On GF Capital buying Cosmos, past interested investors – and a Red Bull purchase?

IMAGE, MATT KREMKAU FOR EMPIRE OF SOCCER

by DAVE MARTINEZ

Late Thursday afternoon, Michael Lewis of Big Apple Soccer reported a possible investment group looking to either join or buy out the existing New York Cosmos ownership: namely, GF Capital. He also made mention of one of the oldest and wildest rumors in the silly mill — a possible purchase of the New York Red Bulls.

Before we get to the latter, let’s start with the GF story.

EoS first heard of their possible involvement as of last Friday afternoon. Unfortunately, we were unsuccessful in confirming the rumor after numerous attempts to reach the firm and after contacting several sources on the subject. We decided to keep the matter off record until we were able to further corroborate the story.

Nevertheless, with the news out and on the table, this is what we have learned to this point — again, from a single, but reliable source:

  • GF Capital’s Chairman and CEO Garry Fuhrman has been exclusively speaking to Seamus O’Brien about a possible role with the organization for about a month.
  • O’Brien is reportedly offering a stake in the Cosmos for $4-5 million. Stories conflict on whether that is for a portion or the entire club.
  • If only for a portion, O’Brien would retain his majority role with the team. A portion of that purchase will go towards a rumored debt of $4 million (despite O’Brien’s claims of no debt).
  • Why would anyone want to buy the Cosmos in this uncertain atmosphere? Apparently, GF wants to beef up their GF Sports division with a “marquee team,” which explains their interest. Their purchase would grant them access to the Cosmos likeness, library and rights.
  • These talks likely won’t lead to a 2017 season for the Cosmos. In fact, there seems to be consternation about the future of the team if this were to go through.

That last part is critical. It is not known what a cash infusion from GF would mean. However, if the chance of a return to NASL would be in the cards, it wouldn’t happen next year.

But who is GF Capital? They’re not a traditional sports ownership group; they are a venture capital company that specialize in situations like the one the Cosmos are enduring. One look at their mission statement says it all:

“GF Capital makes control-oriented growth capital investments in middle market, branded consumer product and media companies. The investments can be in the form of control, recapitalization and growth capital with a target equity commitment of $15 million to $50 million per transaction with enterprise values between $20 million and $150 million. The Fund is able to invest in larger transactions by offering co-investment rights to limited partners.”

The intriguing part remains that the Cosmos have not officially pulled out of the NASL competition. One theory suggests the league may be able to use the Cosmos “state of limbo” as leverage, positing the club in their plans for a push towards a 2017 season — knowing they will never take the field. For the Cosmos, their unofficial hiatus leaves them with one foot in the NASL door — and options for the future.

OTHER RUMORED INVESTORS

To this point, GF Capital have been the most promising rumored investor involving the Cosmos. But they are hardly the first.

Here is a list of rumored investors EoS has heard about, dating back to 2014:

  • One of the earliest and most hopeful attempts at luring new investors was that of a multi-million dollar Chinese investment group, with ties to Chinese multi-billionaire Jack Ma. Those talks began sometime in the latter part of 2014/early 2015. While a hopeful endeavor, the two parties could not come to an accord and talks, as one source said, “simply faded away.”
  • Carlos Slim. This is a familiar name to people following this story. In fact, we reported it just two short weeks ago. The first time Slim came up in conversations regarding the Cosmos was about the same time the Chinese investor rumor began. Slim’s name once again reared its head in the midway point of this year and again, this very month. EoS asked Seamus O’Brien about Slim’s involvement — a question he laughed off. “I don’t know where these rumors come from,” he said, denying any connection to the Mexican mogul. Since then, Slim has been rumored to be interested in some role with the NASL. But again, who knows how true that may be.
  • Andrew Murstein. The owner of the New York Lizards, who also calls Hofstra home, was a popular name volleyed about in the latter half of this year. Whether he ever had contact with the Cosmos remains a mystery.
  • Everton Football Club. Several people in and around the club were somehow aware of possible interest from the English Premier League club — including players and managers. However, EoS could not receive any indication if those rumors were at all true or where they even began.

What strengthens the claim of GF is the reliability of the source. But again, it is difficult to report their interest as fact when there has been a lack of corroboration.

ON THE RED BULLS

Finally, the most intriguing part of Mr. Lewis’ article came with an inference of a possible purchase of the New York Red Bulls.

From the piece:

One intriguing rumor bouncing around has new owners acquiring the team. They would then have the club stay out of competitive soccer for a year and then purchase the Red Bulls to perform in Major League Soccer in 2018.

This may come as a surprise for Red Bull fans. For anyone who has followed the Cosmos closely, however, this particular strategy is not much of a secret. In fact, Cosmos supporters have been told about this tact by ranking members of the team for the past two years.

The Red Bull connection dovetails with a report from SI nearly two years ago, claiming the Red Bulls would be open to listening to potential offers for the club — a report EoS was able to independently confirm at the time.

Since then, talks of a Red Bull selloff have all but gone silent. That’s not to say there aren’t valid reasons to believe the team could go on sale — a topic we will tackle in the coming days.

Still, for Cosmos brass, that option remained the “nuclear option;” the choice they would pursue if their jaunt through the NASL did not bear fruit. After all, if they were willing to spend $400 million on a stadium in Belmont, why not sink that money  into an established franchise and stadium in Harrison instead?

To the credit of BAS, we did not hear of GF’s intention to buy the Red Bulls and start a team in 2018 — and that may connect the dots with Seamus O’Brien’s recent comments leaving the door open to an MLS move. What we have heard of GF Capital simply stated that the group’s role was not clear, but potentially threatening to the Cosmos/NASL relationship — and potentially a death knell for anyone hoping to see the Cosmos take the field in the near future.