Melbourne Victory shareholders have supported a proposal that allows a US private equity investor to own up to a 70 per cent stake in the soccer club within five years.
The move paves the way for Miami-based 777 Partners to invest up to $30 million into Victory as the club recovers from high expenses and the financial impact of the pandemic.
The deal was struck to the backdrop of significant financial problems at Victory, the A-League’s best supported club. In 2021-22 its auditors warned there was “material uncertainty” it could continue as a “going concern”.
Melbourne Victory investor Richard Wilson is unhappy about what a controlling stake by 777 Partners means for the club’s future.Credit:Paul Jeffers
The investment from 777 Partners has angered some shareholders, who point to an option for the investor to walk away from Victory and be repaid the $30 million at a compounding interest rate of 10 per cent a year, according to documents filed with the Australian Securities and Investments Commission.
Victory was left reeling after an incident in December where 150 fans entered the pitch during a match at AAMI Park, resulting in dozens of arrests and damaging international headlines for the sport. The incident came after the decision by the Australian Professional Leagues to sell the next three grand finals to Sydney. Football Australia has since imposed sanctions on the club.
Fans invade the pitch during a Melbouren derby in December.Credit:Darrian Traynor/Getty Images
The club entered an agreement with the private equity investor late last year for $8.7 million, giving the company a minority stake. Shareholders were then given an option to allow 777 Partners to secure a stake of up to 70 per cent over the next up to five years.
Melbourne Victory were approached for comment but was unable to respond after the vote on Tuesday.
An independent report provided to shareholders found the deal was “not fair but reasonable” to non-associated shareholders. “In the absence of any other relevant information and/or a superior offer, we consider that the proposed transactions are reasonable,” the RSM Australia report found.
Richard Wilson, a founding director and shareholder of Melbourne Victory, said the deal “wipes the value of the shares” because of the option for 777 Partners to walk away.
“It effectively wipes the value of the shares [for up to five years],” said Wilson, who resigned from the board in 2021 over a disagreement about the direction of the club.
“It makes it almost impossible for a shareholder to sell their shares. You could sell to somebody who’s going to walk straight into a minority position where the shares are worthless.”
He said he saw the deal was “borrowing time” instead of affirming the club’s future.
“So the risk to the fans is that no matter [what the club] says about ‘this brings certainty, it brings security’ – no it doesn’t … [the investor] can walk away from it any time they like,” Wilson said.
“For the fans, there’ll be a product, there’ll be a team … but it’s just a bad deal.”
Private investment is playing a growing role in Australia soccer, with private equity firm Silver Lake the biggest shareholder in the A-League. Victory also owns a stake in the A-League, along with the other 11 teams in the competition.
With Ben Schneiders
