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US private equity firm takes Liverpool stake

US private equity firm Dynasty Equity has purchased a minority stake in Liverpool Football Club worth at least $100mn, reports the Financial Times.   The investment in the Premier League football club is the latest example of private equity’s interest in sport and underscores the growing market for new sports-focused funds such as Dynasty.

  Liverpool is owned by Boston-based Fenway Sports Group, a consortium of media companies and professional sports teams that include the Boston Red Sox in baseball and Pittsburgh Penguins in ice hockey. FSG itself has received passive institutional investments from other sports-focused funds, including Arctos Sports Partners and RedBird Capital Partners.

The group in February called off a potential sale of Liverpool but retained Morgan Stanley and Goldman Sachs as financial advisers for outside investment options, leading to the Dynasty transaction. “Our long-term commitment to Liverpool remains as strong as ever,” said FSG president Mike Gordon in a statement. “We have always said that if there is an investment partner that is right for Liverpool then we would pursue the opportunity to help ensure the club’s long-term financial resiliency and future growth.”

FSG and Dynasty said the new funds would be used to pay down debt accrued at Liverpool during the pandemic shutdown, as well as for infrastructure investments at Anfield and broader growth off the pitch. FSG, which bought Liverpool for £300mn in 2010, did not disclose the valuation of the club in light of the new investment.

World’s fourth most valuable football club

Forbes valued the club at $5.3bn in May, rating it as the world’s fourth most valuable football club. New York-based Dynasty was founded last year by asset management veteran Jonathan Nelson and investment banker Don Cornwell. Through their respective backgrounds at Providence Equity Partners and PJT Partners the pair have a history of advising or leading on sports industry deals, including the creation of broadcaster YES Network, the sale of sports talent manager IMG to Hollywood agency William Morris Endeavor and the sale of the Buffalo Bills American football team. 

The stake in Liverpool FC is Dynasty’s first investment. Nelson and Cornwell said in a statement they were excited to support the club and partner with FSG. The opening up of North American professional sports leagues to institutional investment in recent years has prompted the launch of several sports-focused funds including Arctos and investment firm Blue Owl’s Dyal HomeCourt.

Meanwhile, traditional asset managers and private equity firms such as Ares Management, Sixth Street Partners and Clearlake Capital have amassed stakes in clubs on both sides of the Atlantic. One factor behind the rush of private capital into sport is the high valuations for clubs and leagues, particularly in North America, where the cost of buying out whole teams or limited partnerships has become increasingly expensive.   The relatively weak pound against the dollar also helps.

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