Home Plan for new £350m Manchester venue moves forward
March 1, 2020
A US entertainment group backed by Silver Lake is pressing ahead with plans to build a £350m arena next to the stadium of Manchester City football club, in a move that deepens ties between one of the world’s biggest private equity groups and the Premier League champions.
California-based Oak View Group told the FT it is to file a planning application for the 23,500 person capacity music and entertainment venue, which it believes will be the most expensive arena in Europe and the biggest in the UK.
One of Oak View’s biggest investors is Silver Lake, which in November paid $500m for a 10 per cent stake in City Football Group, the parent company of Manchester City and sister clubs around the world.
As part of the deal, Oak View said it will pay an annual lease payment worth millions of pounds to CFG.
Tim Leiweke, Oak View co-founder and chief executive, said the private equity group’s stake in CFG “puts a little more pressure on me now because [Silver Lake] are both sides of this equation as a tenant and a landlord”.
If the Manchester project gets the go ahead from the city’s planning authorities it could boost income at CFG at a critical time. Earlier this month Manchester City was banned from the Champions League, Europe’s top club competition, for two seasons after Uefa, European football’s governing body, said the club had committed “serious breaches” of its so-called financial fair play regulations. The move could result in lost revenues of up to £200m and the club is appealing the sanction.
The proposed venue is contentious. SMG, the operator of the Manchester Arena, a 21,000 capacity city-centre venue which was bombed in a terrorist attack in 2017, argues there is not enough demand for two big arenas in the city.
Oak View’s planning application will be heard by Manchester City Council, which has also faced criticism from local protesters and rival developers over its close ties with the football club’s Abu Dhabi-based owner. The land on which the arena will be built is owned by a joint venture between Abu Dhabi United Group (ADUG) and the council, which has a 20 per cent stake.
The critics argue that the local authority has given preferential treatment to ADUG and other companies owned by Sheikh Mansour bin Zayed al-Nahyan, the billionaire who controls Manchester City, in deals that allowed them to amass a property portfolio worth more than £300m in the city.
Sir Richard Leese, council leader, said: “Abu Dhabi United Group has demonstrated consistent commitment to the ongoing regeneration of east Manchester which has delivered real benefits for Manchester people. It is, however, a myth that they have been treated differently to other investors. We don’t do sweetheart deals.”
Mr Leiweke said Oak View is fully funding its project without asking for taxpayer subsidies which are common with similar building projects elsewhere in the world.
“We don’t look at [Manchester Arena] as the competition,” he said. “We believe both arenas will be available to exist and find a place and niche that will be their part of the marketplace. Their success or failure has little impact on our vision and the return on the investment we’re making.”
Oak View was founded in 2015 by Mr Leiweke, who once ran AEG, the world’s biggest arena operator, and Irving Azoff, former chief executive of online ticket seller Ticketmaster and Live Nation, the event producer. The group is also developing arenas in Seattle, New York and Milan.