On June 10 2023, the culmination of over a decade of monumental growth resulted in Manchester City winning the treble: the FA Cup, the Premier League, and the Champions League.  Not only is this a monumental feat for a club to achieve, but it also highlights the changing relationship between football and finance. Increasingly, football clubs are becoming a form of alternative investment for the ultrawealthy, but is this actually a new phenomenon? And with the stunning returns that Manchester City has given back to shareholders and fans alike, is there an easy recipe for success or are clubs (and private equity firms) trying to piggyback on City’s success heading for failure? 

Success on the Field

The club was in a dire condition in 2008. After fluctuating between success and failure in the 1990s and early 2000s, there was hope in the form of ex-prime minister of Thailand Thaksin Shinawatra who bought the team in 2007. However, due to mounting legal issues, he was forced to sell the club to Sheikh Mansour, Deputy Prime Minister of the UAE, for $200 million. The second turn around for the club happened after Roberto Mancini was brought in as manager in 2009. A series of key signings directly led to one of the most iconic moments in Premier League history: Sergio Aguero’s last minute winner against Queens Park Rangers to clinch the Premier League title from rivals Manchester United’s hands. City’s first Premier League title in over forty years cemented the new winning mentality that Mansour had brought to the club, but his work was only getting started.

Success in the Boardroom

Ferran Soriano was appointed CEO of Manchester City in 2012 and he immediately began working on an idea he had had while working for Barcelona. He had envisioned a multi-club ownership business which would grow support abroad for City whilst allowing member teams to share medical and scouting data. As support grew from abroad so too would sponsorship, creating a steady cash flow for City. Though the idea is not entirely unique (look at Red Bull with its plethora of teams ranging across multiple sports) the City Football Group (CFG) created in 2013 is unmatched in its reach. Buying stakes in teams from nearly every continent, Soriano wanted it to revolutionise how football was enjoyed. Called Disneyfication, the idea reflects the holistic experience Disney creates by intersecting its many franchises and products. In the same way, CFG’s media arm and unique match-day experiences worked to intersect football with entertainment. At the same time as this, £150 million were spent on upgrading Manchester City’s facilities, to better train youth talent and attract the best coaches in the football world. Furthermore, in 2014 Manchester Life was launched by Mansour, an initiative to rejuvenate the rundown areas of Manchester by building affordable housing to later attract retail and leisure developments. Mansour had a clear aim: to attract the best players, coaches, investors, and sponsors in the world. With Amazon partnering with the club to produce a documentary series, legendary manager Pep Guardiola joining in 2016, and a star-studded squad feared across all leagues, it's safe to say they achieved their goal. But why has this not been replicated at other clubs?

State Sponsored, Sponsoring a State... Or both?

“Where some states have an army, the Prussian army has a state” – Voltaire 

The famous saying was used to describe the reliance the Prussian state (now Germany) had on its army. The same accusations have been levelled against Manchester City as to how they became so successful so quickly, and as to why Mansour poured so much money into the club. With the club currently facing hundreds of allegations of breaking financial rules, it would be disingenuous to present their success, both as a club and an investment for Mansour, as purely due to good management and business decisions. Critics argue that City’s success would not have been possible without the artificial enhancing of revenues by the UAE. For years allegations have been levelled against City and CFG as a way for the UAE to “sportswash” their image, which refers to the using of sports by autocratic states to distract from their repressive policies. While allowing the state to diversify its economy away from oil, it also associates the UAE with the successes of Manchester City, distracting from the domestic policies of the state. But independent of this, there are still good practices other investors and teams wishing to emulate City’s success can copy.

Billionaire Investors, skip to this bit

What sets Mansour apart from other billionaire owners and the private equity (PE) firms that back them is that he was willing to take the back seat and effectively delegate to those who had much more experience than himself. More than decade on from buying City, Mansour has spent billions investing in the club. However, he has still seen an eye-watering 1,700 per-cent return on his investment since 2008, and this is discounting the billions raised by selling stakes to PE firms China Media Capital in 2018, and Silver Lake in 2019. Contrast this with the high-profile disagreements that plague clubs with similar financial backing, such as PSG (Paris Saint-Germain) and Chelsea FC, or the Glazer family funnelling billions out of Manchester United, and it is easy to see why Manchester City has been so successful. Why were the Venture Capital firms who backed Mark Zuckerberg before Facebook went public happy with receiving shares with no voting power? Because they were not only investing in Facebook, they were also investing in the genius behind it. Likewise, Mansour’s light hand has allowed the Spanish trio of Soriano, Guardiola, and director of football, Txiki Begiristain to implement their vision for success unimpaired. Whether or not they did this in accordance with financial fair play rules, is yet to be seen. 

A Toxic Relationship

“They make a desert and call it peace” - Calgacus

When people speak of “alternative investments” in finance, they normally refer to commodities, art, or, recently, cryptocurrencies. Though PE is normally categorised with this class of assets, football clubs bought through funds raised by these firms are not usually seen as an investment class of their own. Understandably, many football fans would be furious to see their clubs be seen as such. Just like the criticism levelled against the Romans by Scottish Chieftain Calgacus, the ruthless profit hunting of PE firms is something football fans have watched in fear. Already notorious in the finance world, PE firms have begun to be seen as business vultures, coming into ailing firms and ripping them apart for profits before leaving a decade or so afterwards. The idea of football as a business is one European fans hate, but realistically business and football have already been inextricably linked for decades. The idea that money is ruining the beautiful game is romanticised, but fans readily turn a blind eye when the summer transfer window comes along, and the chequebooks are brought out. On the other hand, the working-class roots of football should not be forgotten in the pursuit of money. 

While the CFG has led to fans across the world also getting to enjoy football, equally audacious plans like the European Super League are clear examples of finance trying to change the nature of football with no regards to the opinions of fans, who are ultimately the driving force behind the game. If a CEO were to act against the interests of their shareholders, they would be swiftly sacked. As the finance world takes more and more of an interest into football, it should not forget who the true shareholders of the game are: the fans.

The Future of Football

We likely won’t find out if Manchester City broke any rules in their road to success for another few years, and that’s ignoring the lengthy appeals process which they will pursue if found guilty. But the questions raised by the club will be debated for many years to come. How closely linked should the financial world and football be? How much scrutiny should investors face when buying clubs? Should politics play a part when assessing potential future owners for a club? 

Nonetheless, investors hoping to emulate City’s success would do well following Mansour’s method. He could have easily culled much of his management after successive failures despite billions spent, but his patience has finally been rewarded. Critics would argue that it was not patience to win which kept from doing so, but that he was content that the club was playing some part in distracting from the policies of his nation. And here lies the question we will see answered sometime in the next decade: Where some countries have football clubs, does Manchester City have a country?