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City Football Group, the company that owns the British Premier League football team Manchester City as New York City FC of Major League Soccer, is in talks to buy ESTAC Troyes from France, according to a Financial Times report.
Troyes has lately played in the French Ligue 2, or division of moments, but has been competing for promotion to Ligue 1, the most sensitive level, in recent seasons. CFG would be offering “a few million to a figure” for the team, the resources told the newspaper.
The agreement is just the latest example of CFG’s efforts to build a strong global professional football franchise. In addition to Man City and NYC FC, the company now owns Lommel SK, which plays in the Belgian moment division, Sichuan Jiuniu in the Chinese moment league and Mumbai FC in India. He holds a minority stake in Spanish club Girona FC and investments in Montevideo City Torque in Uruguay and Yokohama F. Marinos in Japan. She also owns the Australian football team Melbourne FC and several women’s teams, as well as Manchester City Women and Melbourne City Women.
Like any cumulative game, CFG has sold its acquisition strategy as partly based on economies of scale and distribution: while insisting that it needs the club to succeed independently, the company seeks marketing agreements across its portfolio. He also hopes to gain new supporters for his flagship team, Manchester City, in emerging markets such as India and China, opening up new opportunities for sponsorship and product sales.
CfG CEO Ferran Soriano, Disney’s admirer and business model, also talked about consolidating back-office purposes and generation platforms within its groups. He said possessing a strong club allowed CFG to identify and expand talent, whether in terms of players, coaches and control staff, and said that all CFG groups were learning the same taste of attacking play based on the possession manchester City followed under its current head coach Pep Guardiola.
Football’s strategy of accumulation has proven to be debatable: some accuse CFG of committing to it largely to evade the league’s spending limits, but it has attracted some big investors. Last year, U.S. personal equity firm Silver Lake, which paid $500 million for a 10% stake in CFG, and in 2015, Chinese investor China Media Capital spent $400 million on a 13% stake.
However, the real cash CFG remains Sheikh Mansour bin Zayed Al Nahyan, a billionaire member of Abu Dhabi’s ruling circle of relatives who is also deputy prime minister of the United Arab Emirates. Sheikh Mansour bought Manchester City in 2008 for $276 million and founded CFG in 2013.
Sheikh Mansour’s wealth has allowed Manchester City to spend a lot on talent, and the team spent nearly $2 billion to win new players according to the European Football Association’s move-in procedure over the past decade. The spending frenzy has allowed Man City, once a team suffering, to win the Premier League championship 4 times since Sheikh Mansour bought the team, which recently hit in 2019.
But critics complain that Man City has continually tried to spend caps designed to make a fairer festival and that CFG’s investment in smaller groups around the world is largely an effort to mask the funnel of extra money back to Man City.
In 2014, Man City agreed to move the restrictions and pay a $58 million fine to resolve accusations of non-compliance with spending cap rules. Then, in February, the Union of European Football Associations (UEFA), the guiding framework for the sport in Europe, imposed a two-season ban on Man City from participating in the Champions League festival and imposed a fine of $35 million after German magazine Der Spiegel posted leaks by email. suggesting that the club had artificially inflated the price of a sponsorship deal with Abu Dhabi-based Ethihad Airlines, using the airline as a channel to obtain cash provided through Sheikh Mansour through some other company it controls. But Man City appealed the ban and last month the Swiss Court of Arbitration for Sport ruled in favour of the club, nullizing it.
Whatever the genuine intent of CFG’s strategy, other investors in world football are beginning to emulate their business structure, known as multi-club ownership style or MCO.
The rich circle of Italian relatives Pozzo now owns the Italian team Udinese Calcio and the English League Team, Watford FC, and also owned the Spanish club Granada CF, before promoting it to Chinese businessman Jiang Lizhang.
Red Bull, the energy drinks company, has a portfolio of football clubs in the United States, Austria, Germany and Brazil. The Spanish team Atlético de Madrid got the Mexican football team Atlético San Luis and also owned a team of the Indian Football League for some time. AS Monaco suffered from Belgian Cercle Brugge in 2017, while King Power International, which owns English Premier League Leceister City, beat the Belgian OH-Leuven in 2016. OH-Leuven hired former Leceister City coach Nigel Pearson to run the club and Leceister City used Leuven to recruit talented young players who might one day need to acquire, which could reduce the moving fees the club will have to pay.
“A larger network of clubs has minimized player acquisition prices while maximizing increased movement fees, as players were loaned between ‘sister clubs’ and then sold at a maximum price,” said a 2017 report on the trend through consulting firm KPMG.
Transfer fees are the economic cornerstone of foreign football, with firms of big names such as Neymar and Cristiano Ronaldo, well above $100 million. Successful navigation in the movement market has an impact on victories on the field of the game. But formalized “agricultural systems,” the type of host clubs you’ll find, for example, in Major League Baseball, are limited and some leagues officially ban them. Critics of MCO’s strategy complain that this is what CFG’s tastes seek to secretly create through their club network.
The same KPMG report noted that CMOs pose serious and demanding situations to national and foreign governing bodies in the hope of ensuring a fair festival between groups with various monetary resources. It is difficult for clubs, even high-performing clubs, such as FC Barca, which is one of the few clubs in the world to belong to a broad model of clubs, to compete as independent companies.
For now, however, football consolidators seem to be in a position to keep scoring.
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This story was originally featured in Fortune.com