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Silver Lake is buying a $500 million stake in the owner of Manchester City, at a valuation of $4.8 billion, which makes the English team one of the world’s most valuable clubs.
Manchester City, the champions of the English Premier League have struck a big deal recently. The owner of Manchester City has agreed to liquidate just over 10% of the stake in Manchester City to a private equity firm Silver Lake.
City Football Group (CFG), the holding company of Manchester City is currently valued at $4.8 billion, and the deal has been concluded for a price of $500 million. As per the Financial Times report, CFG is an Abu Dhabi-controlled organization that owns Manchester City. Speaking to FT about this deal, CFG chairman Khaldoon Al Mubarak said:
“We and Silver Lake share the strong belief in the opportunities being presented by the convergence of entertainment, sports and technology and the resulting ability for CFG to generate long-term growth and new revenue streams globally.”
Silver Lake is a California-based private equity firm known for its early investments in technology giants like Dell, Alibaba, and Skype. With the entertainment industry maturing all across the globe, Silver Lake has stepped up its investments in this direction.
Speaking to BBC Radio, Walker-Arnott, senior investment manager at Charles Stanley, said that Silver Lake was eager for investment in Manchester City due to the latter’s lucrative media rights. “We’ve got a lot of large broadcasting firms like BT, Sky and Amazon all bidding for [Premier League football] rights,” he said.
As per the people familiar with the matter, Mr. Al Mubarak of CFG and Silver Lake managing partner Egon Durban signed this deal last Saturday. Silver Lake aims to hold its stake for around 10 years in Manchester City. However, it has the provision to cash out its holding by selling it to another private equity investor or by conducting an initial public offering.
FT report suggests that before approaching Manchester City, Silver Lake had also approached English and European soccers clubs like the Chelsea football club. The year of 2018-2019 proved to be the fifth consecutive year of profitability for Manchester City which had record revenue of 535.2 million pounds. Moreover, it is also the 11 straight year for the football club registering a revenue growth.
“The $500m cash injection will help fund CFG’s aggressive expansion plans, including the acquisition of more football clubs globally, as well as the planned construction of a stadium in New York, according to people with knowledge of the group’s plans”, reads the report.