Business

Entrepreneurs and family offices look to refinance European football clubs

Tony Ressler’s private equity firm Ares Management has bought 34% of Spanish football club Atletico Madrid for $217 million.

The deal is part of a refinancing exercise for Atletico whose debt burden spiralled to $1.2 billion by November 2020, according to digital outlet Goal.

DaGrosa believes this is a good moment to buy control of a European football team by offering them a way to refinance their operations

More refinancings by US entrepreneurs and their family offices are on the cards, as clubs struggle with their finances. Deloitte has estimated that clubs in the Premier League could be facing a permanent loss of commercial income totalling $650 million. 

FC Barcelona lost $117 million in 2020. Its debt was $1.4 billion and its players took a pay cut in March. 

New Zealand Rugby, owner of the All Blacks, had to raise funds and sold a 15% stake in private equity firm Silver Lake in June. In 2021, top European football clubs backed by wealthy investors sought to bolster their income through a European Super League only to see the move defeated by the fans.

As a result of its Atletico deal, Ares will become a strategic shareholder with a seat on the board.  Prior to the deal, 32% of its equity was owned by Quantum Pacific, led by Israeli billionaire Idan Ofer.

Ressler co-founded Apollo Global Management in 1997 with his brother-in-law Leon Black. Both men once worked at former investment bank Drexler Burnham Lambert with Michael Milken. 

Black stepped down as Apollo chief executive in early 2021 as a result of his dealings with disgraced financier Jeffrey Epstein. 

Ares is separate from Apollo, co-founded by Ressler in 2002. But the two firms joined forces with Howard Marks’ Oaktree in 2019 to provide $90 million to Black colleges and universities to foster diversity in alternative investment.

Ressler has often shown occasional interest in sporting opportunities. In 2015 he became majority owner of the Atlanta Hawks basketball club through an $850 million consortium bid. He is also a minority shareholder in the Milwaukee Brewers baseball team. Ares co-founder Bennett Rosenthal is co-owner of Los Angeles Football Club, a Major League team.

Few doubt Ressler’s passion for sport. But its cash flow has enticed it into the sports arena, alongside other investors. 

As well as Atletico, Ares has bought into McLaren Racing.

Ares has also backed a failed attempt by Joseph DaGrosa’s Kapital Football Group to buy control of the UK’s Southampton FC. 

Briefly an owner of Bordeaux FC, DaGrosa attempted to buy Newcastle FC from Mike Ashley, who is struggling to overcome a Premier League’s decision to block its takeover by a Saudi-led group.

DaGrosa believes this is a good moment to buy control of a European football team by offering them a way to refinance their operations. Some US entrepreneurs believe that the next generation’s interest in soccer will lead to its growth across the US in years to come.

DaGrosa is talking to clubs in Belgium, Brazil and Portugal, after the style of Abu Dhabi whose City Football Group stable of ten teams, backed by Silver Lake, include league-topping Mumbai, Melbourne and Manchester City.

Earlier this year, Daniel Ek, founder of Spotify made an approach for Arsenal by talking to its US owner Stan Kroenke. 

Michael Dell’s MSD Partners has provided finance to a range of UK clubs. It assisted with the takeover of Burnley FC by US consortium ALK Capital led by Alan Pace at the start of 2021.

Deep pockets in the US, plus its financial expertise, means it is likely to get front row seats in future club auctions. And the deals could well pay off in the longer term if soccer does take off in the US.

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