Football clubs seek alternative fundraising avenues as COVID strips up to £100m from 2021 match day revenues.
With UK football clubs increasingly seeking alternative fundraising routes, such as bonds to increase their financial clout and make long-term sustained success more achievable, We have announced our launch of a dedicated sports investment fund to sit alongside our existing real estate-focused offering.
Football is a 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.
Bonds in football
Issuing bonds is a relatively new concept for the world of professional football, but it’s already gaining ground fast in overseas leagues with the likes of Barcelona, Inter Milan, and Porto each recently issuing bonds worth up to hundreds of millions of Euros.
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.
Inspired by this, UK clubs have also started to experiment with bonds.
The question is, why are clubs choosing to do this?
One reason is the uneven levels of club wealth within the English football pyramid. 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.
Then, of course, there’s the financial impact of COVID-19.
The impact of the pandemic on profits
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, Alliance Fund estimates that in 2021, 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.
CEO of Alliance Fund, Iain Crawford, commented:
“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.
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
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 long after the impact of the pandemic has been overcome – not to mention exceptional yields for those investing.
With this in mind we felt it prudent to launch a dedicated sports fund in order to provide a tailored platform for those wishing to invest within football, utilising both my own personal experience, contacts and existing Alliance Fund resources.”
“With this in mind we felt it prudent to launch a dedicated sports fund in order to provide a tailored platform for those wishing to invest within football, utilising both my own personal experience, contacts and existing Alliance Fund resources.”
