The outline of a deal for Scottish football club Rangers to be taken over by a U.S. investor group has been agreed with a period of due diligence to take place before it is completed.
Talks have been ongoing for over three months with the group, spearheaded by healthcare mogul Andrew Cavenagh and 49ers Enterprises president Paraag Marathe.
After negotiations with the current bloc of major shareholders, the parties have agreed a set of variable routes to acquiring the 51 per cent majority they seek. It is expected to be processed in the next few months.
Rangers would be the second British club 49ers Enterprises has bought a stake in. It purchased an initial 15 per cent stake in English Championship side Leeds United in 2018, gaining boardroom influence, before completing a takeover worth £170million ($213m) in July 2023.
The deal would add to the growing contingent of American investors in Scottish football. Dundee, Dundee United, Hibernian and St Johnstone have been bought in the past decade. Atlanta United president Darren Eales also bought a minority stake in Aberdeen and sits on their board. Las Vegas-based businessmen bought Scottish Championship club Dunfermline Athletic last month, too.
49ers Enterprises has been scouring the globe for investment opportunities in sport and, despite the Scottish Premiership being left behind by its English neighbour since the Premier League’s first season in 1992, Rangers still carry weight as a historic European club.
Scotland’s smaller domestic market means purchasing Rangers will be significantly cheaper than clubs of a similar scale in other countries. In return, 49ers Enterprises gets one-half of the Old Firm derby with Glasgow rivals Celtic and Ibrox, a 50,000-seater stadium. Commercially, the prospective owner can also tap into a large expatriate community in North America, with the U.S. and Canada holding more than 30 supporter clubs among at least 600 worldwide.
Marathe, the president of 49ers Enterprises (Lachlan Cunningham/Getty Images)
The established financial advantage Rangers and Celtic enjoy over every other team in the country means that European qualification is almost guaranteed, with the title winners gaining access to the Champions League.
After suffering a financial collapse in 2012 and climbing back up from the bottom division of Scottish League football, they are still playing second fiddle to Celtic, who are on course to win a 13th league title in 14 years, drawing level with Rangers’ record of 55.
Here, The Athletic explains the status of the Rangers takeover, the potential complications with Leeds and what they would be getting by investing in Rangers.
What is the structure of the takeover?
According to sources, speaking on the condition of anonymity, the investment group intends to command a controlling stake in the club, which means owning at least 51 per cent of the shares.
Enough shares have been identified to gain that majority and claim the seats on the board necessary to steer the footballing decisions.
The investors will be buying through a separate vehicle that will encase both Cavenagh and 49ers, but the former will be the larger party within the bloc.
That could be pivotal given the Scottish Football Association’s (SFA) barrier to entry for investors who already have control of another club — in this case, Leeds. Article 13 states that, unless given prior written consent, no person can be a shareholder in a Scottish club while holding shares in another club.
There is precedent for the rules being relaxed, however. In February last year, the SFA permitted Bournemouth owner Bill Foley to buy a £6million stake in Hibernian, provided his shareholding did not exceed 29.9 per cent. The argument was that the investment by Foley, who also owns ice hockey’s Vegas Golden Knights, was positive for the Scottish game. It had to be offset against the potential for dual ownership to affect the integrity of the competition if the owners started exchanging players between their clubs to gain an advantage.
Brighton & Hove Albion owner Tony Bloom is still in talks about investing up to £10million for a minority stake in Hearts. Hearts signed a deal with Jamestown Analytics — an off-shoot of Starlizard, the data firm owned by Bloom — which has helped bring success to Brighton, Belgian club Union Saint-Gilloise and Como, who play in Italy’s Serie A.
There was also a belief that if the investors were to pass the 30 per cent threshold at Rangers, they would have to make a compulsory offer to all other shareholders at the same share price, in line with UK Takeover Panel rules.
The code previously applied to public companies incorporated in the UK, Channel Islands, or Isle of Man, irrespective of whether their securities were traded. But this month, the scope narrowed to only companies with securities admitted to trading on a UK-regulated market, such as the London Stock Exchange — which means it will not apply to Rangers.
Who is selling?
Rangers have a wide shareholder base comprised of seven individuals who own between six and 13 per cent, which means any potential investors have to strike deals with multiple individuals.
Former chairman Dave King, the largest shareholder at 12.6 per cent, has been looking to sell for some time. Another former chairman, John Bennett, who owns just over seven per cent, is happy to sell too. So, too, is former director Barry Scott who owns around 1.5 per cent.
Investor fatigue is not widespread but the deal hinged on the preparedness of the other major shareholders — Douglas Park (11.54 per cent), George Taylor (10.22 per cent), Stuart Gibson (9.53 per cent), Julian Wolhardt (6.69 per cent) and John Halsted (6 per cent) — to each sell a significant part of their shareholding.
They have agreed to do so because they know that a deal is dependent on the incoming investors reaching 51 per cent, and they view the partnership with Cavenagh and 49ers as being based on a shared vision for the club.
To make the numbers add up has required intense negotiations. They have been led by Taylor, who owns ten per cent and is Morgan Stanley’s lead banker in Asia, and Halsted, who owns six per cent and was a founder partner of private equity company Pamplona Capital Partners.
Letham, who owns around five per cent and has invested millions of his own money into the club, has also been influential in making the numbers work when it comes to the price, board structure and planned investment post-takeover.
Who are the investors?
Philadelphia-based Cavenagh is executive chairman of ParetoHealth, a health insurance company. It manages over $8billion in assets and covers more than one million lives across thousands of businesses.
49ers Enterprises is the more glamorous name and was estimated to be worth $5.97billion by Forbes in 2023. It has big-name backers from the world of sport and entertainment. The valuation pegged them as the 11th-wealthiest multi-sport owner group.
Jed York, the CEO of the San Francisco 49ers (Steph Chambers/Getty Images)
Some of the famous faces to have invested in 49ers Enterprises include actor Will Ferrell, golfers Jordan Spieth and Justin Thomas, nine-time NBA All-Star Russell Westbrook, Stanley Cup winner Gabriel Landeskog and the most decorated Olympian of all time, Michael Phelps.
The investment company is looking to unload 10 per cent of its stake in its NFL franchise, the San Francisco 49ers, but investment in Rangers is not dependent on that sale. 49ers Enterprises has backers willing to put more money in who are excited by the prospect of being involved in British football.
What would they be inheriting?
A club and fanbase in need of fresh investment and direction.
Rangers are 13 points behind Celtic with only the Europa League — Europe’s secondary club competition — left to play for this season. With regular Champions League revenue boosting Celtic’s coffers, they could open up an insurmountable financial advantage.
It has felt like Rangers have been in constant flux for three years and have been on a downward trajectory since reaching the Europa League final in May 2022. Fresh perspective and investment are needed.
The 49ers will inherit a club free of litigation and legacy issues for the first time in a decade. It is a far cleaner club. Heavy investment has improved the infrastructure of the stadium and training ground. A multi-purpose events space, which houses a club museum, has also been built.
There is plenty of work to do on the sporting side, however, after Rangers sacked manager Philippe Clement, a decision made during a board call on Sunday afternoon that lasted several hours. They debated the need to pull the trigger against the weighty compensation package that would be triggered. The 49ers were made aware and gave their blessing.
Rangers have appointed former captain Barry Ferguson as interim manager until the end of the season — but no long-term appointments will be made until the takeover is complete.
Are there any other issues with owning both Rangers and Leeds?
Potentially, but it involves the UEFA rule book and only becomes relevant if Rangers and Leeds qualify for the same European competition.
UEFA’s club financial control body says a club has decisive influence over another club if they hold at least 30 per cent of both clubs, or if they have at least 10 per cent and are the club’s largest shareholder.
Leeds are in the Championship, England’s second tier, but they are on track for automatic promotion and their owners have spoken about European ambitions. In Marcelo Bielsa’s first season in the Premier League, Leeds finished ninth.
In theory, if Leeds did make it into Europe, the 49ers would either have to relinquish their stake in one of the clubs or only team one would be able to compete, decided by whichever is in the most prestigious competition or, failing that, whoever finished higher in their league or whichever member association has the highest ranking.
UEFA has made exceptions in this regard, with Manchester City and Girona (owned by the City Football Group, CFG) being allowed to compete in the Champions League this year and Manchester United and Nice (partly owned by INEOS) also allowed to play in the Europa League on the basis that CFG and INEOS placed their shares in Girona and Nice into a blind trust.
Multi-club ownership models are being adopted across the world. Rangers being second in the food chain, almost as a feeder club to Leeds, would not sit well with fans — but the nature of the arrangement would not be so hierarchal.
And how about Leeds? Are the 49ers planning to sell?
49ers Enterprises and Leeds have declined to comment on the developments in Glasgow. Sources at Levi’s Stadium and Elland Road, who remained anonymous to protect relationships, have not indicated any concerns about the ownership setup radically changing in Leeds.
Chairman Marathe’s regular presence at Leeds games this season, despite living in California, was flagged by those sources as a show of his continued commitment to the club. The investment arm of the NFL franchise first got involved with Leeds in 2018. It waited five years for full control and now, nearly two years on, is on the cusp of the Premier League dream it came here for.
There is an army of investors behind Marathe who were sold the dream of being involved with the most-watched football league in the world. Years of grinding have led them all to this point, with the end of the Championship purgatory in sight. Throwing that away for the Old Firm seems unlikely.
Leeds are on the cusp of promotion from the Championship (George Wood/Getty Images)
In November, there was confirmation of a job change for Gretar Steinsson. United’s former technical director was shifted into a similar — but broader — role with 49ers Enterprises. Leeds and the 49ers were not shy in making it clear Steinsson would explore multi-club opportunities for the American group.
Rangers, it appears, would be the start of that multi-club strategy, joining Leeds in the stable instead of replacing them.
How has 49ers Enterprises been perceived as Leeds?
It took full control less than two years ago but the signs have been promising. Marathe was on the board during Andrea Radrizzani’s tenure and has to shoulder his share of the blame for some of the poor decisions made in the top flight.
However, over these two seasons as chairman, he has been a refreshing change from his Italian predecessor. Marathe is a calm operator, who does not speak publicly too frequently. Radrizzani was guilty of speaking too often.
Sources, who remained anonymous to protect relationships, who have worked closely with Marathe say he can be ruthless. He is not afraid to make changes if he feels it is for the betterment of Leeds. A raft of executives have been replaced in senior positions at Elland Road since he came to power.
Player sales, many enforced by relegation release clauses, have needed to be swallowed, but Leeds are carrying the second-biggest wage bill in Championship history — last season’s was considered the biggest. Money has been spent and they are committing to getting Leeds promoted.
It feels like real judgements can be made if and when United return to the top flight. Elland Road is expected to be redeveloped and, once back in the Premier League, supporters hope to see the full might of this investment vehicle in the transfer market.
(Top photo: Stu Forster/Getty Images)
