As Australian tennis ace Ashleigh Barty chases a second Grand Slam title at Wimbledon this weekend, one regular Irish attendee of the championships will be watching the action on TV from his Covid-19 bolthole in Portugal.
Still, Greg Lawless, chief executive of sports events supplier Arena Events Group, which has served the All England Lawn Tennis Club for more than seven decades, is just glad to see spectators cheering from the stands around Centre Court again, after last year's cancellation.
“It’s been great just watching the crowds at Wimbledon,” says Lawless (61), a handy Irish tennis junior in his day, in a video call interview. “I’ve never been to the finals but I’d been there at some stage very year since 2007. It didn’t make sense to travel this year because of the Covid quarantine rules.”
At Wimbledon, Arena provides seating around outdoor courts and temporary structures for ball kids and linesmen, as well as hospitality facilities. “This year, we did a large part of what we normally do, but not the full job, because there wasn’t much by way of fixed hospitality,” he says.
A bigger gig will be golf's British Open at Royal St George's in Kent next week, where Offaly's Shane Lowry will be seeking to defend a title won two years ago, and crowd capacity will be running at 80 per cent. Arena will be providing everything from scaffolding for TV cameras to triple-deck hospitality tents at an event. As with Wimbledon, spectators will have to show proof of their Covid status on arrival.
"We see this as a transitional year, with a gradual return to normality," said Lawless, noting that vaccination is rolling out at pace across its major markets in the UK, US, Middle East and Asia, even as the highly-infectious Delta variant of the virus is causing concerns.
The US has been leading the way, with Arena servicing both golf's recent PGA Championship on Kiawah Island in South Carolina and US Open in San Diego, California. The UK is catching up, with Boris Johnson's planned "Freedom Day" lifting of most of the remaining Covid-19 restrictions in England set to go ahead on July 19th.
However, much of Asia remains in virtual lockdown. And while Arena has rented 26,000 seats to the organisers of the Tokyo Olympics, covering the equestrian, beach volleyball and triathlon venues, a decision this week to ban spectators from the Games, amid a sharp infections spike, will leave them unused.
Sales
London-listed Arena reported on Wednesday that its sales fell 55 per cent to £71.6 million (€83 million) for the year to March from the previous 12 months, as events were cancelled across the globe during the pandemic.
Still, the sales and earnings decline was limited as Arena switched quickly into new lines of business during the crisis, delivering temporary Covid-19 hospital sites as well as testing and vaccination centres – and temporary mortuaries. Adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) decreased by 65 per cent to £5.7 million.
“I think everyone was kind of ignoring [the onset of Covid-19] back in January of last year. But we began to see the hits that February, because we began to see some cancellation of events in Asia,” said Lawless. “It became very obvious to us back at that stage that this was going to gain legs.”
Arena moved quickly to rein in costs and shore up its finances.
In April 2020, Arena raised £9.5 million in a share sale to strengthen its balance sheet and to give the business a greater ability to withstand the crisis. It also secured a £15.6 million lending facility last year under the UK government’s coronavirus business interruption loan scheme. Some £4 million of this has been drawn down.
The company also cut its pre-pandemic headcount of about 1,500 in half at one stage. "It has undoubtedly been one of the most challenging years for the group in its history," Lawless said. The company traces its roots back to 1761, when Sir Richard Edgington set up a company to make and sell tents, flags and decorations for public events.
Lawless, a native of Howth in north Dublin, may have followed in the footsteps of the English nobleman more by accident than design. But the world of finance is in the blood.
One of his three brothers, Patrick, is founder and chief executive of Appian Asset Management, which was taken over by UK fund manager Gresham House last month. (Greg had a minority stake in the business). Another, Shane, is a senior trader with Goodbody Stockbrokers, while the third, Simon, has worked financial markets in London all his adult life.
Greg, the eldest, trained as a chartered accountant at Haughey Boland, now part of Deloitte, before moving after he qualified in 1982 to KPMG. He would end up working for a two-year stint with the accountancy firm in Minneapolis.
Lawless signed up to stockbroking firm Davy's corporate finance division in 1987, where he would work on deals for the likes of DCC and Kerry Group before joining Irish distribution company Allegro in 1993.
He was part of a management team, led by businessman Dermot Divilly, that bought out the business later that year in a €34 million deal, backed by UK private equity firm Hg Capital. Allegro was subsequently merged with a unit of Fyffes in 1999.
Following four years in consultancy with Hg Capital after that transaction, Mr Lawless acquired Dublin-based event and party hire company, HireAll, with Divilly.
“To be frank, I knew nothing about the events rental industry until we bought HireAll. But shortly after the deal I went to a trade show in the States and I realised that everywhere you go, every major city, there’s a HireAll of some kind, and that the events rental industry is huge,” he said.
“I had a personal ambition of running a global business at some stage. And I thought, ‘Okay, I’m young enough and have enough energy to have a go at building something’.”
The duo bought similar businesses in Ireland and Britain, culminating in the leveraged 2007 purchase of Arena Structures and Seating, which was supposed to launch the group into another realm of dealmaking. Then the financial crash hit, hitting turnover and earnings. Hard.
Luckily, Arena had long-standing clients in Wimbledon and the Open during the crisis to help tide it over as discretionary spend elsewhere was off the cards.
Lawless moved in 2011 to take over as full-time chief executive of Arena to take advantage of opportunities from the London Olympics the following year. It also meant that company would need to step up investment, paving the way for private equity firms MML Partners and Sports Investment Partners to come on board – and for Divilly to cash out. (Divilly and his son, Gavin, remain partners with Lawless in HireAll.)
Arena provided more than £30 million of products and services for the Games, doubling revenue, including a 14,000-seat temporary grandstand at Horse Guards Parade, used for beach volleyball, as well as structures at the ExCel London, which hosted weightlifting, boxing, fencing, table tennis and judo. MML also helped the group take the business into the Middle East, Asia and the US.
Flotation
Lawless floated Arena on the London Stock Exchange in July 2017, after spearheading a £60 million initial public offering (IPO) – with much of the proceeds used to repay shareholder loans and interest, mainly to MML and Sports Investment Partners, and pay down some senior debt.
The company spent about £20 million on acquisitions in the year and a half after the IPO, with purchases including a California-based tent rentals and event services company, Stuart Rentals, and an exhibition design-and-build firm based in Dubai, called TGP.
Arena had essentially pressed the pause button on deals in the year before Covid-19 hit. But Lawless, who owns 3.1 per cent of the company, is back on the prowl. The group bought a small San Jose party rentals business that it had been targeting for years last July at a discounted price of $200,000, giving it an opportunity to expand its US west coast business.
In April, Arena led a takeover of US events rental company Aztec Shaffer, which was put up for sale after filing for bankruptcy last year. Arena paid $3.35 million for a 50 per cent equity stake, and full management control, and committed with co-bidders, private equity firm Summit Investments and AIG, which was Aztec's main lender, to providing a $18.3 million debt package to the company.
“I didn’t set foot once in the States during the four months when the deal was being done. It just shows you how much the world has changed,” says Lawless. “It’s a business that I had bid for twice before, in 2014 and 2017 – unsuccessfully, thankfully, in retrospect. It was one of the casualties from the impact of Covid on event rental businesses. It was highly leveraged and we were able to pick it up for a figure that was significantly less than what it would normally have cost.”
That Aztec side of the business is a Houston-based provider of party and wedding tents as well as tables, chairs, linens and dance floors – and fits in well with Arena Stuart Rentals in California. The Shaffer part operates across North America, with the majority of its historical revenues coming from golf, motorsports and horse racing.
Arena raised £11 million in a share sale to finance the acquisition, which came with up to 400 additional staff, and give the company additional funds for opportunities expected to result from the pandemic.
Lawless said Arena plans to ultimately take 100 per cent ownership of Aztec Shaffer, with options to up its stake kicking in in about 30 months’ time.
“We remain very keen to do more transactions,” he said. “We have more cash now than we had 12 months ago, helped by shareholder support. And our sense is that many businesses in the industry, particularly some private-equity owned ones, are more highly leveraged than they were a year ago. And that will present opportunities for us over the next six to 12 months.”
The Aztec Shaffer deal has pushed Arena into the third spot globally among events suppliers, behind France's GL Events, which generates about €1 billion of sales in a normal year, and German-headquartered Losberger De Boer, which typically does more than €300 million of business.
Is the number one spot ultimately in Lawless’s sights? “I think if we can leapfrog into second place anytime soon, that would be a good start,” he says.
Seeing the events industry return to some level of normality will be an even better one.
