Sir Jim Ratcliffe’s £1.25bn investment in Manchester United was a win for both him and majority shareholders the Glazers, insists the bank which brokered the deal.
Ineos tycoon Ratcliffe shelled out for a 27.7 per cent stake in the Premier League football club in December and, in return, took over much of the decision-making from the Glazer family.
The deal struck by the Raine Group valued Manchester United at around £5bn, making it by some distance the highest valuation ever seen in the sport.
“They’re both winners, and here’s why,” Raine Group partner Colin Neville told the Leaders sport business conference in London.
“Jim wanted to run football operations, and he’s doing that. I think the Glazers acknowledged that he brought a lot to the table: obviously, an incredible valuation for the club, primary capital for growth. So it solved a lot of challenges that we were facing when we started that process.”
The Raine Group also achieved the £2.5bn sale of Chelsea following the sanctioning of Roman Abramovich and is now helping English cricket chiefs sell stakes in Hundred franchises.
The US merchant bank remains bullish on sport investments due to the premium value of live broadcasts and the enormous followings that top teams and leagues command.
“Sports IP is so valuable. These are brands. These are cultural assets. In some cases, clubs have over 1bn followers, which is bigger than many religions,” Neville added.
Private equity interest in sport has rocketed in the past five years, with Raine reporting the number of funds willing to invest in the sector had increased at least 10-fold.
“Prior to Covid, you probably had five or six private equity funds interested in some of the assets that we were working with. It’s easily 50, and that’s just in the US,” Neville said.
“I don’t see that slowing down anytime soon. There are now sports-specific funds that are being created and there’s certainly a lot of healthy demand for the asset class.”
Sovereign wealth funds such as Saudi Arabia’s PIF, owners of Newcastle United, and Qatar’s QSI, which owns Paris-Saint-Germain, have also pumped billions into sport.
The Raine Group expects that trend to continue and, while football remains the most attractive market, the relaxing of rules on investment in US leagues has opened up new avenues.
“If you look at what PIF did with their investment in Newcastle – incredible success and a very short period of time. So I anticipate more of that,” said Neville.
“We’ve seen sovereigns finally investing in US leagues and teams. And I know for a fact, because I’m working on several, and I expect more of that to come.”