FootBiz newsletter #121: Why Apollo buying Atletico Madrid is such a big deal

There is only one place to start this week and that is in Madrid, where Apollo have just completed one of the biggest private equity deals in football history.

The Financial Times report that two people with knowledge of the deal said it valued the club at €2.5bn including debt, although “another person put the figure at just higher than €2bn.”

Either way, only Chelsea’s 2022 sale to the uncomfortable marriage of Todd Boehly and Clearlake Capital could be described as bigger, and given how publicly separate the involved parties have actually turned out to be in west London, the fact that this is one big, aligned group taking a majority stake seems significant.

This ends up being a major, decisive bet from a humongous financial institution on Atletico, Spain, European football and the global sports business as a whole at a time when others are sat on their hands wondering where to deploy capital. Speaking with different people around the football industry about it there are plenty of differing views, but the most obvious read is that there are three mega-clubs in La Liga, the second-best league in the world, and two of them are owned by members and will never come up for sale.

The third is Atleti.

So Apollo have picked up a majority stake in the most significant sports asset in Spain that anyone could actually buy and managed to keep in place the existing management team that made the club so successful.

Now, whether chairman Enrique Cerezo or CEO Miguel Angel Gil Marin are still there in three years is another question entirely. Having been part of the leadership team at a company subject to a big-money acquisition myself, there is certainly a difference between being retained and staying.

Cerezo and Marin’s roles aren’t permanent but Apollo’s significant recent expansion into sports seems to be, and the New York-based firm will need to show the marketplace in its first investment that it has its own operating team who can go into their properties and increase value.

Helpfully, Atleti’s retained management team of Cerezo, Marin, CFO Oscar Mayo and others are also one of the most respected within football. Mayo was CEO of La Liga before being lured away to become COO of both the Madrid club and their network clubs in Mexico and Canada.

Atletico are 12th in Deloitte’s Money League and four of the clubs ahead of them (Real Madrid, Barcelona, Bayern Munich, Borussia Dortmund) are majority-owned by fans. Within Spain there is a huge moat separating their revenue (~$450m) and the likes of Real Sociedad, Sevilla and Athletic Club (~$180m). On the continental stage, Atleti’s revenues have now surpassed the three biggest Italian clubs and will continue to pull away, though the Premier League obviously remains a dominant force.

We covered Apollo’s big bet on sports back in September, when they finally announced the long-rumoured Apollo Sports Capital (ASC) division that would have $5bn in dry powder and promised to “bring patient capital, extensive networks, and a range of solutions that go beyond the typical equity-only strategies.”

From the Apollo side, Rob Givone and Lee Solomon will oversee the entire sporting portfolio, to which we will now be paying even closer attention.

Those who know the firm say that Givone has been a driving force behind many of Apollo’s moves into the sports space, and has quietly become one of the most influential figures in global sports investing. Buying a majority stake in Atleti and following it up with some of the investments being whispered about in the market will probably bring about the end of the quiet life for Givone. Solomon’s background is more on the media side, and given the symbiosis of sports and media rights, his experience appears an ideal complement to Givone and the two executives selected to operate the ASC group.

Al Tylis and Sam Porter were brought in as CEO and Chief Strategy Officer respectively and come as something of a package deal having invested and operated together in the sporting space at Liga MX outfit Necaxa and as co-chairmen of Colombian side La Equidad, two clubs that received investment from the Ryan Reynolds and Rob McIlhenney group behind Wrexham. Porter also ran business and legal affairs for the Kaplan/Levien ownership group at Swansea City and DC United while Tylis was CEO of NorthStar Asset Management.

Combining those four atop this investment is about as different a brains trust as you can imagine from the “Mom and Pop shop” that Atletico was as recently as 15 years ago when it was mired in debt and flirting with relegation to Segunda.

At that point, Valencia was clearly the third-biggest club in Spain and the most recent team to win a La Liga title outside Real Madrid and Barcelona. While Valencia’s own debt issues and mismanagement have seen them fall from relevance and nearly into Segunda themselves, only currently above the drop zone on goal difference, Atleti made the fateful hire of Diego Simeone in 2011 and have never looked back. The Argentine has won La Liga twice, reached the Champions League final the same amount of times and, justifiably, been the best-paid coach in the world for over a decade — and yet it still pales into insignificance versus the value he has driven for the club. Atletico Madrid are now a global sports property worth over $2bn, and much of that stems from his work on the pitch, no matter how well those in the board room have done.

A 2017 move from the beloved but creaking Vicente Calderon to the Metropolitano Stadium was not necessarily popular among fans, chiefly because it meant moving from a real neighbourhood within the city and out to a soulless bowl by the airport, but after nearly a decade it has finally become an arena that at least feels something like home. It also makes them many multiples more in matchday and corporate revenue than they could have dreamed of down by the banks of the Manzanares. The next phase of that is the planned development of land around the stadium to make it into a multi-purpose sports and entertainment district.

That is actually how the discussions between Apollo and Atletico initially began, with the PE fund interested in funding the development opportunity over a year ago and somehow ending up as the majority owners of the club. (Side note: Ares may have done their bollocks on Lyon/Eagle Football but they get a pretty healthy return on the 34% stake they bought in Atletico for €180m in 2021.)

Beyond the real estate opportunity that brought Apollo to the table, being Champions League regulars, qualifying for the lucrative (expanding?) Club World Cup and continued global marketing efforts position Atleti as a club that could build on revenues that already approach $450m. Again, there aren’t that many of those businesses in football at the moment and even fewer that are available.

More broadly, until now (or when the deal closes in Q1) there weren’t any teams of this size in any sport owned by the big private equity firms at all. CVC paid ~$650m for the IPL’s Gujarat Titans, later selling at a profit, but otherwise their deals have been at league level rather than individual teams. Other PE firms like Arctos and Ares have taken stakes but not a majority piece of one of the biggest clubs in the world.

That’s why it’s such a significant deal in football finance, an acquisition that also pretty neatly sums up where the global sports business is in 2025 and a huge first bet from ASC. Given what we know about the fund, it won’t be their last.

But the most important part is yet to come. Now they have to grow the club.

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• Flipping in time for June

• Argentina trio get international fever

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