Will Banks Take Their Ball Away

Football was a banker’s playground for much of the last decade. But have banks now reached a point where they will take their ball away and end the game? Banks have done well out of deals with Russian oligarchs, Middle Eastern royalty and American hedge funds. Banking consortia were put together to fund the takeovers of Manchester United and Liverpool, and the stadium financing for Arsenal.

Football was a banker’s playground for much of the last decade. But have banks now reached a point where they will take their ball away and end the game? Banks have done well out of deals with Russian oligarchs, Middle Eastern royalty and American hedge funds. Banking consortia were put together to fund the takeovers of Manchester United and Liverpool, and the stadium financing for Arsenal. From the clubs’ perspective, it was reasonable to believe that banks would continue to roll over their loans given the reputational damage they would incur for allowing such high-profile community assets to descend into financial crisis. That view may prevail since banks would be left selling clubs as distressed assets. But Premier League clubs’ debts are running at £3.1bn. Any chance of another Liverpool-style debt-finance deal in the Premiership looks remote.

One view of the future is that put by a football club adviser to the Financial Times, ‘Football clubs are not easy assets to own and control. That’s not the game banks are in.’ The buying market for clubs may continue to look thin, but that does not necessarily mean panic stations for banks. Their argument is that football looks a lot more solid than some other sectors, such as retail. One banker told the FT, ‘Football clubs, at least at the top end, are reasonably robust in a downturn.’ Certainly, the recent Deloitte football finance report emphasises how resilient football has been so far in the recession.