Sports
Manchester City owner nets record soccer valuation with Silver Lake deal
November 27, 2019 View comment (1)
Manchester City Football Club may be in second place right now when it comes to the Premier League standings, but the British team's parent has scored a different title—the world's most valuable soccer enterprise.
The coveted position comes thanks to a $500 million investment from Silicon Valley-based private equity firm Silver Lake in Abu Dhabi-controlled City Football Group; the deal gives the organization a valuation of $4.8 billion. City Football Group owns or has partial stakes in seven soccer teams around the world, including New York City FC, Melbourne City FC and Girona FC, with two-time defending Premier League champion Manchester City as its prized trophy. Altogether, the organization oversees more than 1,500 players and 2,500 games annually.
Silver Lake will hold just over 10% of City Football Group, and managing partner Egon Durban will be added as the ninth member of its board. The firm becomes a shareholder alongside majority owner Sheikh Mansour bin Zayed Al Nahyan, who controls 77% of the business via his Abu Dhabi United Group. A further 12% is held by China Media Capital, which bought into the organization in 2015 for $400 million.
Although this investment may seem a bit odd for Silver Lake, a firm that describes itself as "a global leader in technology investing" and made its name by investing in the likes of Alibaba and Ant Financial. However, a closer look at its portfolio reveals a wealth of connections to the sports industry. While its DNA might be tech, the firm has been devoting more attention to the entertainment and sports verticals in recent years.
In 2012, Silver Lake bought a minority stake in sports and entertainment talent agency Endeavor, then known as William Morris Entertainment, for a reported $200 million, then invested another $500 million when the company merged with IMG in 2014. In 2016, the firm backed WME's acquisition of mixed martial arts organization UFC, a $4 billion deal made with a consortium of investors including KKR.
Silver Lake is betting on the digital opportunities that come from the sports industry, such as media rights and the digitization of operations. Fans are increasingly turning away from TV toward other devices, as the options to watch sports on streaming services and apps has boomed in recent years. UFC, for instance, is one of the largest pay-per-view event providers in the world, with a new five-year, $1.5 billion agreement with ESPN to broadcast fights on ESPN+, as well as its own digital distribution platform. Manchester City also operates its own online content channel that offers a monthly subscription.
As part of its new investment, Silver Lake intends to help City Football Group to further develop its technology and fund international growth opportunities, which may include more acquisitions. Silver Lake also stated that the investment would allow for the development of infrastructure assets. It is unclear whether this is limited to digital, but rumors have circulated that Manchester City is looking to build a new stadium at a cost of roughly £300 million (about $387 million). Earlier this year, it was also reported that City Football Group is working on the potential development of an arena with US-based Oak View, a provider of sports and live entertainment venue services. Oak View has been backed by Silver Lake since 2018.
Adding half a billion dollars to the coffer is likely good news at any time, but especially so for City Football Group right now, as the business's star asset has been operating under a shadow. Manchester City is under investigation by UEFA for possibly breaking financial rules. If found guilty, the club could face a ban from the Champions League, Europe's most prestigious professional soccer tournament.
Featured image courtesy of Manchester City Football Club
The coveted position comes thanks to a $500 million investment from Silicon Valley-based private equity firm Silver Lake in Abu Dhabi-controlled City Football Group; the deal gives the organization a valuation of $4.8 billion. City Football Group owns or has partial stakes in seven soccer teams around the world, including New York City FC, Melbourne City FC and Girona FC, with two-time defending Premier League champion Manchester City as its prized trophy. Altogether, the organization oversees more than 1,500 players and 2,500 games annually.
Silver Lake will hold just over 10% of City Football Group, and managing partner Egon Durban will be added as the ninth member of its board. The firm becomes a shareholder alongside majority owner Sheikh Mansour bin Zayed Al Nahyan, who controls 77% of the business via his Abu Dhabi United Group. A further 12% is held by China Media Capital, which bought into the organization in 2015 for $400 million.
Although this investment may seem a bit odd for Silver Lake, a firm that describes itself as "a global leader in technology investing" and made its name by investing in the likes of Alibaba and Ant Financial. However, a closer look at its portfolio reveals a wealth of connections to the sports industry. While its DNA might be tech, the firm has been devoting more attention to the entertainment and sports verticals in recent years.
In 2012, Silver Lake bought a minority stake in sports and entertainment talent agency Endeavor, then known as William Morris Entertainment, for a reported $200 million, then invested another $500 million when the company merged with IMG in 2014. In 2016, the firm backed WME's acquisition of mixed martial arts organization UFC, a $4 billion deal made with a consortium of investors including KKR.
Silver Lake is betting on the digital opportunities that come from the sports industry, such as media rights and the digitization of operations. Fans are increasingly turning away from TV toward other devices, as the options to watch sports on streaming services and apps has boomed in recent years. UFC, for instance, is one of the largest pay-per-view event providers in the world, with a new five-year, $1.5 billion agreement with ESPN to broadcast fights on ESPN+, as well as its own digital distribution platform. Manchester City also operates its own online content channel that offers a monthly subscription.
As part of its new investment, Silver Lake intends to help City Football Group to further develop its technology and fund international growth opportunities, which may include more acquisitions. Silver Lake also stated that the investment would allow for the development of infrastructure assets. It is unclear whether this is limited to digital, but rumors have circulated that Manchester City is looking to build a new stadium at a cost of roughly £300 million (about $387 million). Earlier this year, it was also reported that City Football Group is working on the potential development of an arena with US-based Oak View, a provider of sports and live entertainment venue services. Oak View has been backed by Silver Lake since 2018.
Adding half a billion dollars to the coffer is likely good news at any time, but especially so for City Football Group right now, as the business's star asset has been operating under a shadow. Manchester City is under investigation by UEFA for possibly breaking financial rules. If found guilty, the club could face a ban from the Champions League, Europe's most prestigious professional soccer tournament.
Featured image courtesy of Manchester City Football Club
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