GACP Sports Plans Premier League Club Takeover To ‘Recreate City Football Group’
With the coronavirus pandemic hitting the finances of all soccer clubs, DaGrosa sees an opportunity to snap up teams at a discount of between 50%-70%.
DaGrosa is Chairman of Florida-based GACP Sports, which sold out of French Ligue 1 club FC Girondins de Bordeaux in December, 13 months after leading a takeover. The company also owns Soccerex, the world’s largest organizer of soccer business conferences.
“From a macro point of view, we believe football over the long term is a great investment,” DaGrosa told Forbes in an interview.
“It’s a particularly opportune time, given what's happened due to the coronavirus and its effects on the global football industry. We think that clubs are going to be hard pressed to survive in many cases and there'll be some opportune possibilities to acquire some really strong clubs in terms of on-field performance, but that are financially distressed.
“Similarly, you've got an opportunity to acquire some world class players at a fraction of what they would otherwise cost. So anyone who comes in with dry powder in this environment with the view to the medium to long term is going to be well rewarded.”
DaGrosa and Varela, a former professional player and agent, plan to “recreate the best aspects of City Football Group” in their platform, Kapital Football Group.
Beginning with an “anchor club”, ideally in the English Premier League, Kapital Football Group intends to add three to five satellite clubs and up to 10 academies in Asia, Africa and South America.
City Football Group, which has eight clubs including the flagship Manchester City, was valued at $4.8 billion in November.
However, while Manchester City account for more than 80% of City Football Group’s revenue, Varela told me Kapital Football Group’s satellite clubs would not be set up to “feed” the anchor club.
“Each club will grow and have individual success on their own … and we can take advantage of sharing information, like scouting and commercial,” he said.
The investors said they are eyeing clubs in Spain’s La Liga, Portugal, Brazil and the U.S. as possible satellites.
The anchor club is unlikely to be one of the Premier League’s ‘top six’ of Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham.
“Because of the situation there’ll be clubs in the second tier of the table (below the top six) that are more open to sell than before,” Varela said.
“The idea would be to go to a mid-table club and grow from there.”
DaGrosa, who was in discussions to take over Newcastle United last year, said GACP Sports was talking to “large institutional investors” and wants to move “fairly quickly”. He sees a window of opportunity of 24 months to recreate the City Football Group model “at a fraction of the cost”.
“Ultimately, we want to build a platform that will lend itself to going public at some point,” he said.
“But the idea is to have all the capital in place, allocate approximately two thirds of our capital for acquisitions, and leave a third or more of our capital as dry powder.
“The whole key here is to have dry powder after those initial acquisitions are done to build world class teams at a time when not a lot of other people are investing. Thematically, it's all about playing offense when the rest of the world is playing defense.”
It is a strategy that has previously worked well for DaGrosa, who has built a reputation for turning around distressed businesses. While with private equity business 1848 Capital Partners, for example, he bought 248 Burger King Franchises out of bankruptcy.
But while the burger business may be all about how many Whoppers you can sell, DaGrosa learnt from his time in Bordeaux that there is emotion involved in running a soccer club.
“First and foremost, we're fiduciaries for other people's money. And so regardless of our personal feelings, we have a responsibility to protect the capital we've been entrusted with and that's our primary focus,” he said.
“Having said that, we both love the sport and we would both like to have a legacy. But I don't think it's inconsistent to have a legacy of winning on the field and winning financially as well.
“That's why we think this is a particularly good, opportune time to move, because we think we can accomplish both.”
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