The addition of the New York Yankees as a partner in Manchester City FC’s purchase of a New York MLS expansion franchise was kept under wraps for more than six months.
Joe Ravitch, co-founder and partner of global merchant bank The Raine Group, points to November for when the idea of a partnership between the powerhouse franchises started to take hold.
“I thought a partnership would be enormously helpful to get the deal done,” Ravitch said last week, after the announcement that New York City Football Club would begin play in 2015 in an interim stadium while the team seeks to secure a permanent home. EPL club Man City is the majority owner of the franchise. The Yankees, according to a source, are looking to take a stake of between 20 percent and 25 percent, though the deal’s paperwork was still being finalized late last week.
The $100 million expansion fee for the franchise more than doubles the previous high for MLS ($40 million for Montreal in 2012).
The Yankees and Man City had a relationship before the NYCFC deal through Legends Hospitality Management, the Yankees’ stadium concessions business, which in December signed a deal at Man City’s Etihad Stadium. But bringing the Yankees directly into the fold for an MLS expansion club was seen as a way to make the EPL club owners more comfortable dealing with New York politicians and community groups while searching for a stadium development deal.
Ravitch’s involvement dates to last summer, when his group was retained by MLS to advise on the league’s desired 20th franchise. Although The Raine Group has advised on dozens of sports league and franchise transactions — including working with the Yankees on the creation of the YES Network — this was its first deal with MLS.
“It would give the Manchester City guys more confidence in New York by having a strong local partner like the Yankees,” Ravitch said.
Yankee Stadium now has been mentioned as a possibility for the new club’s interim stadium. Since MLS’s efforts to complete a deal for a stadium development in Queens have been unsuccessful to date, NYCFC management will look at other sites in New York for a permanent home.
“We thought we could help Manchester City, and the deal made sense for us,” said Yankees President Randy Levine. “We’re a sports and entertainment company that’s always looking for great opportunities.”
Any revenue generated for the Yankees through such opportunities would not be subject to MLB revenue-sharing provisions.
Man City first expressed its interest in MLS a year ago, when club executives came to New York in June to unveil a rooftop soccer field at Public School 72 that was donated by club owner Sheikh Mansour bin Zayed Al Nahyan. MLS President Mark Abbott stopped by the event to show his support. A very preliminary discussion about Man City’s interest in the New York expansion franchise was held. Formal talks began three months later.
Last Wednesday, Abbott, MLS Commissioner Don Garber and Man City CEO Ferran Soriano were back at PS 72 for a press conference to discuss the deal.
“It was beautiful symmetry, being back at PS 72,” Abbott said. “Our negotiations began the day after Labor Day, and we worked on it just about every day for the next nine months.”
All in-person negotiations were conducted at the New York offices of the law firm Paul Hastings. Martin Edelman, who is of counsel to Paul Hastings, sits on the board of Manchester City FC. MLS was advised by outside counsel Jon Oram and Bradley Shron of Proskauer. Brent Richard, a former soccer player at Vanderbilt and now a vice president at The Raine Group, worked with Ravitch on the deal. Soriano represented Man City in consultation with attorneys from DLA Piper in most discussions, while the Yankees utilized their internal legal staff.
“There were a lot of interesting compromises, a lot of negotiations,” Ravitch said, declining to disclose any such details.
Abbott also declined to provide specifics about the lengthy negotiations. “In the end,” he said, “we can’t imagine having better partners for this team than Manchester City and the New York Yankees.”
