Close to a year after the craze peaked, SPAC efforts that never got to market are canceling their IPO plans with the Securities and Exchange Commission. Among the personalities calling it quits on their blank check efforts: Eli Manning, LaDainian Tomlinson and Barstool Sports’ CEO Erika Nardini.
This morning, Brand Velocity Acquisition, a special purpose acquisition company formed in March 2021 by Brand Velocity Partners’ Drew Sheinman and Steve Lebowitz, filed a Form RW, withdrawing the SPAC’s registration with the SEC and canceling its plan to raise $200 million to pursue themes of “influence-driven purchases” and “talent as brands,” as detailed in its preliminary prospectus last March. The SPAC included the participation of Manning and Tomlinson, as well as Tracy DeForge of The Players’ Impact venture capital fund, among other executives. Gerry Byrne, vice chairman of Sportico publisher Penske Media, was also involved in the Brand Velocity SPAC. BVP’s Sheineman declined to comment on the cancellation.
In a Sportico interview earlier this month around Manning’s joining BVP as a partner, Sheinman said the SPAC process had been slowed by the challenging market for blank checks. “We put together a great team, a great value proposition, and we were adopted by Credit Suisse as one of the leaders in that space, but we all decided it was better just to park it for the time being.”
Brand Velocity isn’t the only sports-related blank check to cancel the IPO process. Tuesday night, TCG Opportunities Corp. filed its own withdrawal statement, giving up its goal of raising $250 million to find a consumer-oriented business in the media, sports, gaming and wellness sectors. TCG SPAC was formed by Hollywood producer Peter Chernin and Barstool’s Nardini in March last year. They declined to comment on canceling their IPO plans through a spokesperson.
Overall, 31 IPO hopefuls have scotched plans this year, of which 14 are SPACs, according to SEC filings. Among other cancellations, esports-focused Ascendant Digital II called it quits last week. The SPAC, formed by U.K. game developer Mark Gerhard, wanted to raise $300 million. Also pulling IPO plans this year: Authentic Brands Group. Not a blank check business, ABG filed for a traditional IPO last July, aiming to better monetize its sports-related intellectual property, including Sports Illustrated, Muhammad Ali and Dr. J.
SPACs exploded in popularity over the past two years, with 613 blank checks completing their IPOs in 2021, according to data from SPACAlpha, a research firm. The market for SPACs has gotten more difficult, however, with about 244 SPACs still looking to price their IPO. Those that do succeed in holding their IPO are generally offering more generous terms for investors than seen a year ago. Once SPACs hit the trading market, they are also seeing weaker investor demand, with shares of the majority now trading at a discount to their trust value, the money shareholders can redeem holdings for if they dislike a SPAC’s proposed merger.
Plenty of sports-related SPACs continue to pursue deals. There are currently 61 sports-related SPACs that have held their IPO and are seeking a merger target. As a group they have $11.5 billion in IPO capital to deploy. After the recent cancellations, there remain about 58 sports-related SPACs planning IPOs. Part of the motivation to keep at it: SPAC sponsors typically have to put up about 3% of the money they wish to raise in an IPO to fund the underwriting process. While often part of that money is deferred until an IPO is priced, canceling IPO plans still means SPAC sponsors have lost a good portion of their investments.