Key Takeaways
- • PGIM's head of European private credit, Josh Shipley, says private credit lenders are increasingly financing European football clubs, which have become media, real estate and entertainment businesses with heavy demands for cash from wages, transfer fees and stadium construction.
- • Shipley says private credit is more attracted to top-tier clubs such as the English Premier League's big six and Spain's Barcelona, Real Madrid and Atletico, citing large fan bases, visible revenues and a less competitive lending market than sponsored direct lending.
- • Relegation is the main underwriting risk, because dropping a league is a step change in revenue from match days, player sales and broadcast payments.
- • Private equity has been more active in lower-tier clubs, with Wrexham and Parma cited as examples, while private credit sees the size of those deals and their risk profiles as a barrier.
- • PGIM expects European football revenues to keep growing through broadcast rights, expansion into Asia and Latin America, and greater direct-to-consumer monetisation.
Summary
Private credit is moving into European football, according to an article in Professional Wealth Management that quotes Josh Shipley, head of PGIM's European private credit business. Shipley says top European clubs are evolving into media businesses, real estate concerns and global entertainment brands, and their financing needs from player wages, transfer fees and modern stadium construction have grown. He notes that traditional banks face tighter regulation and balance-sheet limits, leaving room for private credit lenders to provide longer-term capital.
Shipley links the shift to governance reforms introduced by UEFA, FIFA and leagues in the early 2010s, which pushed clubs to operate more like conventional businesses aiming for consistent profits. He argues that European clubs have the largest global fan bases of any sport and generate revenues that are visible and sustainable, which he contrasts with manufacturing borrowers whose products can fall out of favour. He says private credit has been focused on the big six in the Premier League and Barcelona, Real Madrid and Atletico, and describes the lending space as less competitive than sponsored direct lending, where he notes a hundred lenders may be competing.
The article identifies relegation as the principal risk in underwriting. Dropping a division can reduce match-day income, prompt player departures and cut broadcast payments, and while some clubs recover quickly, others remain in lower leagues for years. Shipley says private equity has been most active further down the pyramid, citing Wrexham, which has received investment from Ryan Reynolds and Rob McElhenney and rose from the fifth tier to the second, and Parma in Italy. Private credit has seen only limited interest in these lower-tier clubs because of their smaller revenue bases, deal sizes and risk profiles.
PGIM expects European football revenues to keep rising, supported by broadcast rights and possible growth in fan bases across Asia and Latin America. Shipley cites the FC Barcelona Museum, now Spain's second most visited museum, as an example of untapped monetisation, and says club CFOs expect more direct-to-consumer revenue. He adds that private credit investors have asked about rugby and cricket, but he sees those sports lacking European football's appeal. The article also notes that FIFA president Gianni Infantino's plans to bring external investors into the international game, which have since been abandoned, were partly motivated by World Cup revenues in North America.
Shipley links the shift to governance reforms introduced by UEFA, FIFA and leagues in the early 2010s, which pushed clubs to operate more like conventional businesses aiming for consistent profits. He argues that European clubs have the largest global fan bases of any sport and generate revenues that are visible and sustainable, which he contrasts with manufacturing borrowers whose products can fall out of favour. He says private credit has been focused on the big six in the Premier League and Barcelona, Real Madrid and Atletico, and describes the lending space as less competitive than sponsored direct lending, where he notes a hundred lenders may be competing.
The article identifies relegation as the principal risk in underwriting. Dropping a division can reduce match-day income, prompt player departures and cut broadcast payments, and while some clubs recover quickly, others remain in lower leagues for years. Shipley says private equity has been most active further down the pyramid, citing Wrexham, which has received investment from Ryan Reynolds and Rob McElhenney and rose from the fifth tier to the second, and Parma in Italy. Private credit has seen only limited interest in these lower-tier clubs because of their smaller revenue bases, deal sizes and risk profiles.
PGIM expects European football revenues to keep rising, supported by broadcast rights and possible growth in fan bases across Asia and Latin America. Shipley cites the FC Barcelona Museum, now Spain's second most visited museum, as an example of untapped monetisation, and says club CFOs expect more direct-to-consumer revenue. He adds that private credit investors have asked about rugby and cricket, but he sees those sports lacking European football's appeal. The article also notes that FIFA president Gianni Infantino's plans to bring external investors into the international game, which have since been abandoned, were partly motivated by World Cup revenues in North America.
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