Mexico’s $800 Million Soccer Darling Chivas Awaits Slim CallJose Enrique Arrioja and Crayton Harrison
Chivas, Mexico’s most popular soccer team, has come from the brink of bankruptcy to become one of the world’s most profitable clubs -- and would fetch top dollar if it’s ever sold, its co-owner said.
The team officially called Club Deportivo Guadalajara SA; its stadium in Guadalajara, Mexico; and its U.S. affiliate are worth a combined $750 million to $800 million, said Angelica Fuentes Tellez, chief executive officer of Grupo Omnilife SA. That would place it among the top soccer clubs in the world, compared with rankings by Forbes magazine. Fuentes holds a 50 percent stake in Omnilife, the closely held cosmetics and health-supplement seller, which owns the 107-year-old team.
“We are probably in the top five soccer teams in the world that have that kind of profitability” in terms of margins, she said in an interview this week at Bloomberg’s headquarters office in New York. She declined to offer specifics.
Fuentes’s comments come amid upheaval in Mexican soccer, where the world’s richest person began investing last year. Billionaire Carlos Slim acquired stakes in two clubs and began broadcasting games online, a challenge to the two Mexican TV networks that dominate the nation’s sports landscape.
A Mexican sports newspaper, Record, reported last month that Chivas could be next on Slim’s wish list. Slim hasn’t contacted Chivas, and Omnilife isn’t selling the team, said Fuentes, 50.
The value Fuentes gave for Chivas would place it above Italy’s Juventus and England’s Manchester City, according to a Forbes list of soccer-team valuations. The magazine didn’t include Chivas in its top-20 ranking.
Chivas, along with Omnilife’s health-supplement business and a cosmetics division, Angelissima, have made Fuentes one of Mexico’s most influential female CEOs. She and her husband, co-owner Jorge Vergara, who founded Omnilife in 1991, are now contemplating an initial public offering.
“We’d probably do an IPO within the next couple of years, if not sooner,” said Fuentes. By the end of this year, Omnilife may be ready to start talking to prospective banks, she said. The valuation of the other parts of the company is “way higher” than Chivas, she said, without offering figures.
Going public would help Omnilife fund an expansion into markets beyond the 19 countries where it sells its nutritional products.
“We’d like to go into Asia, definitely, and we target India as well,” Fuentes said.
Already, Omnilife is in talks with a large company to replicate its direct-selling business model for cosmetics in India, Fuentes said. She declined to name the company and said the talks were preliminary, with the next round of meetings scheduled for August in New York.
Omnilife uses an Herbalife Ltd.-like direct-sales model to offer more than 300 products in countries including Brazil, Peru and Spain. Health-products revenue will grow 14 percent this year, while the cosmetics business expands 16 percent, Fuentes said, without providing figures. The company is investing about $50 million this year excluding Chivas, in part to refurbish its 186 distribution centers, she said.
Omnilife is also looking to develop a real-estate project in 160 hectares (395 acres) next to the company’s stadium in Guadalajara. Architect Javier Sordo Madaleno crafted a “a city within a city” project aimed at middle- and upper-class buyers, Fuentes said. “Maybe that is another project we want to do in the next couple of years,” she said.
When Fuentes joined Omnilife in 2007, Chivas was “technically bankrupt,” and she renegotiated licensing, marketing deals and a stadium soft-drink contract to restore it to health, she said.
A law approved by Congress to boost competition in the TV business may create a new opportunity by creating more broadcasters. That will benefit Chivas when its television rights come up for bid again in 2015, she said. Mexico’s largest broadcaster, Grupo Televisa SAB, currently holds the TV rights.
“We would have other competitors offering bids on the rights to transmit our games,” Fuentes said.
Chivas has struggled on the field, with one championship in the past 15 years. While the club regained the lead over its archenemy, Televisa-owned Club America, as Mexico’s favorite team this year, its support fell to 20.4 percent from 21.1 percent in 2012, according to a Consulta Mitofsky poll.
While Fuentes plays no role in the team’s personnel decisions, Chivas owes it to its 27 million fans to improve, she said. Part of its challenge comes from a self-imposed limit to use Mexican players only, a unique tradition among the country’s teams.
Slim acquired 30 percent stakes last August in Club Pachuca and Club Leon. He signed a deal with News Corp.’s Fox Sports to carry Leon’s games on cable -- making them unavailable on free TV -- and also began showing them online.
After Record reported talks between Chivas and Slim, Arturo Elias, a spokesman for Slim, responded on Twitter that there was nothing to disclose.
“It’s great to find out that somebody as savvy as Mr. Slim could have an interest in a very well-run sports company like us,” Fuentes said.