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Abu Dhabi emerges as world’s largest football investor

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City Football Group (CFG) is a holding company founded by Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister of the United Arab Emirates, who holds a majority stake (77%) with Abu Dhabi United Group. CFG is an increasingly confident financial leader with 12 football clubs and is about to expand its acquisitions into Brazil and the Netherlands. From England to France, Japan to Uruguay to Italy, CFG is becoming a natural force across the football world. In July 2022, CFG completed the acquisition of Palermo, the Italian football team that plays in Serie B (the second most important league) and is rumored to be finalizing the term sheet for the acquisition of Dutch side Breda (financial document) . Through these acquisitions, Abu Dhabi now plays a leading role in the top football leagues in Italy, Spain, England and possibly the Netherlands.

There is no doubt that CFG is becoming the most powerful financier and manager in international football. At the corporate level, CGG is a global holding company 78% owned by Abu Dhabi United Group (led by His Highness Prince Mansour), with US investor Silver Lake and Chinese companies Huawen Capital and Citic holding minority stakes in the capital . The group will expand its ownership base by acquiring more clubs, including Bahia (Brazil) and NAC Breda (Netherlands), which are in the advanced due diligence stage. More specifically, if the Bahia and NAC Breda takeovers go through, these teams will join Manchester City, New York City, Palermo, Melbourne City, Yokohama Mariners, Montevideo City Tok, Herro Nagoya, Sichuan Jiuniu, Mumbai City FC, Lommel SK and ES Troyes AC reached a total of 13 teams.

This acquisition and ownership model has enabled Abu Dhabi to acquire over-leveraged teams that were acquired by Palermo and Breda for $12 and $13 million, respectively. This represents a huge revenue and branding opportunity if the stewardship and local culture are properly managed to build and strengthen a stronger bond with the fan base. In addition, the ownership structure of multiple teams also allows the group to easily transfer players between its clubs, giving players exposure to different football styles, while significantly reducing football acquisition and transaction costs.

Palermo Football Insights: Founded in 1900, Palermo has a long tradition of football, participating in Serie A (the highest Italian football league) for 9 consecutive years from 2004 to 2014, especially in the first 5 years with outstanding performance. Sicily went bust in 2019 and restarted as an underdog in the fourth tier of Serie A. Despite financial challenges, Palermo quickly returned to the top flight, beating northern Italian side Padua in the playoff final in early 2022 to advance to Serie B. With a low price of $12 million and a massive brand, it would be a no-brainer for CFG to make money on this acquisition.

What is the strategy of City Football Group?

While most countries are struggling to avoid a recession and deal with unprecedentedly high inflation (caused by volatile food and energy prices), Abu Dhabi is flush with cash and its main energy company TAQA saw profits rise 63% in the second quarter, because oil price increase income. The recovery in oil prices has led to significant revenue growth in Gulf Cooperation Council (GCC) countries such as Saudi Arabia, the United Arab Emirates, Kuwait and Qatar. The GCC’s total current account surplus has grown more than sixfold from $20 billion in 2020 to $109 billion in 2021. GCC oil and gas revenue is expected to increase to $520 billion by 2022, up from $326 billion in 2021. This is partly due to persistently high oil and gas prices since Russia’s invasion of Ukraine in February 2022.

final thoughts

Abu Dhabi has ambitiously built a strong global football management brand on the basis of the football team acquisition by Prince Mansour. This approach is based on the belief that under the leadership of CFG, Abu Dhabi can shape the future of sports business, build strong brands, accelerate collaboration between clubs, grow women’s football, and invest in eSports including the future of sport. With huge sums of money at their disposal (through sovereign wealth funds), the GCC countries will continue to shape the future of football, especially among the heavily indebted teams in Italy and Spain.

With such an important sponsor behind the Sicilian team, local Sicilian fans can start dreaming of a return to Italy’s main league, Serie A.

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