The Lender Financing Soccer Clubs' Big-Money Transfers

Atletico Madrid v Juventus - International Champions Cup
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Soccer has never been richer.

The cost of broadcasting rights for the Premier League in the latest round was $12 billion for three seasons. Clubs pay players several hundred thousand dollars a week in salary. And transfer fees keep rising.

Premier League clubs spent $1.7 billion on new players during the summer transfer window while La Liga clubs have splashed $1.3 billion so far.

But with many banks still refusing to recognize the “intangible” value of a club’s biggest asset—its players—some teams are seeking alternative financing to pay for mega-money deals.

23 Capital, a “capital and solutions provider to the sports, music and entertainment space,” has provided more than $2 billion in direct lending, including to some of Europe’s top soccer clubs.

“We're not a fund as such. We don't manage third-party monies aligned to a mandate,” Jason Traub, who cofounded the company in 2014, told me in an interview. “We're a specialist finance company. See us more like a bank in that we raise our own lines of credit and pools of money, and that allows us to provide direct financing into the various sectors with our various clients.”

Lending to fund player transfers is a growing part of 23 Capital’s business.

Last week, the business opened a dedicated sports office in Barcelona, Spain, adding to existing offices in London, New York and Los Angeles.

It comes after 23 Capital was reportedly involved in two of the biggest soccer transfers of the summer.

Spanish outlet El Confidencial named 23 Capital as the company behind the financing of Barcelona’s €120 million ($134.6 million) signing of Antoine Griezmann and Atlético Madrid’s €126 million ($141.3 million) deal for teenage attacker João Félix.

According to the report, Spanish banks refused to loan Barcelona the funds for the Griezmann deal, having already lent €600 million for a refurbishment of Camp Nou.

Traub would not discuss 23 Capital’s role in the deals, saying only: “We have strong relationships with the biggest and best clubs in Europe, including those within Spain. All clubs within all those leagues, irrespective of size, will have that same central challenge around significant value being locked.” 

The problem, Traub says, is that clubs have revenue streams that are essentially fixed at the start of the season while the “real value” lies in the club’s players, which many banks consider intangible.

“A club, without having the luxury of driving revenue beyond what is fixed at the outset, has an awful lot of liquidity trapped within that asset class, within that one asset on its balance sheet. That's the majority of its value,” he said. “A club has that strategic challenge of constantly looking to ensure that whatever liquidity it does have is invested, one hopes prudently, into those intangible assets. 

“But ultimately that means they don't have great liquidity at their current behest either to manage roadblocks along the way or to deliver into a growing strategic plan. At the heart of it, it is the inability of financial institutions to make sense of why clubs have that liquidity challenge.”

Portuguese giants Benfica have worked with 23 Capital, effectively selling their broadcast rights in a deal that saw 23 Capital provide a five-year lending worth more than €100 million ($112 million).

“It enabled them to look to repay a number of their banking lines. It was clearly done to improve their balance sheet,” Traub said. 

While banks may be seeing too much risk in even Europe’s biggest soccer clubs, 23 Capital looks to “deliver across the risk spectrum.”

“I would argue that within football there are risks that are exceptional; there are risks that are slightly more challenging,” Traub said. “We would look to reflect our return aligned to the risk profile that we will have assessed.” 

Even if top clubs continue to grow richer, Traub sees a growing role for companies like his.

“Do I think that clubs will continue to want to explore healthy financings? Yes. Is the club's need to continually look to invest in players? Yes. So I guess those two come together, and I'm sure we will continue to assist in providing liquidity to buy players for many years.”

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Soccer has never been richer.

The cost of broadcasting rights for the Premier League in the latest round was $12 billion for three seasons. Clubs pay players several hundred thousand dollars a week in salary. And transfer fees keep rising.

Premier League clubs spent $1.7 billion on new players during the summer transfer window while La Liga clubs have splashed $1.3 billion so far.

But with many banks still refusing to recognize the “intangible” value of a club’s biggest asset—its players—some teams are seeking alternative financing to pay for mega-money deals.

23 Capital, a “capital and solutions provider to the sports, music and entertainment space,” has provided more than $2 billion in direct lending, including to some of Europe’s top soccer clubs.

“We're not a fund as such. We don't manage third-party monies aligned to a mandate,” Jason Traub, who cofounded the company in 2014, told me in an interview. “We're a specialist finance company. See us more like a bank in that we raise our own lines of credit and pools of money, and that allows us to provide direct financing into the various sectors with our various clients.”

Lending to fund player transfers is a growing part of 23 Capital’s business.

Last week, the business opened a dedicated sports office in Barcelona, Spain, adding to existing offices in London, New York and Los Angeles.

It comes after 23 Capital was reportedly involved in two of the biggest soccer transfers of the summer.

Spanish outlet El Confidencial named 23 Capital as the company behind the financing of Barcelona’s €120 million ($134.6 million) signing of Antoine Griezmann and Atlético Madrid’s €126 million ($141.3 million) deal for teenage attacker João Félix.

According to the report, Spanish banks refused to loan Barcelona the funds for the Griezmann deal, having already lent €600 million for a refurbishment of Camp Nou.

Traub would not discuss 23 Capital’s role in the deals, saying only: “We have strong relationships with the biggest and best clubs in Europe, including those within Spain. All clubs within all those leagues, irrespective of size, will have that same central challenge around significant value being locked.” 

The problem, Traub says, is that clubs have revenue streams that are essentially fixed at the start of the season while the “real value” lies in the club’s players, which many banks consider intangible.

“A club, without having the luxury of driving revenue beyond what is fixed at the outset, has an awful lot of liquidity trapped within that asset class, within that one asset on its balance sheet. That's the majority of its value,” he said. “A club has that strategic challenge of constantly looking to ensure that whatever liquidity it does have is invested, one hopes prudently, into those intangible assets. 

“But ultimately that means they don't have great liquidity at their current behest either to manage roadblocks along the way or to deliver into a growing strategic plan. At the heart of it, it is the inability of financial institutions to make sense of why clubs have that liquidity challenge.”

Portuguese giants Benfica have worked with 23 Capital, effectively selling their broadcast rights in a deal that saw 23 Capital provide a five-year lending worth more than €100 million ($112 million).

“It enabled them to look to repay a number of their banking lines. It was clearly done to improve their balance sheet,” Traub said. 

While banks may be seeing too much risk in even Europe’s biggest soccer clubs, 23 Capital looks to “deliver across the risk spectrum.”

“I would argue that within football there are risks that are exceptional; there are risks that are slightly more challenging,” Traub said. “We would look to reflect our return aligned to the risk profile that we will have assessed.” 

Even if top clubs continue to grow richer, Traub sees a growing role for companies like his.

“Do I think that clubs will continue to want to explore healthy financings? Yes. Is the club's need to continually look to invest in players? Yes. So I guess those two come together, and I'm sure we will continue to assist in providing liquidity to buy players for many years.”

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I am a freelance journalist based in Valencia, Spain. My sports reporting has covered everything from interviewing globetrotting coaches and top executives, to witnessin...