US firm takes big bite of the British soccer pie
● Silver Lake’s expensive foray into British soccer reflects the soaring value of live matches and a bet that Manchester City’s hundreds of millions of fans represent a big revenue opportunity.
The US private equity firm is buying just over 10% of City Football Group for about $500m (about R7bn), the companies said Wednesday, valuing the club’s owner at $4.8bn. That’s one of the highest price tags yet for a professional sports group.
Silver Lake is best known for tech investments such as Dell Technologies and China’s Alibaba Group and could bring that expertise to the English Premier League club. The big clubs still make most of their money from broadcast rights and merchandising but are looking for ways to use technology to sell privileged access to fans.
Clubs have been developing apps showing exclusive content such as player interviews, short documentaries, press conferences and even match highlights.
Manchester City demonstrated the potential value of behind-the-scenes content last year when it partnered with Amazon.com’s Prime Video streaming service for an eight-part documentary charting the path to its 2018 title win.
“There are large international audiences and fan bases for Premier League clubs, particularly in Asia,” said Richard Broughton of Ampere Analysis.
“There is potentially a large and arguably under-served opportunity outside the UK — albeit at a lower price point.”
The bigger teams will have to tread a careful path, offering enough to entice fans without upsetting the leagues that bring them TV revenue.
Income from sports broadcasts has been surging since media companies latched on to live sports as one of the remaining ways to bring in advertisers, which are increasingly moving online. The emergence of the big US streaming platforms in rights contests has helped to buoy valuations for the most sought-after content.
Few TV shows can match the pulling power of a big, live sporting clash. Manchester City was the world’s fifth-highest revenue generating soccer club in 2017/2018, says a study by Deloitte, following a run of successes in domestic and European competitions. Comcas’s European pay-TV unit, Sky, says recent Premier League audiences are 23% higher than last season.
“We remain very optimistic for continued increases in global football broadcast rights,” said Manchester United’s vice-chair, Ed Woodward, in an earnings call with analysts.
City Football Group has annual revenue of £535m (about R10bn), compared to £627m for publicly traded rival Manchester United, whose market value is $2.75bn. No existing shareholders sold their stake, and Abu Dhabi United Group remains the majority shareholder.
It’s one of the highest price tags yet for a professional sports group