Manchester City Owner Sells $500 Million Stake to U.S. Investor

Silver Lake Partners bought about 10 percent of the parent company of the Premier League champion, making it one of the most valuable franchises in sports.

The Etihad Stadium, where Manchester City plays its home games.
The Etihad Stadium, where Manchester City plays its home games.Credit...Jon Super/EPA, via Shutterstock

LONDON — The owner of the English soccer team Manchester City, which has become a powerhouse in the sport on the strength of huge investment from Abu Dhabi’s royal family, has agreed to sell a stake of just over 10 percent to the American investment group Silver Lake Partners for $500 million.

Silver Lake has bought into City Football Group, an organization that controls seven soccer clubs on five continents. The group’s biggest asset by far is Manchester City, the reigning Premier League champion, but its holdings also include a team in Major League Soccer, New York City F.C., and clubs in Australia, Japan and Uruguay.

The stake sold to Silver Lake values City Football Group at $4.8 billion, according to a statement confirming the deal that was disclosed by The Financial Times late Tuesday. That makes the group one of the most valuable franchises in professional sports, in part because most other organizations are based on ownership of a single team.

According to data published by Forbes magazine this year, the N.F.L.’s Dallas Cowboys were the most valuable sports enterprise, at $5 billion, with the Yankees second at $4.6 billion and the Spanish soccer team Real Madrid third at $4.24 billion.

This month, Manchester City announced record revenues of 535 million pounds, about $689 million, a figure bettered in English soccer only by its more established city rival Manchester United. City’s domestic success has led to it to become a regular in the Champions League, a continental championship that confers not only global attention but also millions of dollars in annual revenue. That money could, in the short term at least, be at risk should financial regulators at European soccer’s governing body decide to banish the club from the competition for at least a year as punishment for rules designed to ensure financial fairness in the sport.

The situation does not seem to have put off Silver Lake from making what can be considered as the third-largest investment to buy an equity stake in English soccer. Egon Durban, a managing partner at Silver Lake, suggested the move was spurred by expectations of continued growth in the sports content market.

Manchester City, which as recently as 1999 was playing in the third tier in England, is now firmly established among a group of world soccer’s elite teams. It is the fifth-highest revenue-generating team in soccer, according to the latest edition of an annual soccer finance report by the accountancy firm Deloitte.

City Football Group is 77 percent owned by Abu Dhabi United Group, an investment vehicle owned by Sheikh Mansour bin Zayed al-Nahyan, the brother of the ruler of the United Arab Emirates. A Chinese consortium led by the media and entertainment conglomerate CMC is a minority investor.

Silver Lake, a Silicon Valley-based technology investor, has increasingly shown an appetite for buying into sports and entertainment ventures. The acquisition of City Football Group stake joins its investments in the Ultimate Fighting Championship, a mixed martial arts competition, and in the sports marketing and entertainment giant IMG.

Khaldoon al-Mubarak, the chairman of the soccer business at City Football Group, said in a statement that attracting investment from Silver Lake validated the group’s project and presented opportunities for further growth. The group said the money would be used to bolster its “technology and infrastructure assets.”

Recent news reports also have linked City Football Group with an offer to buy a soccer team in Mumbai, India. Should a deal be completed, that club would join a constellation of assets that includes teams in Manchester; New York; Melbourne, Australia; Girona, Spain;, as well as ventures in China, Japan and Uruguay.

But the Manchester club remains the flagship. After decades of playing under the shadow of Manchester United, its historically more successful neighbor, City transformed itself into a superpower almost overnight with a flood of investment that followed Sheikh Mansour’s buyout in 2008.

Since then, the club has spent huge sums on top players and coaching talent that have seen City become a dominant team in English soccer, culminating last season in a sweep of England’s three major domestic trophies.

The spending has also attracted the attention of soccer’s regulators.

The sport’s European governing body, UEFA, announced in May that a committee investigating clubs suspected of breaching cost-control rules had referred Manchester City to a panel of adjudicators. That could lead to penalties on the club, including a ban from the Champions League, one of the few prizes that City has not won.

A hearing between Manchester City and the UEFA adjudicators is scheduled for next week. Manchester City has denied wrongdoing.

Aleksander Ceferin, the UEFA president, was at Manchester City’s Etihad Stadium on Tuesday for the team’s latest Champions League game. Durban, who will join City Football Group’s board, also was present.