As European soccer teams continue counting the costs of the global pandemic that led small and big teams into economic distress, Europe’s football governing body is preparing to create a relief fund of around $7 billion. The relief fund is set to help struggling clubs manage their growing debts.
According to officials briefed on these negotiations, the plan will be for the soccer governing body to get financial relief for teams strapped for cash while playing in major club competitions. The repayments will be linked to the clubs’ future payouts on their participation in tournaments run by the UEFA.
The paydays can reach up to 100 million euros annually, especially for teams participating in the latter stages of Europe’s premier club competition and the Champions League. Fortunately, VWin offers odds on these major competitions to Asian punters who enjoy betting on soccer. This Asian sports betting site lets you bet on soccer scores and other popular markets, including live betting on major European leagues.
For months, UEFA has been talking to banks and other private equity firms on creating the fund. The first relief payments will be available to teams that will qualify for the three annual club competitions in Europe – the Europa League, the Europa Conference League, and the Champions League.
Many European teams desperately need this financial relief, as billions of dollars have been lost from the teams’ balance sheets since the lockdown in early 2020. Teams in many countries had to play matches without their fans for months, with others having to pay rebates to their sponsors and broadcast partners. As such, most teams have had to endure significant pain in the last year.
Barcelona, for instance, couldn’t retain the services of their star player, Lionel Messi, with growing debts of over $1.5 billion. The club’s president has also recently revealed that they’re expecting losses of around $570 million this year, a significant figure for the soccer teams. Many of these financial problems by Barcelona have been self-inflicted, resulting from years of poor management.
Soccer’s richest domestic competition, the English Premier League, has also suffered its first reduction in revenue since its establishment in 1992. UEFA has held talks with London-based investment firm, Centricus, which previously held talks with FIFA to finance their enlarged Club World Cup.
However, UEFA has recently focused on landing a deal with several group lenders like UniCredit and Citigroup. Unfortunately, the involved parties haven’t been officially identified, as no agreement has been reached.
UEFA has refused to comment about the relief funds or the ongoing talks, but they’ve discussed a proposal with Europe’s Club Association (ECA), the body representing around 200 top division teams. The soccer governing body has also requested the ECA to survey its members and understand their financial requirements.
However, the biggest concern is the millions of dollars related to player trading debt. These obligations have accumulated in several years, as clubs traded players to each other as a crucial source of finances between small and medium teams.
Considering how interlinked the team debts have become, any default in player trading debts creates a contagion effect. The player trading market was worth over $7 billion by early 2020, but it has slowed significantly with lots of sellers and only a few buyers, with teams struggling to trade players they can’t afford.
According to the chief executive on one of Italy’s most prominent teams, the market for middle-tier footballers worth between $5 and $30 million are now few, despite these trades being known for lubricating the market in the past. Instead, teams are depending on loans and free transfers to offload salaries and contracts they can’t afford.
According to people familiar with the talks, UEFA’s involvement in the relief fund is crucial and will allow banks to secure the investments against future income from competitions instead of the balance sheet of each team. This arrangement will reduce the risks for lenders and ensure lower interest rates for clubs than in normal conditions.
However, UEFA will develop a rating profile for the teams based on their projected income from the Europa League, the Champions League, and the conference league, helping to know the amount that every team is eligible to receive.
UEFA’s plan comes after months of failed efforts by a group of 12 top teams, citing the need for financial stability and a better share of soccer wealth. The governing body is the latest football organization to look for outside investment in a bid to mitigate the ongoing effects of the lockdown.
The Spanish professional league announced that it had signed a deal to trade around 11% of commercial and broadcast income for the next 50 years to a private equity fund for $3 billion in investment. The Italian league is also negotiating to establish a similar arrangement.