English Premier League 2016-17

Premier League to ban unregulated , offshore soccer lenders

PUBLISHED : Saturday, 19 November, 2016, 3:25am
UPDATED : Saturday, 19 November, 2016, 3:25am

In an effort to limit the influence of shadowy, offshore lenders in professional soccer, the Premier League is banning its clubs from borrowing from unregulated finance firms, a practise that has been common for more than a decade.

Starting next season, clubs will only be allowed to borrow against their broadcast income from firms regulated by the UK’s Financial Conduct Authority, the Premier League said in an e-mail.

That will rule out opaque, offshore funds like British Virgin Islands-based Vibrac Corp, which has become a particularly prolific lender to clubs including West Ham, Southampton and Everton. The league already prohibits teams from using unregulated lenders to borrow against player trading income.

“They want to deal with greater transparency in terms of the people that are lending money to their clubs,” said Martin Blake, a London-based lawyer who advises both clubs and lenders. “There is a perception that some of the funds that are lending aren’t as transparent as they would like.”

Vibrac, for example, has never revealed the identity of its owners, even as it has financed at least 150 million pounds (US$245 million) of loans to teams in England, Spain and Germany. The same anonymous owner backs Mousehole Ltd, which is also registered in the British Virgins Islands and has financed Atletico Madrid, Getafe and Deportivo La Coruna in Spain, according to filings by London-based JG Funding Ltd.

Graham Shear, a lawyer at Berwin, Leighton, Paisner who represents Vibrac, declined to comment.

Clubs typically borrow against their annual share of broadcast revenue from the Premier League in order to build the biggest possible war chest ahead of the bi-annual transfer windows.

Lenders typically charge around 7 per cent interest for a loan against broadcast income, said a person familiar with the agreements who asked not to be identified because the terms are private.

Traditional lenders weren’t always eager to lend to soccer teams, but now that most Premier League clubs are profitable thanks to record broadcast revenues, institutional banks are interested again, said Blake. Macquarie is among the banks attracted to the forward financing market. Macquarie declined to comment.

Dealing with UK-regulated institutions may hurt the speed with which teams can access funds.“Banks are slower because they have more layers, more control and are more risk averse,” Blake said.