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9 big things: Pro sports confront pandemic precautions

Parallels between the resumption of pro sports and restarting the rest of the economy highlight our recap of the week.

The NBA is planning to come back from the coronavirus by locking down a few hundred of the world’s best basketball players within the friendly confines of Disney World. Baseball’s players and owners may be drawing closer to a deal to resume action after months of contentious and confusing negotiations. The English Premier League returned to play Wednesday, with a full slate of games in the ensuing days playing out in massive stadiums completely devoid of fans.

In various wacky ways, professional sports leagues are attempting to start back up after the pandemic resulted in months of suspended play. And investors and executives may want to take note. Some of the problems and opportunities presented by these various restarts could be a preview of what’s to come for companies across the economy.

The resumption of football, baseball, soccer and more is a sports story. But it’s also a business story, and that’s one of nine things you need to know from the past week:

Fans were only in virtual attendance when Manchester City and Arsenal squared off this week. (Laurence Griffiths/Getty Images)

1. Restarting sports

The stresses of the pandemic have heightened tensions between labor and management in multiple sports, as players and owners debate how—and whether—they should play out abbreviated seasons in the months to come.

In pro baseball, many of the issues at hand are financial, including debates over how the risk of infection should be factored into compensation, echoing recent discussions about hazard pay at companies like Instacart and Amazon. But in basketball, the issue seems to be more about whether players are willing to isolate themselves in a metaphorical bubble for weeks on end during a time when many feel there are much bigger issues at hand than putting a ball in a hoop.

The dynamics are obviously different, but countless other companies are wrestling with how to get back to business as usual. Bosses may want their employees back in the office, but do employees feel the same? Will workers want to spend eight hours a day wearing a mask, boxed in at their desks behind plexiglass partitions? If such measures aren’t in place, will they feel safe?

The NBA, NHL and MLS all plan to alleviate at least some of these worries by locking down players in bubbles, where coronavirus tests will be plentiful and traffic in and out will be limited. But that isn’t an option at most workplaces. No matter how much planning is done, every office might be one positive test away from another closure. For companies with hundreds or even thousands of employees, sports leagues’ recent struggles demonstrate just how difficult it may be for workplaces to start filling back up.

Another parallel between pro sports and the economy at large is that the pandemic could be an inflection point at which certain names rise and others fall.

In recent weeks, it has started to seem like a real possibility that MLB might cancel its season because players and owners couldn’t come to terms. A new proposal from the league this week seems to make that less likely, but it’s still a worrying prospect. The last time MLB ended a season because of labor unrest, in 1994, is widely seen as an event that alienated fans and caused the league’s popularity to crater. It’s not hard to find fans on social media who say the past few months of squabbling have already caused them to lose interest.

If things go downhill, it could be an opportunity for a league like MLS to fill the gap, winning over new fans who just want some sport, any sport, to occupy their TV screens.

The same dynamics are at play in the broader business world. The pandemic is shaking up many industries, sending some established players into financial distress and opening up new opportunities for other upstarts. The aftermath of the last financial crisis turned into a breeding ground for the next generation of tech giants. The same could eventually prove true of this current moment.

Everyone wants to return to normal. We want to watch sports. We want to go back to work. But as the coronavirus lingers—and in some states, begins to surge—it’s increasingly apparent that it might still be quite some time before there’s any real normal to return to.

2. Well-fed unicorns

Three companies that entered the week with lofty valuations either raised new funding or are in talks to raise new funding that would make those valuations even loftier. UiPath, which makes automation software, is negotiating a new round that could take its valuation from $7 billion up above $10 billion, Bloomberg reported. DoorDash confirmed new funding at nearly a $16 billion valuation, up from a reported $13 billion figure last year. And Epic Games, the developer of “Fortnite” as well as other video games and game-creation tools, is nearing the close of a new round at a $17 billion valuation, again according to Bloomberg, up from an estimated $15 billion in 2018.

3. New bankruptcies

24 Hour Fitness filed for Chapter 11 protection Monday, becoming the latest private equity-backed consumer business to be forced into bankruptcy by the pandemic and its side effects. A very different kind of company also filed for Chapter 11 this week: Proteus Digital Health, a maker of so-called smart pills and other digital health tools that was valued by VCs at more than $1.5 billion back in 2016, according to PitchBook data.

4. Old bankruptcies

The week brought updates for two Texas-based companies that filed for bankruptcy protection earlier this year. Storied retail chain Neiman Marcus won court approval to immediately access $250 million in debtor-in-possession financing from its creditors, plus up to $150 million in additional funding in September. And Borden Dairy, which filed for bankruptcy back in January, agreed this week to sell itself to KKR and Capitol Peak Partners.

Borden Dairy's cows produce some 500 million gallons of milk each year. (Cole Burston/Getty Images)

5. Jumping for Jio

Jio Platforms, India’s rising internet giant, continued a run of some serious fundraising this week. First, the company pulled in $600 million from TPG Capital and $250 million from L Catterton in separate investments. And on Thursday, Jio hauled in $1.5 billion from Saudi Arabia’s Public Investment Fund. It wasn’t all good news, though: Antitrust regulators in India plan to review Facebook’s recent deal to pump $5.7 billion into Jio, Bloomberg reported.

6. A record IPO

Founded back in 1996, Royalty Pharma has built its business in the ensuing decades by buying up biopharmaceutical royalties. Wall Street showed its optimism in the model this week, when Royalty conducted a public offering on the Nasdaq that raised $2.2 billion, the year’s biggest US IPO to date. In the first day of trading, shares in Royalty soared nearly 60%, taking its market cap to nearly $30 billion.

7. A second chance

On May 1, travel software specialist Sabre terminated an agreement to buy Farelogix, a creator of software for airlines, after UK regulators ruled the takeover would be anticompetitive. This week, Farelogix landed on a different deal, agreeing instead to sell to Vista Equity Partners portolio company Accelya, yet another provider of travel software.

8. Big bets

Sam Altman, formerly Y Combinator’s president, is teaming up with his brothers Max and Jack to launch a new fund that will invest in “moonshot” startups seeking to change the world in major ways, Forbes reported. The $3 million fund will have a very apt name: Apollo. For now, at least, Apollo plans to invest from Altman’s personal fortune rather than raise outside capital.

9. The cutting edge

Two companies that seem like they might fit into the moonshot category raised new funding this week. QuantumScape, a Stanford University spinout that makes solid-state batteries, scored a $200 million investment from Volkswagen. And Zero Mass Water, a startup that has built panels it says can harvest water out of nothing more than sunlight and air, thus creating a renewable resource, raised $50 million in an equity round led by BlackRock.

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    Written by Kevin Dowd

    Kevin Dowd wrote The Weekend Pitch newsletter for PitchBook, covering startups, buyouts and the rest of the private market.

    A native of the Pacific Northwest, he’s an alumnus of the University of Washington with a degree in creative writing and journalism. He enjoys books and basketball and, most especially, books about basketball. He feels uncomfortable writing about himself in the third person.

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