the cold war.

Last week the European Commission proposed to raise €150bn that would be lent to capitals to boost their military production. While the broad idea has received unanimous political backing, the details are still being fleshed out, with heavy lobbying over whether the cash could be spent on arms made outside the bloc.

During an EU summit on Thursday, several leaders including German Chancellor Olaf Scholz said the initiative should be open to like-minded non-EU partners. “It is very important to us that the projects that can be supported with this are open to . . . countries that are not part of the European Union but work closely together, such as Great Britain, Norway, Switzerland or Turkey,” Scholz said.

However French President Emmanuel Macron, who has long supported increasing European autonomy and boosting domestic industrial production, said that “spending should not be for new off-the-shelf kit that is once again non-European”.

For the gaps in Europe’s critical capabilities — including air defence, long-range strikes, intelligence, reconnaissance and targeting — “the method is to identify the best businessmen and businesses we have”, he added.

He also said each EU member state would be asked to “re-examine orders to see if European orders could be prioritised”.

Brussels diplomats are concerned that the €150bn initiative will get derailed by the same argument that has delayed agreement for more than a year on the European Defence Industry Programme, a €1.5bn fund disbursing grants for defence. Efforts to implement it ground to a halt this winter after Paris demanded a cap on what proportion could be spent on extra-EU components and a ban on products with IP protection from third countries.

Senior commission officials tasked with drafting the detailed proposal in the next 10 days have been urged to liaise closely with Paris, Berlin and other capitals to make sure it is not blocked when put forward for approval by member states. 

“There’s a lot of work that needs to be done on this. It didn’t exist a week ago and needs to be ready in less than two weeks,” said an EU official. “There will be compromises made.”

Commission president Ursula von der Leyen said the loans, which will target seven key capabilities including air and missile defence, artillery and drones, will “help member states to pool demand and to buy together,” and also to provide “immediate military equipment for Ukraine”.

The Polish government, which currently holds the rotating presidency of the EU and is tasked with chairing the bloc’s ministerial meetings, will be under pressure to work out a rapid agreement. The initiative can be approved by a majority of the EU’s 27 states, but French buy-in is seen as essential even if the country can be outvoted — as the EDIF precedent shows.

“We’re at a stage where this just needs to be sorted in the name of speed, not perfection,” said an EU diplomat involved in the negotiations. “But if there was reluctance to ram €1.5bn past French objections, how are we expected to do €150bn?”

The commission declined to comment.