City Football Group (CFG), the Abu Dhabi-controlled holding company, popularly known for being the owners of English Premier League champions Manchester City, just raised $650 million. This fundraising is considered one of football’s biggest-ever debt deals as the company seeks to step up investment in its international network of football clubs.
What you should know about the loan deal
- The raised loan, which will come due in July 2028, according to sources, is intended to fund infrastructure projects such as a new stadium for its Major League Soccer franchise New York City FC, which has been anticipated for years but still requires approval from local authorities.
- According to sources, the seven-year loan is underwritten by Barclays, with HSBC and KKR Capital Markets helping to arrange and distribute the debt.
- CFG has organized a revolving credit facility worth £100 million with the same finance providers listed above, although sources say it has no immediate intention to draw down on the facility.
- The loan deal has taken its place as one of football’s biggest debt deals as the deal surpasses the €525 million debt refinancing arrangement between Goldman Sachs and FC Barcelona in June 2021 but comes 2nd to Tottenham Hotspur’s loan deal of £637 million in 2019.
The CFG Group
CFG is a British-based holding company that administers an association of football clubs. CFG has shown an appetite for rapid growth, having either taken full ownership or bought minority shares in about 10 clubs around the world over the past decade.
Until December 2015, City Football Group was wholly owned by the Abu Dhabi United Group (ADUG), a private investment and development company belonging to His Highness Sheikh Mansour bin Zayed Al Nahyan. Sheikh Mansour bin Zayed al-Nahyan, a billionaire member of the Abu Dhabi ruling family, who opted to buy Manchester City, has spent an estimated £1 billion transforming the club into one of the most successful football sides in English football to rival giants like its neighbours Manchester United and Liverpool.
CFG owners now include ADUG, which owns 77% majority share of the club. The ADUG sold a 10% stake two years ago to US-based private equity firm, Silver Lake Partners for $500 million. A further 13% stake is owned by 2 Chinese firms which include China Media Capital, a venture capital group and CITIC Capital.
The money will also help prop up the groups’ finances because the group made a loss as a result of the pandemic which affected the sporting industry as a whole, as ticket sales declined significantly as a result of the COVID-19 pandemic.
The group’s annual revenue dropped to £544 million in the financial year ended June 2020, down almost 14% year on year because of a loss in ticket and broadcast revenue. The group’s annual net loss widened to £205 million from £84 million a season earlier.
Manchester City’s revenue fell to £478 million in the 2019-2020 season, down from £535 million the year before. The club swung to a net loss of £126 million from a net profit of £10 million. Although the club made a loss, It had previously been the only profit-making club within CFG’s global network.
Although CFG declined to comment, sources stated that its executives had opted for raising debt, believing it to be a cheaper route to cash than selling more equity.
Critics have suggested such spending has skewed competition in England and Europe, while human rights activists say it is part of a “sports washing” project designed to clean up the global image of the United Arab Emirates. Sheikh Mansour’s brother is Sheikh Khalifa bin Zayed al-Nahyan, the Gulf nation’s de facto ruler.
The new debt deal shows that a good relationship exists between the group and western financial institutions. A year after Silver Lake’s investment in CFG, the group secured $2 billion from Mubadala Investment Company, Abu Dhabi’s sovereign wealth fund, which is run by Khaldoon al-Mubarak, who is also Manchester City chair.