Exclusive: Clubs fear UEFA could withdraw £2bn COVID-19 relief fund
Clubs across Europe fear that UEFA, the sport’s governing body in the region, is set to backtrack on a proposed multi-billion pound recovery fund intended to spur growth in the football market. transfers following the economic difficulties suffered during the COVID-19 pandemic.
In December 2021, the UEFA website announced that the UEFA Executive Committee had heard a detailed update on the plans for the “European Club Football Recovery Plan”.
Sports teams have been impacted to varying degrees by COVID-19, through the loss of matchday and ticketing revenue, the breakdown of business partnerships, and rebates paid to broadcasters when sports product has failed. continue or fundamentally modified in the event of matches played behind closed doors. doors.
UEFA’s Football Landscape Report, published in February 2022, revealed projected losses for Europe’s top-flight clubs in 2021 of €4bn (£3.4bn, £4.09bn of dollars). It also demonstrated a growing polarization between the English Premier League and its rival domestic leagues across the continent, with the division responsible for 34% of global transfer spending.
The European Club Association, a lobbying organization responsible for representing the interests of clubs taking part in European club competitions, has backed the recovery plan and sources have told Athleticism that clubs from France, Turkey, Greece, Cyprus, Poland, Croatia and Portugal have all expressed concern over UEFA’s failure so far to deliver on the initiative.
Leaders of Turkey’s main clubs, for example, say they are having a hard time getting loans from Western lenders due to weak accounts at their main clubs and a dire financial situation for the local currency in Turkey. .
Athleticism spoke to several club leaders across a cross-section of European leagues over the past week and several said they felt UEFA was now unlikely to push through the bailout. Club officials wished not to be named due to sensitive relationships with UEFA, but two said a failure to provide the fund could push clubs into riskier approaches to fundraising. This could include selling a percentage of future broadcast revenue or commercial revenue to private equity funds, as Barcelona have done, or venturing further into the space of fan tokens and non-fungible tokens (NFT).
UEFA acknowledged the fund had yet to materialize, but attributed the delay to a “completely new economic environment” following the Russian invasion of Ukraine, after which “market conditions changed dramatically and unexpectedly”. UEFA’s finance committee, chaired by former Manchester United chief executive David Gill, also expressed reservations about the plan.
A UEFA spokesperson said Athleticism“The unforeseen conflict between Russia and Ukraine has triggered harsh political actions in all economies. It continues to disrupt several sectors and push global financial market volatility to historically high levels. Notably, there was a considerable widening of the credit spread, starting a few weeks after the invasion of Ukraine, signaling tighter funding conditions. These factors have resulted in a sharp increase in borrowing costs in recent months and have increased the risk profile of the initiative for clubs.
The plan was to use revenue from UEFA’s club competitions as collateral to allow European clubs access to greater liquidity, which would stimulate investment and growth in the transfer market.
The hope was that the UEFA brand and competition revenue streams would provide sufficient credibility and allow clubs to borrow money at lower interest rates than would normally be possible.
The relief fund was initially to be made available to clubs that take part in European club competitions, such as the Champions League, Europa League and Conference League. The repayment of the borrowed money would be linked to future payments due to clubs by UEFA for their participation, which can be worth tens of millions each year.
UEFA’s website said last December: “Starting with an estimated initial amount of €2 billion, the funding program is expected to increase over time.”
UEFA also said Citigroup had been appointed as the sole global coordinating bank for the program and added: “If approved, it could be operational as early as spring 2022.”
The fund was then marketed to clubs at the European Club Association’s General Assembly in the Austrian capital of Vienna in March, leaving much hope of receiving funds ahead of this summer’s transfer window. Yet this did not materialize. In May, Bloomberg reported that UEFA had put bailout fund plans on hold due to concerns over how the money would be distributed to clubs and how UEFA would balance its role as competition organizer. , regulator and also facilitator for the loans (although UEFA itself would not have been the lender).
Now, however, UEFA is publicly blaming the delay on the war in Ukraine, which is one of the concerns highlighted by the UEFA finance committee.
The committee is chaired by Gill, who is also UEFA treasurer, and has three other members: Hungarian banker Sandor Csanyi, French Football Federation chief executive Florence Hardouin and Finnish Football Association president Ari Lahti.
When asked to address the finance committee’s concerns, the UEFA spokesperson said: “The UEFA finance committee has been consulted on the initiative on several occasions since its inception. . Its members highlighted these new risks that have unexpectedly hit the wider global economy after more than 10 years of stable conditions and low interest rates.
UEFA, however, marketed the proposal to clubs at the ECA General Assembly in late March, more than a month after the Russian invasion of Ukraine began.
European football’s governing body has yet to communicate a change to the plan by correspondence to clubs, while senior ECA sources have also said they remain unaware of the reasons why the fund is not going step forward. This is despite repeated attempts by senior ECA officials, as well as Paris Saint-Germain president Nasser Al-Khelaifi – who is also ECA president and a member of the UEFA Executive Committee – to raise the issue. with UEFA officials in meetings.
A UEFA spokesperson said clubs would be updated on the progress of the project at a meeting of the ECA board in late August and the UEFA Executive Committee in September. . The spokesperson added that it was necessary “to carefully assess the current volatile market situation and evaluate several alternatives before entering into its execution”. UEFA added that it fears triggering “unintended consequences” by carrying out the bailout.
Not all club leaders go to Athleticism felt the fund was as needed as some suggest, with one executive saying it could be used to benefit clubs that had been mismanaged even before the pandemic, while adding that European football had proven more resilient than expected when the pandemic came on. There had been doomsday predictions that the clubs would fall.
However, many domestic leagues have seen a sharp cut in spending in the transfer market, with the Premier League proving to be a notable exception. Clubs in Turkey, for example, had speculated that loans to major European clubs such as Fenerbahce, Besiktas and Galatasaray would have a cascading effect for medium and smaller clubs in the country, as bigger clubs would invest the money received on the transfer market. Skeptics, however, would warn that a cascade or trickle-down approach sometimes simply reinforces the power and privileges of those at the top of an industry.
However, many club leaders agree that UEFA made a mistake in announcing and marketing the fund before obtaining approval from its own finance committee, as some clubs had already started budgeting their plans around loans. Indeed, some have argued that UEFA, aware of the ongoing threat posed by the European Super League project, was keen to make bold commitments to protect European football finances to ensure clubs’ continued loyalty to across Europe. UEFA rejects this suggestion.
A UEFA spokesman insisted the organization would “fund” any consultancy costs associated with the so far unsuccessful project, rather than shifting the burden to clubs.
UEFA further replied: “It was UEFA’s duty to present and explain the program in detail to the clubs in order to gauge their interest in the initiative and obtain their preliminary approval. Indeed, the clubs received numerous updates on the plan, including a final update on the fund during the ECA General Assembly in Vienna. In each presentation made to the ECA, it is explained that the implementation of the program remains subject to the approval of the UEFA Executive Committee, following the decision of the Finance Committee.
Citibank did not respond to a request for comment.
(Top photo: OZAN KOSE/AFP via Getty Images)