City Football Group | Secure $650m loan facility for infrastructure projects (p 54)

[oakiecokie]

Cheers. I was actually interested in why scoobz thinks thinks this: "If city owners are so good (they are by the way) why would you want them to own 10% less of the company and some firm in America acting as a venture capitalist / private equity firm to have it instead", is relevant.

He`s been wumming since last night mate.
He sounds very Raggish and bitter.

 

[blue oli]

My company started out with an entrepreneur/founder, moved on to a private investor (two rich guys) and have been owned by equity owners two times in a row. We're just at the end of the road with the current owners, and it's ... interesting.

Both have been similar. Short term and cynical. They have no interest beyond maximizing profit when they exit.

I'm guessing that Silver Lake are brought on to help expand the business. They'll want to prove a model where they can grow quickly with high earnings in the new clubs/investments. If they can prove that this model works, they will be able to sell their "shares" with a really big profit, within five years.

EBITDA/earnings will be key. And with players being the easiest way to keep consts down, there is a risk that there won't be as many expensive signings the coming ~5 years.

I'm using my own limited experience as reference.

Bizarrely I think that the football side of things is a side show for this investment, it’s the commercial side, the additional global reach, the additional facilities that will be built such as the area (to be repeated across the CFG I would guess). And the business model built around the club. Silver lake are looking at this business model and I’m willing to bet that other sports will be added to the group at some point. For now however the global model (which let’s face it is unique, or at least the most mature operation) is enough to drive a solid investment - this is more of a business partnership than an investment punt.

 

[Scoobz1]

Congrats on being able to use Google whilst still failing to understand the key differences between VC & PE.

I understand it - but it is neither here nor there re this argument - they are primarily profit driven - and in this instance they are acting more like a venture capitalist - and let's hope it stays that way - unless you would prefer them to own a 100% or a controlling stake as in the case of most Private Equity deals. All I said in essence is that this is not a good thing / news and it isn't. I would prefer that are brilliant owners continue to own as much as us as possible and not dilute their ownership any further. That way they have the maximum incentive to invest further.

 

[toffee balls]

Non of these investors including our owner are in it for the short term gain.
Drubas , have a look at my link I posted yesterday between our arena developer and Silver Lake .

 

[Marvin]

My company started out with an entrepreneur/founder, moved on to a private investor (two rich guys) and have been owned by equity owners two times in a row. We're just at the end of the road with the current owners, and it's ... interesting.

Both have been similar. Short term and cynical. They have no interest beyond maximizing profit when they exit.

I'm guessing that Silver Lake are brought on to help expand the business. They'll want to prove a model where they can grow quickly with high earnings in the new clubs/investments. If they can prove that this model works, they will be able to sell their "shares" with a really big profit, within five years.

EBITDA/earnings will be key. And with players being the easiest way to keep consts down, there is a risk that there won't be as many expensive signings the coming ~5 years.

I'm using my own limited experience as reference.

I've seen talk of a 10 year period over which Silver Lake would likely remain as investors. Probably speculative based on their history and the activity of organisations such as these.

 

[domalino]

This has nothing to do with FFP or buying players. FFP is calculated on revenue & expenditure, which means money we get from TV, ticket sales and commercial deals less what we spend on wages, travel, the costs of running the Etihad & CFA, etc. Sheikh Mansour could put £10bn into our bank account but it's not "revenue" and we still can't spend that unless we've made enough allowable revenue from those sources to support that level of expenditure.

However if Silver Lake use their ownership of Oak View Group to build a 300m arena next to the Etihad and then City develop the surrounding area profitably then that is revenue and can go towards transfers.

Or if they use their ownership of Endeavour to maximise the marketing of our players then that increase of image rights is revenue and that can go on transfers.

Or if they just have investments in companies who want to increase their profile via sponsorships...etc.

 

[Blue Mist]

I don't know where to post this so it might as well go here.
Has anyone written a book that covers all this from the beginning, the business idea of Soriano/Bergestein (sp) whilst at Barca, how they found the Sheikh and the start of the ADUG takeover until as near present as can be ?

It would be a fascinating read.

 

[OB1]

I understand it - but it is neither here nor there re this argument - they are profit driven - and is this instance they are acting more like a venture capitalist - and let's hope it stays that way - unless you would prefer them to own a 100% or a controlling stake as in the case of most Private Equity deals. All I said in essence is that this is not a good thing / news and it isn't. I would prefer that are brilliant owners continue to own as much as us as possible and not dilute their ownership any further

It goes to your credibility to comment.

Silver Lake are not acting as a VC here. CFG don't need VC type funds.

These are the comments of the new CFG director:

Speaking about the partnership, Mr. Durban said: “We are excited to invest in CFG, which is redefining soccer globally and in doing so has successfully built an impressive global platform of marquee soccer clubs across five continents. We greatly respect CFG’s stewardship of more than a century of soccer tradition and the strong global fan bases of its clubs. We are excited to partner with the Board and CFG’s world-class management team to help drive the next phase of CFG’s growth in the fast-growing premium sports and entertainment content market.”

This investment is about synergies and opening doors. They will also want to see the value of their investment grow but quite who they might sell it to realise it is another matter.

I have no reason to suspect Mansour would sell them a controlling stake.

 

[Prestwich_Blue]

However if Silver Lake use their ownership of Oak View Group to build a 300m arena next to the Etihad and then City develop the surrounding area profitably then that is revenue and can go towards transfers.

Or if they use their ownership of Endeavour to maximise the marketing of our players then that increase of image rights is revenue and that can go on transfers.

Or if they just have investments in companies who want to increase their profile via sponsorships...etc.

Your first paragraph is absolutely right. I was under the impression from an early stage of the takeover that the plan was to develop the area around the Etihad so it would produce so much revenue (which would count towards FFP) that we'd be untouchable financially.

But I also think that "traditional" revenue sources are now pretty well maxed-out and that clubs like us will be finding completely new revenue streams based on technology.

 

[Scoobz1]

It is primarily about releasing equity because if it was about synergies and opening doors their are many better potential partners than Silver lake, who are primarily a

It goes to your credibility to comment.

Silver Lake are not acting as a VC here. CFG don't need VC type funds.

These are the comments of the new CFG director:

Speaking about the partnership, Mr. Durban said: “We are excited to invest in CFG, which is redefining soccer globally and in doing so has successfully built an impressive global platform of marquee soccer clubs across five continents. We greatly respect CFG’s stewardship of more than a century of soccer tradition and the strong global fan bases of its clubs. We are excited to partner with the Board and CFG’s world-class management team to help drive the next phase of CFG’s growth in the fast-growing premium sports and entertainment content market.”

This investment is about synergies and opening doors. They will also want to see the value of their investment grow but quite who they might sell it to realise it is another matter.

I have no reason to suspect Mansour would sell them a controlling stake.

If it wasn't primarily about releasing equity and it was about the above why would you choose a company which describes itself as this: "Silver Lake is the global leader in technology investing, with over $43 billion in combined assets under management and committed capital and a team of approximately 100 investment and operating professionals located around the world. There are so many other better potential candidates to achieve the above stated aims. Indeed, given who City's owners are I doubt very much they need the "expertise" of a company like Silver Lake to achieve the above stated aims.

I too hope that Mansour wouldn't sell them a controlling stake because being a "Private Equity company" (unlike a venture capitalist) they typically take up a 100% or have a controlling stake in the companies they invest in. Anyway the gist of it is our owners have been brilliant and very much let finance take a back seat up to now in terms of City's development. With money men coming on-board and our owners reducing their ownership stake their is less incentive for them to continue to invest in the future. Indeed, it is not unknown for smaller stakes to turn into bigger stakes over time (indeed this is what these companies typically do ). So once again I personally don't see any news which is really good from a MCFC's point of view in this. If the £500m stake was about to be invested in new players or ear-marked for such then I might think differently (-: