Clubs Fear UEFA’s $8.2 Billion Covid Fund Will Ignore Minnows

(Bloomberg) -- A growing group of clubs are warning that a potential 7 billion-euro ($8.2 billion) fund being created by European soccer’s governing body will be used as a bailout for the biggest teams who have racked up the most debt. 

UEFA, the organizing body for European soccer, is putting the final touches to a rescue package aimed at helping the sport recover from the impact of the pandemic. The plan first reported by Bloomberg, will give clubs access to funds at lower borrowing rates and be able to restructure existing debt. Exact plans on how the fund will operate have yet to be decided, according to people familiar with the talks. 

Tensions are high between clubs across Europe, after a failed attempt by a collection of the best-known teams to create their own super league. Many of the 12 clubs that signed up to the aborted league are among the most indebted in Europe, such as Barcelona, whose adjusted provisional debt was over 1 billion euros by August, and Juventus.

Bart Verhaeghe, major shareholder of the Belgian champions Club Brugge, said UEFA’s loan facilities should not go to teams that have a bad profit and loss account. 

“This lending facility should not go to clubs who have done a bad job in creating a solid balance sheet, like Barcelona,” said Verhaeghe. “They don’t deserve any money.”

Paul Conway of Pacific Media, the American investment group that owns a clutch of European clubs including Barnsley F.C. in England and AS Nancy Lorraine in France, said that there needs to be a strict underwriting criteria when distributing funds. 

“Lack of underwriting standards and any lack of a clear repayment schedule will encourage mismanaged clubs to continue to overspend,” Conway said.

A spokesman for UEFA declined to comment.

Europe’s largest revenue-generating teams often have the biggest debts as they compete with each other for trophies. Barcelona, Real Madrid, Tottenham Hotspur, Manchester United and Juventus all feature in a table of Europe’s most heavily indebted teams, according to KPMG Football Benchmark, for the year ended June 2020.

“These funds should be a reward for good management and financial discipline, not a bailout for clubs that burn cash,” said Jordan Gardner, co-owner of FC Helsingor, a Danish team.

Manchester United and Juventus last week posted combined losses of more than $370 million after ticket sales were largely wiped due to the spread of Covid-19. Europe’s smaller clubs suffered even more, with those outside the top leagues depending far more on matchday gate receipts rather than broadcast revenue for a greater percentage of their income.

“Football has become a business in which the winner takes it all,” said Ilja Kaenzig, managing director of newly-promoted Bundesliga club VfL Bochum 1848. “This could in the end destroy the business. There are clubs which struggled already before the Covid crisis. Would access to such a facility put them back on the right track - or would it increase their problems in the future.”

UEFA is considering plans to limit the financial power clubs with super-rich owners, which include the U.K.’s Chelsea FC and Manchester City FC, from gaining an unfair advantage in European leagues by introducing new caps on player salaries. 

However, some are concerned any potential funding will only be available to those in the top European leagues. 

“The provision of this facility should not lead to further inequity in the system,” said Jacco Swart, the managing director of the European Leagues, whose organization represents leagues such as Latvia, Iceland and Kazakhstan.

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