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Share sale puts high value on Manchester City

Manchester City's parent, City Football Group, has sold 10 per cent of the group for £389m to American private equity house Silver Lake in a deal that values City Group at £3.75 billion, more than a billion higher than Manchester United which has a market capitalisation of $2.8bn. CFG has a stake in seven clubs across the world. CFG is now valued at $4.84bn, a record for a sports group.

Kieran Maguire of the PriceofFootball comments, 'Valuation seems very high given that City Football Group losing £1m a week over last couple of years. Silver Lake would not be putting in this amount of money unless very confident that City would be subject to avoiding a Champions League ban, but reports suggest that City are on better terms with UEFA.' Silver Lake reckon that even if City were given a Champions League ban for breaches of financial fair play rules, they would still be worth the valuation.

Maguire added, 'Reports that money will be used to expand City group globally and buy club in India [believed to be Mumbai City] as well as new stadium in New York City. We valued City higher than United earlier this year but not to this extent.'

Group chairman Khaldoon Al Mubarak said: 'We and Silver Lake share the strong belief in the opportunities being presented by the convergence of entertainment, sports and technology and the resulting ability for CFG to generate long-term growth and new revenue streams globally.' Silver Lake said its investment would 'help drive the next phase of CFG's growth in the fast-growing premium sports and entertainment content market'.

Silver Lake is best known for its technology investing in companies such as Alibaba, Dell and Skype. However, in recent years it has pivoted to entertainment, acquisitions including a Hollywood talent agency.

Silver Lake had approached other leading English and European clubs, including Chelsea, according to people with knowledge of its strategy. The firm was attracted by the multibillion-dollar prices paid for football media rights by broadcasters and internet groups.

Silver Lake intends to hold its stake for about a decade but could seek to cash out through an initial public offering or sell to another private investor. The deal will leave Sheikh Mansour as the majority shareholder at 77 per cent.

CFG believe that the Silver Lake deal is a vindication of its business strategy. However, making money through CFG, with City the only profitable club in the network, will take many years.

If nothing else, this shows that globalisation is alive and well in football.

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