Benchmark prior transactions, bonds, loans or company profiles using over 300 credit metrics.

Comparables

AI transcripts & instant analysis, making earnings season easier than ever.

Earnings

A full suite of ESG data and analysis. Built for your workflow

Spot undervalued credits and potential future restructurings with our purpose-built tools.

Distressed and Restructuring

We use AI to aggregate newsflow from 2,000 sources, and deliver it to your inbox quicker than anyone else.

News

Full Financial profiles with 3 statements, KPIs, segment splits & credit metrics. All traced to source documents.

Financials

New deal analysis and covenant comparison tools, understand key risks in seconds not days.

Covenants

We've successfully predicted more than 65 price sensitive events - before they happened.

Deal predictions

Say goodbye to CTRL + F with our powerful search. Thousands of documents text searchable for any keyword or phrase.

Search

Track high yield deals from issuance through to maturity, with integrated legal, credit and ESG analysis.

High Yield Bonds

Shine a light on private markets with 9fin's news and legal analysis of syndicated loans

Leveraged Loans

21st century tech and expert analysis to help CLO teams make informed decisions faster.

Structured Credit 

Find information others can't see in one of the fastest growing corners of finance

Private Credit 

Owen Sanderson

Sports finance has always been a complex beast — sports teams are beloved local jewels of paramount political importance, capable of rousing powerful passions. But clubs can also be billionaire-owned baubles, subject to desires which are far from economic.

This year has seen the spotlight fall on stadiums, with the innovative financings for two of the biggest names in European football — FC Barcelona and Olympique Lyonnais.

Barcelona came first, and is by far the largest. The figures for Barcelona boggle the mind; the city itself receives around 10m visitors a year (the asset-backed finance industry contributing only 5,000), with Camp Nou, the iconic stadium, welcoming 1.7m visitors in 2028-2019, according to the now-private KBRA rating report for the financing. The club museum alone does €41m a year in revenue, with sports advisory business Legends reporting that this makes it the most visited sports museum in the world.

There are only a handful of clubs at this level. According to Deloitte’s Football Money League 2023, only nine generate revenues of more than €500m per year — Manchester City, Real Madrid, Liverpool, Manchester United, Paris Saint-Germain, Bayern Munich, FC Barcelona, Chelsea and Tottenham Hotspur.

According to Deloitte, FC Barcelona's revenue in 2022 hit €638m, with €103m in matchday revenue (16% of the total). London clubs Spurs and Arsenal were the matchday champions, with 24% and 22% of revenue from matchday sources.

Per Deloitte, Arsenal's matchday earnings “also reflect a significant return on the investment into the Emirates Stadium and goes some way to justifying the infrastructure investment being explored by clubs such as Real Madrid, FC Barcelona, the Milan clubs and Everton, who are looking to future-proof their businesses.”

Stepping back, there are a few basic approaches you can take to financing a stadium. It’s a very expensive hard asset that can only be used for specific purposes, generating similar difficulties to other infrastructure: you’ve got a port/airport/railway/pipeline/toll road, which is big and valuable and capex intensive, but only really useful if operated for that purpose.

But there’s a twist — it doesn’t really matter whether Macquarie, Morgan Stanley Infrastructure or GIC own a port/airport/toll road, but it matters intensely which sports team plays in a stadium. It’s simply not possible to enforce security on, say, Anfield, and see if Man City wants to play there in future. The only thing really keeping the lights on are the games of this specific club.

“As long as we have a playing and staging agreement, the real estate itself does nothing for you,” said Greg Carey, co-head of the sports franchise at Goldman Sachs, the arranger on the FC Barcelona and Olympique Lyonnais deals. “You want to make sure the club is playing there. Real estate is a “check the box” issue; it’s a nice to have but the important thing is to control the revenues.”

Infrastructure finance often wraps up operations and assets into a combined secured package, with tight covenants on performance and cash leakage and earnings going straight into the vehicle, and equity getting whatever’s left at the end.

This kind of structure, akin to a whole business securitisation, has a long history in football — Newcastle United was the first club to securitise gate and hospitality receipts, with eight further deals carried out between 1999 and 2003. The other clubs using the technology included Leeds United, which raised £60m in 2001 via Lazard, but spent the money rapidly on a reckless player-purchasing bender that left it filing for administration in 2006, paving the way for “Doing a Leeds” to become a byword for financial mismanagement. Ipswich Town and Leicester City also hit financial trouble following securitisations of their stadium revenue. 

Arsenal’s whole business securitisation, structured in 2006 and seen at the time as a market reopener, has a better record — the bonds lost their original triple-A rating, but were still investment grade when they were repaid by an equity injection following the Covid closures.

The innovation, for Barcelona and Lyon, is that the important part is strong security over the revenue streams, and a ring-fence around everything isn’t necessary, giving the clubs the benefits of IG-rated secured long term financing, with as much cash flexibility as possible. 

These two deals therefore use a hybrid structure based on a receivables securitisation to get access to the revenue streams, while giving the clubs more control over their ability to allocate cash.

“In Barcelona and in Lyon, we use the securitisation model, basically a true sale or a version of it, so it’s a perfected interest in the revenues,” said Carey. “But the only monies paid over to the securitisation vehicle are those due for debt service, and clubs have unfettered rights to use any spare cash unless they violate minimum revenue and other covenants. So it’s a way to avoid tying up a bunch of idle cash. It really is the next generation of long-dated financing structures for sports teams.”

Per KBRA, “Unusual for project financings, neither the issuer nor the club are expected to pledge any security to investors. This means that noteholders will not benefit from a mortgage over the stadium or security over other club assets, and will instead rely solely on the issuer’s receipt of the assigned revenues in order to support debt service”.

The Barcelona financing is particularly complex, because it is funding the refurbishment and improvement of the Camp Nou stadium — the structure is secured to an IG level on the future revenues of the completed stadium, so there’s some exposure to construction and execution risk.

Based on the original rating report, the deal totals €1.5bn across three fixed rate tranches; a 2032 bullet, a 2045 amortising tranche, and a 2052 which amortises from 2045-2052. This runway should extend further, with a contemplated refinancing of €525m in 2032, which will start amortising in 2052.

According to a release announcing the financing, the proceeds were €1.45bn, and notes were distributed to 20 investors. Like other privately placed long-end assets, these were likely sold into life insurance demand — US lifers such as MetLife, New York Life and Prudential are mainstays of the USPP market, which has also funded stadiums such as that of Spurs in the past.

It’s crucial for these buyers that a financing achieves investment grade equivalent ratings — NAIC 2, for the US insurance association, which maps across to triple-B at most big agencies.

The revenue assignments kicks in when the Barcelona refurbishment works are supposed to be completed in July 2025, with a special provision assigning 100% of stadium revenues to the issuer (i.e. lenders) for the first two years, covering off the risk of construction delays.

The Camp Nou upgrades are on an epic scale. Per the KBRA report, the 99,000 capacity ground is already the fourth largest stadium in the world by capacity, but it needs an upgrade, with limited premium seating, limited hospitality options, no real catering facilities on site, little digital technology, and coverings over only 28% of seats.

Capacity will be increased to 105,000, with premium seating/hospitality seats up to 7%, “high quality food and beverage offerings”, and more flexibility for other events. This will mean demolishing the existing third tier and building a new structurally independent third tier around the original 1957 stadium structure.

The yet-to-be constructed nature of the main revenue-generating asset means project contingency funds, bank guarantees and a retention of 10% of the €960m construction price. 

Once the stadium works are completed, the club will keep the first €100m earned from the various stadium revenue streams, with the excess available for debt service — projected to be €246m in the first year after completion.

The upgrade projections are punchy — KBRA’s report says this is a 100% increase on 2018-2019, though consultancy Legends says this is in line with peers, with Paris St-Germain and Spurs seeing increases of 400% and 113% following stadium upgrades.

But the crucial part is the flexibility. The structure traps a six-month debt service reserve, but gives the club the first €100m, gives the club operation and maintenance responsibilities, and pays over only the cash required to service the debt. There are various protections built in — a “cash hold event” covers basically a failure to perform, achieve certain milestones, and a debt service coverage ratio (DSCR) below 1.5x, for example.

There are also covenants including a negative pledge, dividend blocker (but cash flows out after debt service anyway), M&A blockers, and an additional debt blocker if DSCR is below 2.5x.

The Olympique Lyonnais deal was simpler, as the stadium was already built and functioning — though it still represents the first stadium securitisation in France.

The €305m 2044 amortising private placement will repay €140m in Covid-era loans from the state under the PGE scheme, plus its revolver, outstanding stadium debt (€98m), and long-term subordinated debt including a loan from a shareholder.

Unlike Barcelona, the deal does include a mortgage over the stadium, though this is an indirect benefit to the noteholders. 

Again, though, it’s structured to keep the club liquid — the club keeps 50% of revenue from sponsorship, naming rights and advertising, and provided the deal performs, one month’s debt service and one month’s operating expenses at a time are transferred through the vehicle.

It’s important for the credit quality and the function of the structure that it uses a securitisation wrapper, a French FCT (fonds commun de titrisation). These structures offer a way through the French banking monopoly regulations, which require loans to be granted by credit institutions, paving the way for the financing to be passed through to the club in loan format. On the other side, FCTs are able to issue English law private placement bonds, a crucial element in attracting the US life insurance investor base, which generally prefer New York or English law documentation. The note purchase agreement followed US Private Placement market standards.

The FCT structure removes the revenue assignments from French restructuring and insolvency processes. These give wide powers to courts to impose stays and moratoriums on payment, and have historically been seen as debtor-friendly.

There are ways to trap cash if the deal underperforms, with a 1.5x DSCR the most prominent trigger for the 'springing waterfall' event (which traps a year’s debt service and operating expenses). DSCR below 1.4x triggers a 'cash hold', trapping a year’s debt services and operating expenses and segregating any surplus. Event of default brings in a full cash sweep.

Clubs can finance stadium investment themselves, through means like the above. But a major source of capital investment in football franchises has been at the league level.

CVC Capital Partners has been prominent in buying minority stakes in leagues — see here for 9fin’s coverage of the financing for Spain’s LaLiga. It also invested in France’s Ligue 1, in a deal funded in private credit format by HPS, and is reportedly bidding against Blackstone and EQT for a piece of Germany’s Bundesliga.

Football leagues are generally organised on a cooperative, rather than commercial basis, governed as associations by their members rather than on commercial terms. This makes it hard to inject equity capital directly.

However, the vast majority of all professional football league revenues come from media rights, so investments like CVC’s use structures which tap into the 'economic interest', or into vehicles containing the media rights revenues.

Here’s the LaLiga structure, as it appears in the bond offering documents.

But either way, the private equity purchases inject outside capital which can be used for club-level investments. Having an experienced financial investor involved can also improve overall financial performance, helping with international rights deals and improving the commercial potential of domestic leagues.

“Some of the leagues could have chosen to take on league-wide debt, and leverage their media rights revenues themselves, but don’t want debt at that level,” said Carey. “Taking a minority equity investment brings in capital that’s helpful, but also, some of the leagues have not done a great job at monetising globally and dealing with broadcasters. Having an adult in the room, not just lending money, is going to help greatly at growing the overall pot.”

FC Barcelona and Real Madrid opted out of the LaLiga media rights deal, which, has, according to SportsProMedia, already distributed €1bn to clubs, with 70% of it required to be spent on infrastructure.

FC Barcelona and Real Madrid instead concluded deals with Sixth Street, with Barcelona selling 10% of its LaLiga TV rights for 25 years, for an initial investment of €207.5m.

Other than media rights and matchday revenues, another growth area of football financing is against transfer rights. Apart from physical infrastructure, players are the major line item on a club’s balance sheet — so when a football team sells or loans a player to another, this creates a tempting financing possibility.

The player usually doesn’t move until the end of the season

FC Porto, in its latest report, disclosed €186m “related to the anticipation(factoring) of accounts receivables from the sales of players’ registration rights and future revenues”, with €39m of this coming from factoring player sale receivables. 

This can be an unusual and lucrative niche. Most of Porto’s player receivables are financed by Internationales Bankhaus Bodensee, a tiny German private bank with total €1.7bn balance sheet, which has nonetheless specialised in player receivables finance.

The basic concept is like any other working capital financing — a business generates an invoice from a customer, which it will collect at some point; it can use these invoices as collateral to get the money up front.

The main difference in player transfers is that the individual invoices are substantial, multimillion payments, the counterparties are all other football clubs, and the players themselves are humans with personalities, professional aspirations and a propensity for injury.

Nonetheless, it’s attracting interest from private credit funds, drawn to the high short-term yields on offer in an unusual market corner. 

Like all short-term financing, though, it has its problems.

“Transfer finance is like an addicition,” said Carey. “Once a club starts factoring your receivables, it has to keep doing it — it can be tough to catch up. It's a business that’s not going away, and in some respects an attractive one, but we’re more focused on doing the deals that do allow clubs to catch up.”

🍪 Our Cookies

Net leverage — The next generation of sports finance

Read all our public content for free

Recently Published

9fin named as one of The Sunday Times 100 fastest growing technology companies

2024 European High Yield Bonds Covenant Trends Report

US LevFin Wrap — Ringing in 2025 with more repricings

The wait is over — private credit CLOs have entered Europe

What are you waiting for?