Manchester City Owner to Transact with Silver Lake, Selling $500M Stake
Breaking a major record in sports valuation and fuelling the football group’s spread, the owner of Manchester City announced plans to sell a $500m stake to American private equity firm, Silver Lake.
Sources have reported that the Abu-Dhabi controlled organisation that owns Manchester City and related teams in the US and China will benefit from the deal, wherein Silver Lake has promised to buy more than 10 percent of City Football Group (CFG) at a valuation of $4.8bn.
The deal was announced officially on November 6 by the CFG and Silver Lake. The Chairman of CFG, Khaldoon Al Mubarak said in a statement, “We and Silver Lake share the strong belief in the opportunities being presented by the convergence of entertainment, sports and technology.”
As per the firms, the transaction is subject to regulatory approval in some territories. In the past few years, Silver Lake has made a reputation in the technology companies like Alibaba, Skype and Dell, but majorly extended itself in entertainment category, with a portfolio that has the Hollywood talent agency, Endeavor and the Ultimate Fighting Championship.
If sources are to be believed, the Managing Partner of Silver Lake, Egon Durban, and the CFG Chairman, Khaldoon Al Mubarak, signed the deal on November 23. Just after the deal, the two were spotted beside each other as Chelsea F.C. lost to Manchester City boosting the hopes of the team to retain England’s Premier League title.
Prior to speaking with Manchester City, Silver Lake had spoken to various other leading English and European clubs, including Chelsea. As it seems, the multibillion-dollar prices paid for football media rights by broadcasters and internet groups attracted the firm. A person closely associated with the investment group said that the stake will be held by Silver Lake for about a decade. But it is quite possible for it to seek to cash out via an initial public offering or sell to another private investor.
Despite all plans, Abu Dhabi intends to retain majority ownership of CFG. Flourishing as the most powerful official of Abu Dhabi, CFG has purchased clubs all over the world. Recently, Silver Lake acquired the Chinese third-tier side Sichuan Jiuniu, adding up to investments in the US, Japan, Australia, Spain and Uruguay. Sources have reported that CFG is planning to takeover Indian Super League side Mumbai City FC.
In comparison to its peers, CFG has a better valuation. For instance, co-founder Chinese ecommerce group Alibaba, Joe Tsai has purchased a share in the Brooklyn Nets basketball team this year at a $2.35bn valuation. Manchester United on the other hand has a market capitalisation of $2.8bn.
Despite the valuation, some questions remain unanswered. As Manchester City are being investigated by Uefa for possible breaches into financial fair play, so Silver Lake is looking over that. After the rejection of the request to probe the club, there is an increased risk that the club may be banned from the Champions League.
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