banner

Inside the firms that finance football’s biggest transfers – and the death of eleventh-hour deals

Published by The Daily Telegraph 

The ease with which the biggest two football signings of the summer were funded could hardly have been more different.

In early July, Atletico Madrid paid Portuguese club Benfica €126m (£116m) for 19-year-old forward Joao Felix – the third-biggest upfront fee ever paid for a footballer; and the fifth biggest deal of all time.

Two weeks later, Frenchman Antoine Griezmann left Atletico for Barcelona in a deal worth €120m.

The Griezmann transfer caused a right ruckus, according to reports in the Spanish media. Barcelona had hoped that local lenders such as Santander, Caixabank and Sabadell, would stump up the transfer fee to Atletico. They refused, it is said.

Traub is resolutely tight-lipped on the Griezmann deal but the inference seems clear. Barcelona were running around like headless chickens for someone to provide the financing for the deal, reports suggest.

Michael Savva, a specialist sports finance lawyer at Watson Farley & Williams, points out that clubs which are looking to sell a player use the deadline as leverage over those that are buying.

“The frenzy on deadline day is the result of a knock-on or domino effect of one long-running transfer deal feeding into two or three other ones… So there will inevitably always be a mad rush in one way or another. Would we really want it any other way?”

 

Traub’s fund is just one piece of a financing jigsaw that has evolved in recent years. As the money in the game has rocketed, so has the way clubs are funded.

“In the early days obviously less capital was required, so local owners were able to fund moves personally and normally via their other business relationships with the bank,” says one former Premier League chief executive. “It then all started to change when the Premier League emerged in 1992.”

With transfer fees soaring “normal lenders disappeared, leaving the financing to owners and specialists”, he says.

Football transfers are generally reported by way of a headline figure. How much money changes hands on day one is much more complicated than that, however. Often fees are paid in instalments; if this is the case, the selling club is often unwilling to wait; it wants the money upfront.

A specialist bank will therefore loan the club the money, with the selling team repaying the debt as it receives staged payments from the buyer. Beyond transfers, loans can be advanced for future TV rights money or sponsorship earnings.

Savva says that the rise of football banking specialists does not necessarily fan the flames of transfer fee inflation – it’s something of a chicken and egg scenario. “There are examples where actually the reverse is the case. In other words, because of the transfer fee inflation, new liquidity is required to come on tap,” he says.

There is concern about a growing divide between the haves and the have-nots in English football that a new wall of finance could create.

“The knock on effect of the growth in the Premier League has been devastating for lower league clubs as they try and keep up but [struggle] without the revenues,” says the ex-Premier League chief.

Richard Price of New Century Finance, a self-styled “packager and arranger”, brokers loans from merchant bank Close Brothers and football clubs. Since 2000, he’s been involved in transfer deals totalling £750m. He says the financing of transfers has changed in England in recent years as a result of the increasing amount of TV money that has poured into the game.

“The Premier League clubs are so wealthy, the top 10 don’t really need help,” he says. “You will rarely see Liverpool or Manchester City go into market.”

So instead Price is rushing to seal a £7m deal between two club’s from the Championship, English football’s second tier. “The Premier League clubs borrow less and less. And the Championship clubs borrow more and more.”

Does this mean the market is saturated with lenders? “There is still not a queue,” says Price. “Traditionally, banks do not like football clubs.”