Monday, February 26

PSG sells minority stake to US firm Arctos Partners

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Paris Saint-Germain owner Qatar Sports Investments agreed to sell a minority stake to U.S. private equity platform Arctos Partners on Thursday.

Financial terms of the deal were not disclosed by the French league club. Arctos will own up to 12.5% of the club, valuing PSG at between 4 billion euros ($4.32 billion) and 4.25 billion euros, two people familiar with the deal who were not authorized to speak publicly told The Associated Press.

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The French league champion said Arctos’ investment will go toward growing PSG operations “into new markets, including North America” and supporting plans to develop its stadium and training center. Arctos, as a non-controlling partner, won’t have a say in sporting matters.

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“QSI will continue to have full control of all decisions at PSG,” the club said in a statement.

Since it took over 12 years ago, QSI has increased PSG’s net expenditure to more than 1 billion euros ($1.1 billion). The club has become a dominant force on the domestic stage — having won nine of the last 11 league titles — but has repeatedly failed to win the Champions League.

Arctos, which has offices in Dallas, New York and London, has invested in more than 20 professional sports organizations such as Liverpool, Aston Martin in Formula One, and teams in the NBA, NHL and Major League Baseball.

“Our investment in (PSG) fully aligns with our strategy of partnering with best-in-class teams across North America and Europe,” said David O’Connor, co-founder and managing partner of Arctos.

Arctos is one of several American investment firms that have invested aggressively in sports businesses in the United States and internationally, including European soccer clubs.

“Until very, very recently, the clubs were not commercial entities, they were sports associations or clubs,” said Andrew Zimbalist, an economist at Smith College in Northampton, Massachusetts. “Over the last couple of decades, they started to get commercialized. People saw opportunities to make money … and the teams were way undervalued.”

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The buying spree shows that the U.S. firms expect skyrocketing valuations of sports teams to continue, said Zimbalist, who studies the business of sports. The fragmented U.S. sports-television market, he said, makes international franchises more attractive — a way to diversify their investments.

For Arctos, striking a deal with QSI could lead to other opportunities.

“A lot of business is conducted through networking and connections,” Zimbalist said. “If Arctos is now going to be a partner of the Qatari sports group, they’ve got access to the Middle East and they also have some prestige that they can trot around if they decide they want to make an investment in Japan or South Korea or China or somewhere else as a partner with the Qatari sports group.”


AP Business writer David Koenig in Dallas contributed to this report.


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