That explains the one unanswered question I had about the arena deal, namely, why we were going to let an American company take all the money from the arena when ADUG have plenty of money to build it themselves.
Now that we know that is essentially money from another one of our owners it makes sense.
It is not “just” that!
In “allowing” Silver Lake/Oak Tree to have this opportunity, they have made them pay for a portion of those future revenue opportunities upfront by paying “generously” for their 10% stake in CFG. Indeed, when the NYCFC stadium is finally built, one wonders whether it will be made as a dual use arena, to compete with the likes of MSG and the new Barclays Center.
Allowing in Silver Lake, who should make multiples of their investment (and who are already playing with house money with stock markets at record highs), in at the 10%/$500M level, they have leveraged Silver Lakes future earnings and turned them into an eye-watering CFG valuation overnight, and done it in such a way as to make EVERYONE sit up and take notice.
Today, CFG is owned by massive, mature, serious investment groups in America, China and the Middle East, with a portfolio of teams that will encompass England, North America, South America, Australia, Japan, China and India. This is NOT a Middle East “FAMILY” VANITY PROJECT, nor is it a vehicle to spin off cash flows to pay down debts elsewhere or load up with debts created elsewhere and feed those with shirt revenues.
This is a REAL, GLOBAL, SPORTS/ENTERTAINMENT/REAL ESTATE BUSINESS that is designed to take investment monies and create significant amounts of long term returns on those investments.
Going forward, and over the longer term, one of the important things will be whether these current investment behemoths see the long term value of maintaining and reinvesting those returns, or siphoning them off for other ventures. What we need to ensure is that any additional dilution of the ADUG stake isn’t so severe as to lose sight of the MAN CITY aspect of this growing global enterprise.
I don’t believe that should be a concern for a good long while, but the investment world is a fickle mistress. That will require continued investment in the product to create the success from which all else flows (sponsorships, etc...).
while I think Sheikh Mansour has proven that is not going to be an issue, I think we need to be cognizant of the fact that even with record revenues, we only made a small profit (about $10M on $550M of revenues) and do when Pep says “we can’t afford him!” we should be mindful of the fact that he means it! The current squad is eating up almost 60% of those revenues, and it was player SALES that created the slim profit.
This is relatively normal in a growing business, especially one that is rapidly expanding and needing internal growth expenditures, but we should understand that in a season where we won ALL FOUR DOMESTIC TROPHIES, we had to take in record TV revenues and sell players to balance the books for FFP! Makes you realize just how precarious the situation must be at some clubs!!
Onwards and upwards!
The future is BLUE!