Dec 5, 2019

When a sports team is a media investment

Illustration: Rebecca Zisser/Axios

Sports teams have historically been a bauble for billionaires, traded infrequently between each other for stratospheric valuations that often make little economic sense.

Exhibit A: Hedge fund manager Steve Cohen is looking to spend $2 billion of his personal cash to buy a controlling stake in the New York Mets.

  • Cohen wrote a letter to his investors about how “it has always been a dream of mine to be a majority owner of a Major League Baseball franchise.”
  • The $2.6 billion valuation he's buying in at is 75% higher than the $1.5 billion at which the team was valued earlier this year, when a non-controlling 12% stake changed hands.

Meanwhile, English soccer team Manchester City is much more valuable, and a very rare example of a franchise being valued on economic fundamentals rather than sentiment and ego.

Driving the news: Silver Lake, a Silicon Valley private equity fund, has just invested $500 million into the team's parent company as part of a huge secular bet on the future of technology, media and entertainment.

  • Silver Lake's investment values City Football Group — which also owns teams in New York, Melbourne, and five other cities — at $4.8 billion.
  • The thesis is that Manchester City's on-pitch success can be replicated across the world, scaling everything from its manager's tactics to its expertise in sports medicine and its well-respected player development schemes.
  • Egon Durban, the man who orchestrated the deal, was rewarded by being appointed co-CEO of Silver Lake. Expect more media deals from a group that has already invested in mixed martial arts behemoth UFC and talent agency Endeavor, which bought the Miss Universe pageant from Donald Trump in 2015.

Our thought bubble, from Axios Sports editor Kendall Baker: "CFG is at the apex of what it means to be a 21st century sports business — a mixture of sports, entertainment, media and digital technology."

  • "It is for this reason that Silver Lake has invested a half-billion dollars in what was once a soccer club with historic roots in the working class communities of east Manchester, but is now a global entertainment business."

Go deeper: The new power brokers in sports media

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The City Football Group empire

Map: Aïda Amer/Axios

Private equity giant Silver Lake Partners has agreed to invest $500 million for a ~10% stake in City Football Group, owner of reigning English Premier League champs, Manchester City, and seven other soccer clubs around the world.

Why it matters: The deal makes CFG, now valued at $4.8 billion, the world's most valuable soccer group, as well as the second most valuable enterprise in all of sports, trailing only the Dallas Cowboys, per Forbes.

Go deeperArrowDec 5, 2019

Private equity giant Silver Lake to invest $500 million in City Football Group

Illustration: Rebecca Zisser/Axios

Private equity giant Silver Lake agreed to invest $500 million for just over a 10% stake in City Football Group, owner of reigning English Premier League champs Manchester City and other soccer clubs, from Abu Dhabi United Group.

Why it matters: It makes CFG, now valued at $4.8 billion, the world's most valuable soccer group.

Go deeperArrowNov 27, 2019

Mets on verge of sale to hedge fund billionaire Steve Cohen

Mets president Saul Katz, majority owner Fred Wilpon and COO Jeff Wilpon. Photo: Jim McIsaac/Getty Images

The New York Mets are in the process of being sold to hedge fund billionaire Steve Cohen, who is currently a minority owner in the team.

Why it matters: This would represent a massive change in the landscape of New York sports and a new chapter for the beloved, if troubled, Mets franchise.

Go deeperArrowDec 5, 2019