Top English clubs are calling on the Premier League to create a central fund in excess of £1bn to tackle their cash flow problems and shut out lenders that charge steep fees.
Club executives with direct knowledge of the discussions said the world’s most valuable domestic football competition has come under pressure to create a new financing facility through raising debt or securing a large credit line. One suggested the fund should be worth at least £1bn, while another said clubs required access to between £1bn and £1.5bn.
A centralised fund would seek to replace so-called factoring deals with private lenders. Factoring allows clubs to borrow against future income, such as upcoming instalments of transfer fees or broadcasting contracts. The upfront cash helps settle more immediate costs, such as meeting the multimillion-pound wage bills of star players or signing new footballers.
Such transactions have been used regularly by top European sides such as Italy’s Juventus, Portugal’s Benfica and England’s Leicester City in recent years, though they tend to be more common among smaller clubs.
The calls reveal tension between teams. Big sides have reliable revenue streams that allow them to access cheap financing, while small clubs at constant threat of relegation are offered worse terms as they are seen as more risky to lend to.
Clubs have relied on the likes of Australia’s Macquarie Bank and UK’s Close Brothers to conduct such deals in recent years, though bigger global banks have tended to avoid such transactions.
Some club executives complain of being charged high interest rates and fees. One Premier League club owner said a prospective lender offered an interest rate of more than 7 per cent to conduct a recent factoring deal.
MSD Partners, a US firm that invests some of the fortune of technology pioneer Michael Dell, has made loans to English clubs including Southampton that carry an annual interest rate above 9 per cent, according to financial documents and people familiar with its dealmaking.
Many clubs argue that the Premier League is in a stronger position to raise money at far lower rates, as any debt would be secured against the competition’s £9bn in multiyear broadcasting deals.
One club chief said leading global banks would consider the Premier League as “investment grade” and that “clearly any central fund would be dirt-cheap secured versus media [contracts]”.
Another club owner suggested accessing a fund at lower interest rates would save it tens of millions of pounds, adding that “several clubs [are] agreed and would like it”.
The move would mainly benefit smaller sides that rely on factoring deals to ease cash flow. By contrast, the biggest clubs, such as Manchester United and Liverpool, have access to revolving credit facilities.
However, people close to the Premier League said it has no immediate plans to raise debt, having avoided doing so during the worst of the pandemic when its clubs lost a collective £2bn in revenue due to the lack of ticketing income and rebates paid to broadcasters.
Richard Masters, chief executive, said in August that the league’s strategy “is to continue to go for growth” rather than borrow.
Other European leagues have sought to sell stakes in their business to deal with the financial crisis in football. In August, Spain’s La Liga agreed a €2.1bn investment deal with private equity firm CVC Capital Partners.
The Premier League declined to comment.