Alliance Sports Fund – Launching February 2023
Football is big business.
It is the world’s most popular pastime and generates unimaginable amounts of money.
In 2021 alone, the average Premier League team generated £246m in revenue, with Manchester City leading the way with a total of £571m.
With so much money to be made, it’s perhaps surprising that some clubs are turning to alternative investment channels in order to raise money.
A relatively new concept for the world of professional football is the issuance of bonds, however despite its relative infancy it’s already gaining enormous ground in overseas leagues with the likes of Barcelona, Inter Milan, and Porto each recently issuing bonds worth up to hundreds of millions of Euros.
Inspired by this, UK clubs are now also starting to experiment with bonds.
A prime example was the opening of the new Tottenham Hotspur Stadium, not just for its cutting-edge design and engineering but also for the £637m debt incurred in building it.
The club were fortunate to have three supportive banks in Goldman Sachs, HSBC and Bank of America Merrill Lynch who provided the development finance package enabling the stadium to be completed.
Lower tier clubs have also followed suit with teams such as Queens Park Rangers and Peterborough United having already issued bonds with the aim of raising millions of pounds worth of additional investment.
In doing so, they allow fans and investors to loan money to clubs in order to enable everything from improving training facilities and upgrading pitches, to ensuring youth academies are of a good enough standard to nurture the very best emerging talent.
The question is, why are clubs choosing to do this?
The hugely uneven levels of club wealth within the English football pyramid is one primary reason.
While the average Premier League club generated revenue of £246m in 2021, the average for Championship clubs was £26.5m, and just £5.4m for those in League One.
For these lower league clubs, therefore, money is much harder to come by. This makes it difficult for clubs to invest in their future, attract top players, push for promotion and, once that’s achieved, remain competitive against far wealthier opposition.
The never ending quest for investment to aid financial health and club development is a vital one and while many top flight clubs benefit from their substantial accumulated wealth, it’s a far tougher task for those in the lower leagues.
Then, of course, there’s the financial impact of COVID-19.
The impact of the pandemic
Between 2016 and 2020, match days accounted for an average of 16.5% of total club revenues.
In 2021, matchday revenues fell to just 1% of total club revenue, a dip to the tune of -15.5% due to the pandemic’s impact on matchday earning potential. Income that clubs, especially those in lower leagues, rely heavily upon.
As a result, the average lost revenue per club due to Covid was an estimated £45.1m for Premier League clubs; £5m for Championship clubs; and just under £1m in League One.
Building the momentum required to compete and challenge for promotion is a herculean task in itself.
However, this has been made all the harder by the devastating impact of the pandemic, with many clubs still struggling to overcome the financial pothole it has placed them in.
Having personally made multiple investments into football clubs from League One and upwards, I’ve seen first hand how the ability to secure investment via alternative paths can hand a vital lifeline to lower league clubs.
Growth potential of sports financing
Despite an almost complete loss of matchday revenue in the 2020/21 season, the European football market grew defiantly in revenue terms by 10% to €27.6 billion, boosted by the UEFA EURO 2020, a record-breaking UEFA Women’s EURO and the first ever winter FIFA World Cup tournament.
Premier League clubs’ revenues also saw an increase of 8% to £4.9 billion in 2020/21 following the previous season’s drop, which was the first year-on-year fall in total revenue in the Premier League’s history.
This increase is largely due to a circa £1 billion (43%) increase in broadcast revenue, owing to rebates and deferrals in the previous season. The impact of this on overall revenue, however, was diminished by the absence of fans for the majority of the season, which resulted in a loss of over £0.5 billion in matchday revenues.
With the return of full stadiums, along with new broadcast deals and improved commercial deals, the outlook for future Premier League clubs’ revenues is optimistic, with overall revenue projected to surpass £6 billion in the 2022/23 season.
The launch of The Alliance Sports Fund
To support this emerging funding process and to help UK football clubs with short-mid-term cash flow requirements, we are launching a dedicated sports investment fund to sit alongside our existing real estate offering.
While the practice remains in its relative infancy within the UK, it’s an up and coming sector and one that provides huge room for growth – not to mention the exceptional yields for those investing.
The Alliance Sports Fund will provide a tailored platform for those wishing to invest within football, utilising both my own personal experience and contacts as well as existing Alliance Fund resources.
The fund will offer investors an attractive opportunity as it provides returns that are higher than traditional investments such as stocks and bonds. It will also offer investors the chance to benefit from the increasing revenues and profits generated by football clubs and other sports teams.
Investors will benefit from both capital appreciation and dividend payments, making it an attractive option for those looking for a long-term return on their investment.
The fund is due to launch in February 2023 and will be primarily focused on clubs in EFL League One and above.
Iain Crawford, CEO.