How football clubs are funding their fight for Premier League riches by selling shares of their future revenues
With the treasures of next season's £5bn TV deal coming ever closer into view, Premier League and Championship clubs are exploring alternative avenues to fund their promotion push or relegation resistance in the January transfer window.
Morning Wire has learned that some football clubs within England's top two tiers have boosted their available transfer funds this month by either selling a share of potential future revenues or the promotion bonuses attached to a player sold to a promotion-chasing rival.
The novel financial services are being provided to clubs by Sportsrisq, a London-based sports finance organisation.
Read more: Bournemouth and Watford in line for £130m windfall from Premier League promotion
Next season will see the introduction of a new three-year Premier League TV deal that guarantees even the league's bottom club around £100m in broadcast revenue.
And with just over a week remaining for clubs to add to their armoury before the end of the season, Sportsrisq and its network of private investors have provided funding to clubs through their Future Rights Purchase (FRP) scheme to help get deals over the line before the window shuts.
The price of any FRP is determined by the likelihood of a club's promotion according to Sportsrisq's probability model.
Clubs that win promotion or avoid relegation will then be entitled to repay the investment plus pre-agreed interest at the end of the season with their share of the broadcasting bonanza safely secured.
Similarly, if a club holds a promotion bonus on a player it has sold, that bonus and the potential earnings it holds can be sold on to Sportsrisq to make cash immediately available.
Yet the risk of failure is offset by an agreement that no amount is repayable should a club miss out on their objectives.
“Everyone knows the riches associated with being a Premier League club, but next season’s new TV deal means there’s more pressure on teams to use this transfer window to construct the team required to either avoid relegation or guarantee promotion,” said Sportsrisq director Max Hamilton, who told Morning Wire the firm is currently putting most of its resources behind the new scheme during the January window.
He added: “We have seen before that one or two new players can really be the difference, and our services are helping clubs raise the funds required to make key transfers happen, while managing risk."