Takeover latest: American billionaire interested but talks on holdDecember 29th, 2006

An American billionaire has been in discussions with City about a possible £70million takeover - but no further talks are planned until the summer.

The information has come to me through three separate sources, all of whom I believe to be reliable.

One source revealed that City’s chief executive Alistair Mackintosh showed a group of three Americans, believed to be representatives of the billionaire, around CoMS six weeks ago. As yet I do not have a name for the investor, but have been told that £70m would be “a drop in the ocean” for this person.

According to one very well-placed source, the American has told the board that “if City are in the Premiership in the summer then he’ll talk”.

The main spur for the deal is widely believed to be the increase in TV money next season. The deal the Premiership signed with Sky and Setana will be worth £1.7billion over three seasons starting from 2007-08 - a 67% increase on the current deal (more details here). City, who have been getting £26m a year from the present deal, could see their TV income grow by around £17m a year.

Fear that City might miss out on this cash pot is rumoured to be the main reason behind the delay, though I suspect there are other reasons. As relegation is a fear for any club mid-table or lower in any season, the loss of revenue it would entail will always be factored into the final price, regardless of when discussions take place. West Ham, for instance, were in 16th place when Eggert Magnusson bought the club last month.

It’s possible that John Wardle and David Makin’s eagerness to sell has made the American investor suspicious, though the delay could merely be a negotiating tactic by a person used to playing with far bigger numbers than our board.

Recently I wrote that I couldn’t see a good financial reason for someone to buy City (story here) as property values have been central to other club takeovers. The West Ham takeover hinged on the four freehold properties the club owned, Aston Villa had a similarly enticing landholding while according to this Daily Telegraph story the consortium hoping to buy Liverpool expects to make a 25% annual profit on the investment over seven years by redeveloping Anfield. City have no such landholdings to entice an investor.

But then I found this article from The Independent claiming that new Villa owner Randy Lerner plans to build a super-casino on land adjoining Villa Park. The increasingly close ties between football and the gaming industry were examined by David Conn in this Guardian piece, and could be a clue to the identity of the mystery American.

Although City doesn’t own the stadium, plans for a £260m casino and leisure complex to be built next to it (proposals here) could make the club attractive to the right buyer.

One person who fits the bill is Philip Anschutz, America’s 31st richest person who is worth an estimated $7.8 billion. Anschutz, who has been described as a “sports nut”, owns five US soccer teams and, until recently, the MEN arena.

In 2003 the Mail on Sunday reported he was in talks with Man United about a possible takeover. United at that time were hoping to bid for a super-casino licence but later scrapped the plans.

Anschutz also owns the Millennium Dome and in 2004 entered into an agreement with Kerzner International to redevelop it as a casino (link). Kerzner is the firm brought in by Manchester City Council to develop the SportCity site. In October, Howard Kerzner, the company’s CEO and son of founder Sol Kerzner, died in a helicopter crash. It is unknown what effect this has had on the Manchester casino bid.

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Entry Filed under: Features