Manchester City’s parent company has raised $650million (€550 million) in one of football’s biggest ever debt deals as it seeks to step up investment in its international network of football clubs.
City Football Group (CFG), the Abu Dhabi-controlled holding company that owns the English Premier League champions alongside clubs in the US, Australia and India, recently raised the loan, which will come due in July 2028, according to multiple people familiar with the transaction.
The debt deal beats the €525 million debt refinancing arrangement between Goldman Sachs and Spain’s FC Barcelona agreed in June. It is roughly the level of England’s Tottenham Hotspur, which borrowed £637 million in 2019 from several banks to build its new stadium.
CFG intends to use the money to fund infrastructure projects such as a new stadium for its Major League Soccer franchise New York City FC, which has been mooted for years but still requires approval from local authorities.
But the group has shown an appetite for rapid growth, having either taken full ownership or bought minority shares in 10 clubs worldwide over the past decade.
The seven-year loan was underwritten by Barclays, with HSBC and KKR Capital Markets helping arrange and distribute the debt, according to people familiar with the deal.
Separately, CFG has also organised a revolving credit facility worth £100 million with the same finance providers, though a person close to the group said it had no immediate intention to draw down on the facility.
CFG declined to comment. People close to the deal said its executives had opted for raising debt, believing it to be a cheaper route to cash than selling more equity.
CFG sold a 10 per cent stake to US-based private equity firm Silver Lake Partners for $500m two years ago, which valued the group at $4.8billion – then a record valuation for a sports group. A further 12 per cent is owned by China Media Capital, a venture capital group.
The majority owner is Sheikh Mansour bin Zayed al-Nahyan, a billionaire member of the Abu Dhabi ruling family, who bought Manchester City in 2008.
He has spent an estimated £1 billion on transforming the club into one of the most successful sides in English football.
Critics have suggested such spending has skewed competition in England and Europe, while human rights activists say it is part of a "sportswashing" 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.
Western financial institutions
The new debt deal ties the group closely to western financial institutions. A year after Silver Lake’s investment in CFG, it secured $2 billion from Mubadala, Abu Dhabi’s sovereign wealth fund which is run by Khaldoon al-Mubarak, who is also Manchester City chairman.
The money will help prop up the loss-making group whose finances have been hit hard in the pandemic.
CFG’s annual revenue dropped to £544 million in the financial year ended June 2020, down almost 14 per cent year on year because of lost 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. It had previously been the only profit-making club within CFG’s global network. – Copyright The Financial Times Limited 2021