The owner of English Premier League champions Manchester City is selling a major stake in the club for US $500 million (€454 million) – in a deal said to break a new record in sports valuations.
Astatementby Silver Lake, an American private equity firm, says the deal is equivalent to just over 10% of the new value of the owning company, City Football Group (CFG), which is estimated at US $4.8 billion (€4.36 billion).
This would make the club the second most valuable sports franchise in the world, and the most valuable sports franchise in Europe, according to valuations published in Forbes in July.
The same listings from Forbes placed Manchester City at the time in 25th place, but Wednesday’s valuation provides a substantial bump.
Before this valuation, Real Madrid sat at the top of the charts for the most valuable sports franchise in Europe, followed by Barcelona.
The Silver Lake firm, which describes itself as a “global leader in technology investing”, was founded in 1999 and is based in California. It had already made investments in entertainment and had reportedly approached other English and European clubs.
The Financial Times, which first reported the story, says Silver Lake was attracted by the soaring sums paid for football rights by broadcasters and internet groups.
The cash injection will help CFG expand. The Abu Dhabi-based group also has teams in China and the US. It will remain Manchester City’s majority owner.
A list of top European clubs, based on their finances and published by accountancy firm KPMG in May, placed Manchester City in fifth place with an “enterprise value” estimated at €2.46 billion. The Silver Lake deal helps make the club one of the world’s most expensive sports franchises.
The US investment comes despite a UEFA investigation into City’s finances for alleged breaches of “fair play” rules. Investigators have recommended the club be banned from the Champions League and a ruling is expected soon.
Ultimately, Manchester City’s success will be determined by its performance on the field. The club won the first of its four English Premier League titles in 2012 but has yet to reach the Champions League final. Last night the team qualified for the last 16 of this year’s competition.
The reliance of English and European football’s top tiers on rich investors from abroad, notably Gulf states, has been criticised. Some dislike football club ownership becoming a vehicle to promote countries such as the United Arab Emirates, in a manner that detracts from criticism of their human rights records.
City’s half-billion dollar investment is also in stark contrast to the plight of some of its smaller neighbours. In the summer two clubs near Manchester made the news over their severe financial difficulties.
Bury was expelled from English football’s third tier after going out of business, a fate that Bolton Wanderers narrowly managed to avoid when the club was sold.