US investor secures control option for Melbourne football club
Shareholders in Australian football club Melbourne Victory have approved a proposal that allows US-based investor 777 Partners to take a majority stake.
The private equity firm made a minority investment in Victory towards the end of last year, reportedly paying AUD 8.7m (USD 6.1m). The deal included an option to put in another AUD 30m and increase the holding to as much as 70% over a period of five years.
777 Partners told ESPN last month that it owned 19.9% of the club – claiming to be a significant investor, but not the largest investor – and a proposal would be put before shareholders enabling it to increase its equity interest over time.
Victory was established in 2004 as an inaugural member of Australia's A-League. The club, which plays its home games at a 30,050-capacity stadium, is recognised as Australia's best-supported side and one of its most successful, with four league championships to date.
The A-League is controlled by the clubs through Australian Professional Leagues (APL), the commercial rights holder for professional domestic football across men's, women's, youth, and e-sports levels. In 2021, Silver Lake acquired a 33% stake in APL at a valuation of AUD 425m.
777 Partners has a dedicated sports, media, and entertainment team that has established a strategy around targeting what it regards as undervalued global football assets. The firm holds controlling stakes in Italy's Genoa, Belgium's Standard de Liege, France's Red Star FC, and Brazil's Vasco da Gama. It also holds a significant minority interest in top-tier Spanish side Sevilla.
The initial investment in Victory last year was positioned as a strategic move, with Anthony Di Pietro, the club's chairman, saying it would strengthen the capital base and create new opportunities for growth. 777 Partners said it would bring high-end data and analytics capabilities and player development techniques as well as global commercial opportunities.
The deal also came as Victory was recovering from economic challenges presented by COVID-19. The Sydney Morning Herald reported last month that the club posted a AUD 6.7m loss for the 2021-2022 year and its auditors expressed uncertainty as to how long it could continue as a going concern.
PE firms globally are increasingly pursuing sports assets. Three main approaches have emerged: targeting franchises in mature systems where there are predictable cost and revenue streams; building multi-club platforms that diversify risk; and buying into leagues and media rights owners.
777 Partners claims its football group is the fastest-growing muti-club network in the world.
Other notable sports investments in Australia and New Zealand have involved rugby – and structured deals. Last year, Silver Lake subscribed to a perpetual convertible security for NZD 200m (USD 117m) issued by New Zealand Rugby, while Ares Management made a AUD 40m loan to Rugby Australia. Neither body is profitable, partly because they have relatively small domestic audiences.
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