Football Business News From The UK
Football is big business but can no longer rely on the ticket sales generated on a matchday. The big money is in TV rights but how else are clubs looking to bring in extra money during these Covid times.
Some clubs are turning to borrowing and from unlikely sources, some are looking at new corporate sponsorship deals like Manchester United’s £235 million shirt deal with technology firm TeamViewer or the FA’s new partnership with Dettol to promote hygiene at Wembley, St George’s and grass roots football clubs and obviously with the added bonus of getting in some corporate dollars. Read more here. We will look at some of the more secretive firms involved in football financing and see which clubs are using them.
MSD Investment Capital
There is a little-known investment firm located in New York’s 645 Fifth Avenue that lend at interest rates reaching into double figures to some of the top clubs in England. This firm is called MSD and because they are privately held, there is not much information we have about their investments or dealings. What we do know is that one of their biggest clients and funders is Michael Dell of the Dell Computer behemoth and his family wealth fund.
With these funds, MSD lends money to football clubs in cases where regular and regulated banks are unwilling to. In current times, when providers of finance have been hesitant to lend to any firm in the entertainment industry because there are simply no spectators on the horizon.
Remortgaging the House?
When clubs struggle with payments, running expenses and player salaries, one of the easier assets to sell off seems to be the family silver or the club stadium. Southampton, Derby, Sunderland and most recently Burnley after their American takeover – have used their stadiums to collateralize multi million-pound loans from MSD.
We only know the details of the Southampton mortgage which gives us an idea of the interest rates involved. They borrowed £78.8m against their St Mary’s ground and are paying 9.14% interest that’s a whopping £7.2m interest every year or a new Theo Walcott every season.
Sports & Football Live Streaming Companies
Many of the largest or most popular live sports and football streaming websites are betting sites. These companies have huge budgets and are able to pay for the TV rights to many of topflight European leagues, cups, and competitions. Bet365 Group Ltd is covering Bet365 online live streaming services directly on its sports index that supplies live stream football, US sports, and most other major sporting leagues from around the globe.
The live streams also have built in software for in-play betting so members of the Bet365 Group’s website can place bets on real time odds that change as the games, events, and matches are being played. As you can imagine, this is big business and the Bet365 Group reported £2.98 billion in 2019!
MSD’s Web of Holding Companies
The Sunderland deal dates back to 2019, when they were in financial trouble and the only valuable asset, they had was their ground, again MSD circled and “helped” the distressed club, saddling them with debt and large interest payments. The loan amount at the time was £12m but we don’t know if that has been increased or settled after Sunderland was sold to Kyril Louis-Dreyfus. It was done through FPP Sunderland LLC, a company registered in Delaware but with directors Glenn Furhman, John Phelan and Robert Platek, who are all also board members for MSD Capital.
Burnley’s deal is about £60million we believe and the loans to Derby and Southampton have been through a subsidiary in the UK under the name of MSD UK Holdings Limited, which in turn is held under a company in the Cayman Islands to flout tax payments.
Derby’s deal is said to be £30m, was taken out on 6 August, secured on Pride Park. Back in 2018 the owner, Mel Morris, bought Pride Park from the club for £81m so, it’s undervalued at £30m.
Ashley Brown, head of governance at the Football Supporters’ Association has publicly condemned these practices and loans as “unsustainable” and “worrying”. Reform is needed to protect our clubs.