In the pandemic football clubs need cash to meet rising costs. It isn't coming through the gate and that matters even for top flight clubs: every month without fans costs them £100m.
Some of the biggest - Arsenal and Spurs - have turned to the Bank of England for a low interest loan. The EFL have also borrowed £75m from that source, but it's not an option even for smaller Premier League clubs.
Step forward MSD Partners, a vehicle for investing some of computer pioneer Michael Dell's fortune. They reckon that football clubs are a good bet in the longer run. Unlike banks, they are not offering short-term finance but longer term funding. Moreover, the stadiums are available as security.
They are estimated to have loaned £170m to English clubs, including £80m to Southampton (repayable in 2025) and funding for troubled Derby County. They also provided funding for the recent Burnley takeover.
None of this comes cheap. Southampton are thought to be paying 9.14 per cent interest. Compare that with the 3.25 per cent coupon on junk grade bonds issued by the purchasers of Asda. Can anyone reading this get much above 1 per cent on a building society account?
Of course, the interest rate reflects the risk involved. Football clubs are too high risk for most conventional banks. Moreover, having to call in a football fan's loan or seize assets is a deterrent for commercial banks from getting involved in the sector according to football finance guru Kieran Maguire.
Maguire told the Financial Times: 'From a reputational perspective commercial banks don't want to take that on and put themselves in an awkward position of calling in the debt and weaponising the fan base.'
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