Super League: JPMorgan bets $4.8bn on disrupting football

United States investment bank JP Morgan Chase & Co has agreed to underwrite an initial $4.2bn investment that could swell to $4.8bn to help set up the Super League, sources tell Bloomberg.

A group of the world's richest football clubs including, Liverpool Football Club, have signed a binding agreement to commit to remaining part of of the Super League, sources tell Bloomberg [Carl Recine/Reuters]

JPMorgan Chase & Co. is bankrolling the biggest upheaval of European soccer since the 1950s in a 4 billion-euro ($4.8 billion) bet that has already drawn heavy criticism from fans, domestic leagues and politicians.

The U.S. investment bank has agreed to underwrite an initial 3.5-billion-euro investment to help set up the Super League, a figure that will total 4 billion euros after additional payments and expenses, according to a person familiar with the matter. The investment, currently financed by JPMorgan, may be offered to investors at a later date, the person added, asking not to be identified as the discussions are still private.

A group of the world’s richest soccer clubs including Manchester United and Real Madrid said they will break away from the prestigious UEFA Champions League and form their own Super League. The marquee names – six from England, three from Italy and three from Spain have signed up so far – would play each other midweek. Alongside 15 permanent teams, another five will qualify to take part each year.

The clubs have signed a binding agreement to commit to remaining part of the Super League for a set number of years, according to people with knowledge of the agreement. The binding agreement was a key driver behind JPMorgan’s investment, the people added. The financing from JPMorgan has been set at an interest rate of between 2% and 3%, and set over a 23-year time frame, one of the people added.

A spokesperson for JPMorgan declined to comment. The European Super League did not respond in time for publication.

The new league would be the biggest shakeup to European soccer since the formation of the Champions League in 1955. National leagues from England, Spain and Italy, the sport’s governing body in Europe, as well as FIFA, the global governing body and organizer of the World Cup, have all hit back at the move, threatening the clubs with legal action and ejection from their domestic leagues.

JPMorgan’s links to landmark deals in the sport stretch back almost 20 years. In 2003, it advised the American Glazer family on its purchase of Manchester United FC. It went on to work on the club’s initial public offering almost a decade later. Manchester United is one of those that has signed up as a founding member of the Super League and its vice chairman Ed Woodward is a former JPMorgan banker.

In recent years, the bank advised Rocco Commisso, the Italian-American owner of Mediacom LLC, on his purchase of Serie A team ACF Fiorentina, and U.S. billionaire Dan Friedkin on his takeover of AS Roma. It has also helped FC Internazionale Milano and Roma sell bonds backed by future media revenue, and Spain’s Real Madrid raise funds to refurbish its iconic Santiago Bernabeu stadium.

“I’m not surprised that a bank like JPMorgan is gearing up its European sports activity,” said Nikhil Bahel of the sports investment group Elysian Park Ventures. Bahel said the impact of the Covid-19 pandemic has left many teams and leagues financially exposed. “To my mind, there is a realization here in Europe that the current financing model for these bodies needs to be revisited.”

The U.S. investment bank’s role is vital as it gives the Super League the financial cover to put billions of euros in guaranteed broadcast rights on the line so the clubs can attempt to earn greater revenues via the breakaway league.

While the new league would free the clubs from playing smaller teams that bring in lower income, it also opens them to the threat of being ostracized by national leagues and many fans. Pulling up the drawbridge and awarding certain teams permanent membership move breaks with a founding principle of international soccer — that anyone can qualify — or fail to qualify — for the most prestigious competitions.

–With assistance from Fareed Sahloul.

Source: Bloomberg