Retail bonds have become increasingly popular with investors as the returns from bank and building society savings accounts have become derisory. They generally offer a return of around six per cent, but there is a higher risk, as there is no compensation if the business you are lending to goes bust.
The model is now being adopted by football clubs in the form of bonds that cannot be resold and are offered in small amounts to consumers. The ability to repay is not always clear, but if you are a fan, and the amount involved is small, why not take the risk?
Retail bonds have become increasingly popular with investors as the returns from bank and building society savings accounts have become derisory. They generally offer a return of around six per cent, but there is a higher risk, as there is no compensation if the business you are lending to goes bust.
The model is now being adopted by football clubs in the form of bonds that cannot be resold and are offered in small amounts to consumers. The ability to repay is not always clear, but if you are a fan, and the amount involved is small, why not take the risk?
Hertha Berlin launched a mini-bond in 2004 to raise £6m from fans. They refinanced it in 2010. The football crowd funding site Tifosy raised £270,000 last August for a new training academy for Portsmouth.
When the Co-operative Bank withdrew £380,000 of funding from Lincoln City, the club issued 500,000 shares at 50p each and launched a bond that pays interest at 3 per cent. So far it has raised £160,000.