Football is continuing to find new ways to attract money, with a London-based hedge fund teaming up with a sports-focused investment bank to create a product that aims to profit from clubs trading players.
(Bloomberg) — Football is continuing to find new ways to attract money, with a London-based hedge fund teaming up with a sports-focused investment bank to create a product that aims to profit from clubs trading players.
Fasanara Capital, which oversees $4 billion of assets, will work with boutique Tifosy Capital & Advisory to lend to clubs, targeting a maximum fund size of $500 million.
Investors will be paid back from future income streams, such as player transfers or ticket sales.
Once the playground for high net-worth individuals, sports investing has morphed into its own asset class in recent years, with private equity and family offices investing in everything from Formula 1 motor racing teams to the Spanish football league.
Fasanara’s new fund will focus on sports receivables — the various cashflows that go in and out of sports teams, such as broadcasting rights and ticket sales. Fasanara will manage the portfolio of loans, with the deals originated by Tifosy, which has built its own model assessing the value of squads.
The fund will offer smaller clubs in Europe’s top five leagues immediate access to capital to purchase players or spend on infrastructure.
“Below the top clubs there is inefficient origination,” said Fausto Zanetton, Tifosy’s chief executive officer. “There is a lot of value sitting in the assets of these clubs.”
The new fund will provide financing based on the value of assets on a club’s balance sheet, lending up to a quarter of the squad’s value.
The scale of transfer expenditure has rapidly grown in recent years, with Chelsea FC alone spending over $600 million in the past year on new players.
While many are bought for headline-grabbing sums, the actual payments are spread over years, sometimes with clauses dependent on appearances or goals scored. Players are often traded before the end of a season, meaning in many instances clubs don’t have to make any initial payments for months after a deal.
Banks have traditionally dominated whats known as transfer-fee factoring: lending to clubs and using future transfers or media rights as repayment.
In 2019, AFC Bournemouth borrowed about £16 million ($19.4 million) from Australian bank Macquarie, using the sales of defender Tyrone Mings to Aston Villa and striker Lys Mousset to Sheffield United to repay the loan.
Fasanara Capital specializes in so-called trade receivables financing and raised about €350 million ($372 million) late last year for bespoke funds to invest in the product.
The firm started lending to football clubs about a year ago and is now opening the business up to external investors, said CEO Francesco Filia. The fund has so far struck deals with about 10 clubs and expects to work with up to 30 in total.
Tifosy has advised on a number of football deals, including Iconic Sports, an investment firm co-run by Dinan, which backed John Textor’s purchase of French football club Olympique Lyonnais.
–With assistance from Irene García Pérez.
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