Yesterday’s report about D.C. United seeking new “investment partners” did not set off alarm bells among Major League Soccer fans in the nation’s capital. But it probably should have.
At first glance, the wording of the announcement looks benign. “D.C. United owner Will Chang has hired sports investment firm Inner Circle Sports and begun to search for local or strategic partners who would be interested in investing in the Major League Soccer club,” it says. The report goes on to state, reassuringly, that Chang “hopes to keep the group relatively small and…plans to remain the club’s majority owner.” Indeed, Chang reiterated his commitment to the club “despite mounting losses” in an interview with Steven Goff of the Washington Post.
But as anybody with any experience in the investment banking or private equity arenas knows, the news means only one thing: Chang is seeking a buyer for the club. He may be satisfied divesting a minority stake, but the firm he hired does not traditionally engineer deals of this type. In fact, some of the biggest recent takeovers in the world of professional soccer involved the New York investment bank; Ellis Short’s acquisition of Sunderland FC in 2008, Liverpool FC’s 2007 sale to Tom Hicks and George Gillett among them. Inner Circle’s Web site has some of the other deals advised by the firm, very few of which were for minority ownership.
Who might buy DC United? And where, if anywhere, would they move the team? Anybody’s guess for now, though there are a few clues. One is the Maryland Stadium Authority’s recently-announced study to explore the viability of building a professional soccer stadium in Baltimore. The study will cost $100,000 and surely has nothing at all to do with yesterday’s announcement. There are ownership groups in Montreal and Miami (among others) who could bid for the franchise as well. Don’t be surprised if an investor from Asia becomes involved in some capacity. According to a recent BBC story, Inner Circle has been busy trying to develop investor ties in China.
Of course, nothing could come of this. Investment banks are hired all the time to shop companies without a sale ever coming to fruition. Or the ownership group could indeed grow by a few names, as Chang insists (on the record at least). But make no mistake: DC United is for sale and is being shopped by one of the most powerful investment banks in the field. DCU fans might want to take note of this.
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