Manchester City is the latest in a line of top European football clubs to tap the debt markets as clubs move to bolster balance sheets and take advantage of lender appetite that is banking on a return of Ebitda and cashflows after lockdowns are lifted. City Football Group, which has total or partial ownership of 10 clubs in major cities across the world, including Premier League champions Manchester City FC and New York City FC, recently raised a US$650m term loan. Some of Europe’s biggest football clubs are also looking to raise significant sums from financial markets. Many already had major liquidity concerns before the pandemic struck as escalating wage bills and transfer fees hit balance sheets, but the void deepened with the loss of match-day receipts and deferred media and sponsorship payments. To compete at the highest level, clubs must continue to invest in squads and stadium infrastructure, and some are hoping to attract investments from institutions looking to tap into lucrative revenue streams from long-term broadcasting contracts and advertising revenues as Covid restrictions are lifted. CFG’s seven-year loan, which was led by Barclays, HSBC and KKR Capital Markets as joint bookrunners, will be used to fund investments and infrastructure developments. The company also arranged a £100m HoldCo revolving credit facility. CFG, which is majority owned by Sheikh Mansour’s Abu Dhabi United Group, received a US$500m equity investment from US-based investment firm Silver Lake in November 2019 in return for a 10% stake. China Media Capital has a 13% stake. “Football clubs are beginning to be seen as smart financing investments in their own right, so as soon as they switch from being an indulgent plaything of billionaires with money to burn to being a viable financial asset that can be profitable and tradable in their own right then you will inevitably start to see interest from private equity and investment firms,” a syndicate head said. Moneyball Conversations between lenders and clubs are becoming more regular as football clubs mull refinancings, buyouts or look for co-investors. “A number of football clubs are kicking around either buyouts or refinancings, and these are becoming more regular conversations,” a second syndicate head said. "The football clubs have some liquidity concerns, there are optimistic valuations being considered, and it is one of those investments that once investors start doing a couple they get comfortable with the sector and more unearth." In late June, Barcelona’s member-owners approved a €525m refinancing arranged by Goldman Sachs, which is expected to be signed in August with one or more financial institutions. The financing will repay an €80m bridge loan provided by Goldman Sachs in June to cover higher treasury obligations for 90 days, renegotiate €200m of senior bonds on more attractive terms and provide necessary liquidity over the next 24 months. It will have a maximum 15-year term, at a 3% interest rate, requiring the club to obtain an investment-grade rating. Away from traditional lenders, investment firms have also stepped up their presence in the sector. Ares Management took a minority stake in Spanish champions Atletico Madrid in June as part of a planned capital increase to raise €182m for the club’s finances, with Mark Affolter, co-head of US direct lending, joining the board. The preferred equity investment will provide liquidity to the existing owners and support future growth, including development of the club's stadium. “In the past, sports franchises, leagues and clubs borrowed through traditional bank facilities, but there is now a growing need for more flexible capital to meet the needs for expansion,” said Jim Miller, co-head of US direct lending at Ares. Ares’ investment in Atletico came after the club agreed a €300m US private placement with Pricoa, Barings and MetLife. I
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