With UK football clubs increasingly seeking alternative fundraising routes such as bonds to increase their financial clout and make long-term sustained success more achievable, Alliance Fund has announced that it’s set to launch a dedicated sports investment fund to sit alongside their existing real estate-focussed offering.
Football is big business. It is the world’s most popular pastime and generates unimaginable amounts of money. In 2021 alone, the average Premier League team generated £246m in revenue, with Manchester City leading the way with a total of £571m.
With so much money to be made, it’s perhaps surprising that some clubs are turning to alternative investment channels in order to raise money.
Bonds in football
Issuing bonds is a relatively new concept for the world of professional football, but it’s already gaining ground in overseas leagues with the likes of Barcelona, Inter Milan, and Porto each recently issuing bonds worth up to hundreds of millions of Euros.
In doing so, they allow fans and investors to loan money to clubs in order to enable everything from improving training facilities and upgrading pitches, to ensuring youth academies are of a good enough standard to nurture the very best emerging talent
Inspired by this, UK clubs are now also starting to experiment with bonds. For example, Queens Park Rangers and Peterborough United have both issued bonds with the aim of raising millions of pounds worth of additional investment.
The question is, why are clubs choosing to do this? One reason is the uneven levels of club wealth within the English football pyramid. While the average Premier League club generated revenue of £246m in 2021, the average for Championship clubs was £26.5m, and just £5.4m for those in League One.
For these lower league clubs, therefore, money is much harder to come by. This makes it difficult for clubs to invest in their future, attract top players, push for promotion and, once that’s achieved, remain competitive against far wealthier opposition.
Then, of course, there’s the financial impact of COVID-19.
The impact of the pandemic on profits
Alliance Fund analysed data on club revenues from the Deloitte Football Money League which shows that between 2016 and 2020, match days accounted for an average of 16.5% of total club revenues.
In 2021, matchday revenues fell to just 1% of total club revenue, a dip to the tune of -15.5% due to the pandemic’s impact on matchday earning potential. Income that clubs, especially those in lower leagues, rely heavily upon.
As a result, Alliance Fund estimates that in 2021, the average lost revenue per club due to Covid was an estimated £45.1m for Premier League clubs; £5m for Championship clubs; and just under £1m in League One.
While the pandemic may be behind us, dark clouds continue to gather over the UK economy and so the ability to secure investment via alternative means remains of vital importance to clubs across the football leagues and beyond.
Alliance Fund launches sport investment fund
To support this emerging funding process and to help UK football clubs with short-mid-term cash flow requirements, Alliance Fund is launching a dedicated sports investment fund to sit alongside their existing real estate-focussed offering.
The fund is due to launch in February 2023 and will focus on clubs in League 1 and above.
CEO of Alliance Fund, Iain Crawford said, “The never ending quest for investment to aid financial health and club development is a vital one and while many top flight clubs benefit from their substantial accumulated wealth, it’s a far tougher task for those in the lower leagues.
Building the momentum required to compete and challenge for promotion is a herculean task in itself. However, this has been made all the harder by the devastating impact of the pandemic, with many clubs still struggling to overcome the financial pothole it has placed them in.
Having personally made multiple investments into football clubs from League One and upwards, I’ve seen first hand how the ability to secure investment via alternative paths can hand a vital lifeline to lower league clubs
While the practice remains in its relative infancy within the UK, it’s an up and coming sector and one that provides huge room for growth long after the impact of the pandemic has been overcome – not to mention exceptional yields for those investing.
With this in mind we felt it prudent to launch a dedicated sports fund in order to provide a tailored platform for those wishing to invest within football, utilising both my own personal experience and contacts and existing Alliance Fund resources.”