Commentary: The football business is changing. Man City is driving it

Commentary: The football business is changing. Man City is driving it

By bringing together football, entertainment, technology and politics, the club’s owners are building a Disney-like empire.

FILE PHOTO: Champions League - Group C - Manchester City v Shakhtar Donetsk
Manchester City's owners City Football Group are valued at a global record sports valuation of almost US$5 billion after Silver lake acquired just over 10 per cent of it for $500 million. (Photo: Reuters/Andrew Yates)

MANCHESTER: US private equity firm Silver Lake acquiring a stake in the City Football Group (CFG), owners of English Premier League football team Manchester City, is a stunning development.

Based in California, the investor has taken a 10 per cent share in CFG for £380 million (S$671 million), valuing the group at almost £4 billion. 

Headlines have inevitably hailed the deal as one that makes Manchester City the world’s most valuable football club.

There is no doubt that the east Manchester outfit is a much more valuable asset than it was just over a decade ago. When current owner Sheikh Mansour (a member of the Abu Dhabi royal family) bought Manchester City in 2008, he paid £210 million.

READ: Commentary: Love for the game? Is owning a football club worth the trouble?

Manchester city owner Sheikh Mansour took over the club in 2008
Manchester city owner Sheikh Mansour took over the club in 2008

But valuing football clubs is not necessarily a precise science, as the proliferation of valuation rankings demonstrates. At the same time, CFG is not just Manchester City alone. It is a group of clubs and related commercial activities that has been built up across the world.

READ: Guardiola rules out Man City spending in January transfer window

So to imply that City is the world’s most valuable club is slightly disingenuous. Nevertheless, the punt that Silver Lake has just taken on CFG reveals a great deal about the trajectory its business is on.

THE DISNEY OF SPORT

Nearly 20 years ago the group’s chief executive, Ferran Soriano, was vice president and finance director of Spain’s FC Barcelona. During his spell there, Soriano spoke of his vision to build a football club in the image of the Walt Disney empire.

Syed Saddiq with Manchester City CEO Ferran Soriano
Malaysian Sports Minister Syed Saddiq with Ferran Soriano, the chief executive of City Football Group. (Photo: Twitter/SyedSaddiq) 

He foresaw the convergence of entertainment and sport in a globalising world. And he also highlighted the role that franchising could play in football, along with the contribution that merchandise could make to club revenues.

READ: Commentary: Invincible Liverpool look set to regain past glory

Fast forward several years and by 2012 Soriano was in charge at CFG. Released from the political constraints of working for Barcelona (where board members are elected by fans, known as “socios”) and instead underwritten by the petrodollars of Abu Dhabi, the Catalan business leader was given the resources and autonomy to transform the organisation.

FRANCHISING IN MOTION

Since then, CFG has established franchise clubs around the world, including the US, Australia, Japan, Spain, and Uruguay. Latest news also indicates that CFG are on the verge of acquiring a club in Mumbai, India. 

No surprise that the city has a sizeable community of football fans, but is also the spiritual home of Bollywood and a focal point for India’s tech sector.

In 2015, CFG’s financial and political fortunes were further boosted as a Chinese investor took a stake in the business. Tellingly, the deal was announced during Chinese president Xi Jinping’s visit to the UK, during which he met then Prime Minister David Cameron and all manner of football, business and political deals were agreed.

Chinese President Xi Jinping, who visited Manchester City in 2015, outlined ambitions to turn the
Chinese President Xi Jinping, who visited Manchester City in 2015, outlined ambitions to turn the world's most populous nation into a global soccer power AFP/Joe Giddens

So it was no surprise when, earlier this year, CFG announced plans to establish a Chinese club franchise (in Chengdu). 

At the same time, Abu Dhabi announced that its state airline Etihad (Manchester City’s shirt and stadium sponsor) would be enhancing its links with Chengdu’s airport. At CFG, football is often the means to an end, not just an end in itself.

NO MICKEY MOUSE PURSUIT

Many of these deals were overseen by Soriano who, in the midst of it all, was also closely monitoring and responding to technological changes. 

Notwithstanding his original Disney vision, the nature of the movie, broadcasting and sport industries has changed dramatically over the last decade – meaning that football and entertainment are no longer Mickey Mouse pursuits.

New digital platforms have emerged, streaming has taken hold and content generation has become the fuel adding impetus to a new industrial revolution. 

Indeed, CFG has already taken advantage of this through, for instance, the development of its Cityzens platform and the club’s involvement in the Amazon TV series All or Nothing.

Winning the domestic treble in 2019 has raised Manchester City's profile around the world
Winning the domestic treble in 2019 has raised Manchester City's profile around the world AFP/Glyn KIRK

The investment made by Silver Lake in CFG is a clear acknowledgement that football is a globally compelling product, a superb source of content, and a basis upon which shrewd business people can make a profit.

READ: Commentary: What stands in the way of England winning Euro 2020?

THE 21ST CENTURY FOOTBALL CLUB

More importantly, as if further evidence was needed, it marks the latest move in a convergence of sport, entertainment and digital technology.

With Soriano providing his foresight and strategy, and Sheikh Mansour providing the money and politics of a wealthy new state seeking its place in the world, Silver Lake is set to bring entrepreneurial zeal and a strong track record of successful tech investments. 

This should help CFG, and more specifically the various franchises within the group, to establish a competitive advantage over their football rivals.

As such, CFG is at the apex of what it means to be a 21st century football business – a mixture of money, entertainment, technology and politics. 

Clubs like Red Bull Salzburg and Leipzig are following their own franchise path, while a growing number of teams across Europe have had fly-on-the-wall documentary series made about them. Bayern Munich and Real Madrid take their digital footprints very seriously, while French champions Paris Saint Germain has a Qatari owner.

READ: Commentary: Why did Spurs sack Mauricio Pochettino?

It is currently only CFG that brings everything together in one place, however. And it is on this basis that Silver Lake has invested in what was once a football club with historic roots in the working class communities of east Manchester, but is now a global entertainment business catapulted to the top of the football’s valuation charts.

Simon Chadwick is Professor of Sports Enterprise at the University of Salford. This commentary first appeared in The Conversation.

Source: CNA/ml(sl)

Bookmark