CFG Expansion | Başakşehir to join? (p70)

[Devil's Advocate]

There is the NYC stadium deal as well as Bahia coming up which is in excess of £1bn from memory

The Bahia offer was quoted as £175million.

Abu Dhabi (via Mubadala and not CFG) have offered c$1 billion for 20% of the Brazilian top 2 leagues. That will give them very high influence with the TV rights and no doubt a play using a streaming platform Mubadala have a big percentage in.

 

[WRicko]

Yes, it will increase the value of NYCFC and CFG.

But it's years and years away before/if ever NYCFC revenues exceed MCFC.
1. MLS have just signed a 10 year exclusive streaming deal with Apple for $2.5 billion. So just $250mil pa (c 4x more than the existing deal) so just $250milpa between 29 MLS clubs + the league.clubs pa. That's peanuts by PL standard... MCFC alone pick up c£170million win the PL.
2. MLS don't have big bucks from CL - MCFC c€80m-€120m for k/o stages and beyond
3. Sponsorship income very low - not enough eye balls on TV coverage and a long,long time before numbers increase to anything like european levels (if ever).
4. Capacity of new stadium just 25,000
I could go on...

When you say big profits from property are you including the club or all the other developmens (flats etc)?
There will be an initial profit on selling something for more than it cost but a long-time before original capital recovered via rental income. Obviously they don't care because it is for the long-term

I carnt disagree however. It will open up huge new areas stadium sponsorship money from related activities on there version of the Etihad campus assuming we are sharing some of it initial reports seem to suggest we are just involved in the stadium not flats and other building I expect the area will get further development down the line from the sounds of things and we could get involved. I also think it is possible that the MLS will grow more quickly and be more profitable than the Prem

It has tighter spending controls,better demographics more room to grow domestically at least. A better domestic economy more cutting edge, better corporate finance links there are still franchise expansion opportunities. We are not going to get extra premier league teams tho.

 

[WRicko]

Yes it is called City Football Group (Midco) Ltd, and it is the middle company between City Football Group Ltd and Manchester City Ltd along with quite a few other UK registered entities.

I had the read the Twitter thread twice to realize that I read it as he was using the previous and new name interchangeably.

Now I see your right

I would think all this means we will be getting new shareholding either for new clubs Bahia etc or for infrastructure investment perhaps that’s the most likely.

 

[bobbyowenquiff]

At team like Fulham Bournemouth wouldn’t make what he premier gives them now! Finish bottom with parachute payments you looking at around for one season if relegated around 140m! Could those teams make that much in one season?

They could if away teams got a share like they used to.

 

[Bluebeemer]

In yesterday's press -
"US private equity firm Silver Lake has consolidated its position as the second-largest shareholder in Manchester City’s parent company, with the group’s Chinese investors slashing their stake to close to zero. The Silicon Valley-based firm now owns more than 18 per cent of City Football Group after buying more shares from China Media Capital, CFG confirmed. Sheikh Mansour bin Zayed Al Nahyan, the billionaire royal who acquired Manchester City in 2008, also increased his stake as the controlling shareholder in the parent group through Abu Dhabi-based Newton Investment and Development. Under his control, reigning Premier League champions Manchester City have transformed into the dominant force in English football. Silver Lake’s continued appetite to build its position in CFG highlights the appetite among institutional investors to buy into elite sports assets. It is also symbolic of how Chinese buyers have retreated from European football since Beijing tightened capital controls."

 

[petrusha]

So, these shares have been issued and allotted for no consideration, meaning no new money is coming into CFG at the level of Midco right now.

Meanwhile, also worth noting that there are many reports of meetings of the members of Bahia to be held this coming Saturday to approve the deal for the club to become part of CFG. The only version of this story I can find is in Football Insider, which is a dreadful clickbait site but reflects Brazilian media reports in relation to this matter at least: Sources: Man City owners poised to announce £114m deal on Saturday

 

[halfcenturyup]

So, these shares have been issued and allotted for no consideration, meaning no new money is coming into CFG at the level of Midco right now.

Meanwhile, also worth noting that there are many reports of meetings of the members of Bahia to be held this coming Saturday to approve the deal for the club to become part of CFG. The only version of this story I can find is in Football Insider, which is a dreadful clickbait site but reflects Brazilian media reports in relation to this matter at least: Sources: Man City owners poised to announce £114m deal on Saturday

Doesn't that mean that CFG's shareholdings (other than City which was already below Midco) have been transferred to Midco ie, CFG now owns Midco, but Midco now owns the football clubs? 800 million GBP is about right for the valuation of the CFG's other interests? Or am I misreading all this?

 

[petrusha]

Doesn't that mean that CFG's shareholdings (other than City which was already below Midco) have been transferred to Midco ie, CFG now owns Midco, but Midco now owns the football clubs? 800 million GBP is about right for the valuation of the CFG's other interests? Or am I misreading all this?

We know that Manchester City Limited, the holding company of MCFC Limited, has been transferred to Midco. So has MCWFC Limited, along with other UK companies such as City Football Image Rights Limited, City Football Investments Limited, City Football Marketing Limited, City Football Services Limited and City Football UK Holdings Limited. The number of shares is remarkably specific and thus likely significant, but how?

It seems entirely possible that it might indeed reflect a valuation of some sort. But given that the companies below Midco in the structure include MCFC Limited (even if Midco holds that one indirectly), it surely can't be intended to represent the value of the above, can it? MCFC Limited is worth well in excess of GBP 800 million given the presence of MCFC Limited as a subsidiary. It's difficult to be sure what they're doing, because we simply don't have enough information, and in particular whether foreign CFG entities are also below Midco in the overall structure.

My first thought was that CFG want to separate out the holdings in different markets so you have a range of CFG subsidiaries, quite possibly not incorporated in the UK, with each one holding the companies that operate in a given market. Thus you could have a subsidiary incorporated in China called something like CFG China that holds CFG's shares in the part-owned Sichuan Jiuniu, plus owns CFG Academy China if they set up something like that, and so on.

The advantage of that structure is that you can attract investors who want a piece of the action in a given market but who don't want (or no longer wish to have) involvement in the worldwide Group. I suspect that CMC, with its holding in CFG now reduced to 1%, will continue to hold its 30% of the shares in the Sichuan club, but maybe it will also invest in wider CFG activity in China if or when we expand our operations there.

But I'm guessing, of course. However, it does seem that something might be going on - though it could eventually prove not to be especially interesting even for geeks like me. If I have time, I might delve through all the filings about CFG companies that I can find on the Companies House over the coming days and weeks to see whether there are further clues.

One thing worth noting is that it further discredits the idea that City is purely a state-focused sportswashing vehicle. Corporate machinations of this kind would be completely unnecessary if the whole exercise were simply aimed at promoting Abu Dhabi and distracting from a human rights record that seems to draw particular ire mainly from people who never mentioned the topic until an Emirati royal turned this project into a conspicuous success.

 

[halfcenturyup]

We know that Manchester City Limited, the holding company of MCFC Limited, has been transferred to Midco. So has MCWFC Limited, along with other UK companies such as City Football Image Rights Limited, City Football Investments Limited, City Football Marketing Limited, City Football Services Limited and City Football UK Holdings Limited. The number of shares is remarkably specific and thus likely significant, but how?

It seems entirely possible that it might indeed reflect a valuation of some sort. But given that the companies below Midco in the structure include MCFC Limited (even if Midco holds that one indirectly), it surely can't be intended to represent the value of the above, can it? MCFC Limited is worth well in excess of GBP 800 million given the presence of MCFC Limited as a subsidiary. It's difficult to be sure what they're doing, because we simply don't have enough information, and in particular whether foreign CFG entities are also below Midco in the overall structure.

My first thought was that CFG want to separate out the holdings in different markets so you have a range of CFG subsidiaries, quite possibly not incorporated in the UK, with each one holding the companies that operate in a given market. Thus you could have a subsidiary incorporated in China called something like CFG China that holds CFG's shares in the part-owned Sichuan Jiuniu, plus owns CFG Academy China if they set up something like that, and so on.

The advantage of that structure is that you can attract investors who want a piece of the action in a given market but who don't want (or no longer wish to have) involvement in the worldwide Group. I suspect that CMC, with its holding in CFG now reduced to 1%, will continue to hold its 30% of the shares in the Sichuan club, but maybe it will also invest in wider CFG activity in China if or when we expand our operations there.

But I'm guessing, of course. However, it does seem that something might be going on - though it could eventually prove not to be especially interesting even for geeks like me. If I have time, I might delve through all the filings about CFG companies that I can find on the Companies House over the coming days and weeks to see whether there are further clues.

One thing worth noting is that it further discredits the idea that City is purely a state-focused sportswashing vehicle. Corporate machinations of this kind would be completely unnecessary if the whole exercise were simply aimed at promoting Abu Dhabi and distracting from a human rights record that seems to draw particular ire mainly from people who never mentioned the topic until an Emirati royal turned this project into a conspicuous success.

Yes, it's interesting isn't it? The written down value of investments in the last filed accounts of CFG was 875 million GBP, so I suppose the share allocation could be to transfer all the football investments to Midco at cost, which IIRC from my professional days, was acceptable for internal re-organisations.

I wonder if they are separating out the football activities so that CFG can enter into deals with entertainment companies (media, maybe, or e-sports, or the activities around the campus and collar site and the same in the US) in a separate entity. Maybe with a view to a listing somewhere?

Anyway, just speculation. But interesting nevertheless.

 

[petrusha]

Yes, it's interesting isn't it? The written down value of investments in the last filed accounts of CFG was 875 million GBP, so I suppose the share allocation could be to transfer all the football investments to Midco at cost, which IIRC from my professional days, was acceptable for internal re-organisations.

I wonder if they are separating out the football activities so that CFG can enter into deals with entertainment companies (media, maybe, or e-sports, or the activities around the campus and collar site and the same in the US) in a separate entity. Maybe with a view to a listing somewhere?

Anyway, just speculation. But interesting nevertheless.

Thanks. That GBP 875 million is a very similar figure. Good spot.

The idea of splitting football and other assets with a view to attracting different types of investors is an interesting one, too. As you say, we're all speculating at the moment, but they do seem likely to have exciting plans, whatever they turn out to be.