UEFA plans $ 7 billion pandemic relief fund for football clubs

As European football clubs continue to count the costs of a global pandemic that has driven teams big and small Struggling financially...


As European football clubs continue to count the costs of a global pandemic that has driven teams big and small Struggling financially, European football’s governing body is preparing to establish a relief fund of up to $ 7 billion to help struggling teams manage growing debts.

The plan, according to several officials briefed on the negotiations, would be for the governing body, UEFA, to secure financial relief for cash-strapped teams playing in major European club competitions. Refunds would be linked to future payments by teams for their participation in these tournaments organized by UEFA; for teams involved in the final stages of the Champions League, Europe’s premier club competition, these salaries can reach 100 million euros per year (nearly 120 million dollars).

UEFA has been in talks with banks and private equity firms for months to set up the fund. According to officials, the first aid payments would be made available to clubs qualified for Europe’s three annual club competitions: the Champions League, the Europa League and the new one Europa League Conference.

For many European teams, financial support is desperately needed. Billions of dollars in revenue have been wiped from team balance sheets since the coronavirus began to impact the football industry in early 2020. Clubs in dozens of countries have been forced to play games without viewers for months, and some had to pay discounts to broadcast partners and sponsors. All but a handful of teams endured significant pain.

Barcelona, ​​for example, have been unable to retain the services of their most famous player, Lionel Messi, amid swollen debts of more than $ 1.5 billion, and their president said last week that the club was waiting this year’s losses are around $ 570 million, a record figure for a football club. While many of Barcelona’s financial problems are self-inflicted, the result of years of mismanagement, red ink has flowed on balance sheets across Europe. The Premier League, the richest domestic competition in football, has suffered its first drop in turnover since its inception in 1992.

UEFA was in talks with Centricus, a London-based investment firm that had also been involved in talks with FIFA over funding for its enlarged Club World Cup, but it has more recently focused on reaching a deal with a group of lenders that includes Citigroup and UniCredit, according to people with knowledge of the talks. They declined to be identified as discussions with the clubs are continuing and no agreement has been reached.

UEFA declined to comment on the talks or the relief fund. But he discussed the proposal with the European Club Association, the umbrella body representing around 200 European top division teams.

UEFA has asked ECA to survey its members to understand their financial needs. The most pressing concern is related to the tens of millions of dollars in commercial debt of gamers. These bonds, accumulated over several years as teams buy and sell players, are a vital source of income for small and medium-sized clubs. Any non-payment, however, risks creating a contagion effect, given how closely the debts of clubs have become interconnected.

The player trading market – worth $ 7 billion before the pandemic – has now slowed dramatically, with more sellers than buyers and clubs struggling to offload players they can no longer afford. to permit. The general manager of one of Italy’s biggest clubs said the market for mid-level players – those worth between $ 5 million and $ 30 million, trades that lubricate the market in good times – are now rare. Instead, teams have become increasingly dependent on free loans and transfers to offload contracts and salaries they can no longer afford.

According to one person familiar with the talks, UEFA’s participation in the relief fund is essential, as it will allow banks to secure their investment against future income from its competitions, rather than the balance sheets of individual teams. This arrangement would reduce risks for lenders while securing lower than usual interest rates for clubs. To determine the amounts for which clubs are eligible, UEFA will create a scoring profile for teams based on their likely earnings from the Champions League, Europa League and Conference League, a new third tier competition that is launched this season.

UEFA’s move comes months after a group of 12 top-tier teams – citing the need for greater financial stability as well as a greater share of football’s wealth – failed to train an escaped superleague.

UEFA is just the latest football body to seek outside investment in a bid to mitigate the continuing effects of the pandemic. The Spanish professional league announced earlier this month that it has reached a deal to sell nearly 11% of broadcast and commercial income for 50 years to a private equity fund in exchange for a $ 3 billion investment. The Italian league has negotiated a similar deal.

UEFA hope the funding will allow the teams to restructure their debts at lower interest rates. At the same time, it plans to overhaul the financial regulations governing the teams in its competitions.

The current, ten-year-old deal known as Financial Fair Play has run its course, according to UEFA President Aleksander Ceferin and clubs are now bracing for a new set of scrutiny rules costs. One likely option is a combination of an income-related spending cap and a luxury tax, similar to that imposed by Major League Baseball on teams that choose to spend significantly more than their rivals.

The move is an effort to bring greater clarity to a process that has often left UEFA unable to apply its rules to the continent’s biggest spenders. Under the new system, say UEFA executives, teams will know exactly how much to pay if they overspend. The system, however, is unlikely to have a significant impact on the growing competitive imbalance between clubs who can freely spend on talent and those who cannot keep up.

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Newsrust - US Top News: UEFA plans $ 7 billion pandemic relief fund for football clubs
UEFA plans $ 7 billion pandemic relief fund for football clubs
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