Exclusive: Clubs fear UEFA will withdraw 2bn COVID-19 relief fund – The Athletic

Clubs across Europe fear that UEFA, the sports governing body in the region, is set to renege on a proposed multi-billion pound recovery fund intended to stimulate transfer market growth following the economic hardship suffered during the COVID-19 pandemic.

In December 2021, UEFAs website announced the UEFA Executive Committee had heard a detailed update on plans for the European Club Football Recovery Plan.

Sports teams were impacted to varying degrees by COVID-19, through the loss of match-day and ticketing revenue, downgraded commercial partnerships and rebates paid to broadcasters when the sporting product was unable to continue or fundamentally altered in the case of matches played behind closed doors.

UEFAs Football Landscape Report, released in February 2022, revealed projected losses for European top-flight clubs in 2021 of 4billion (3.4billion, $4.09billion). It also demonstrated a growing polarisation between the English Premier League and its rival domestic leagues across the continent as the division was responsible for 34 per cent of global transfer spending.

The European Club Association, a lobbying organisation tasked with representing the interest of clubs that compete in European club competitions, was supportive of the recovery plan and sources indicated to The Athletic that clubs in France, Turkey, Greece, Cyprus, Poland, Croatia and Portugal have all expressed concerns about UEFAs failure thus far to deliver on the initiative.

Executives from leading clubs in Turkey, for example, say they are finding it extremely difficult to secure loans from Western lenders owing to the weak accounts of their major clubs and a calamitous financial situation for the local currency in Turkey.

The Athletic has spoken to multiple club executives in a cross-section of European leagues over the past week and several said they felt that UEFA were now unlikely to push through the rescue plan. The club executives wished not to be named owing to sensitive relations with UEFA but two said a failure to deliver the fund could push clubs towards riskier approaches to raising money. This could include selling a percentage of future broadcast revenue or commercial income to private equity funds, as Barcelona have done, or venturing further into the space of fan tokens and non-fungible tokens (NFTs).

UEFA acknowledged the fund has not yet materialised but attributed the delay to a completely new economic environment as a result of the Russian invasion of Ukraine, after which they say market conditions dramatically and unexpectedly changed. UEFAs finance committee, chaired by former Manchester United chief executive David Gill, has also expressed reservations about the plan.

A UEFA spokesperson told The Athletic: The unforeseen conflict between Russia and Ukraine triggered severe policy actions across economies. It continues to disrupt several industries and drives global financial market volatility to historically high levels. Notably, there has been a considerable widening in credit spread, starting from a few weeks after the invasion of Ukraine, signalling tighter financing conditions. These factors have driven a sharp rise in borrowing costs over the past few months and increased the risk profile of the initiative for the clubs.

The plan had been to use the competition revenues of UEFA club competitions as security in order to allow European clubs to gain access to greater liquidity, which in turn would drive investment and growth in the transfer market.

The hope was that the UEFA brand and competition revenue streams would provide sufficient credibility and allow clubs to borrow money at lower interest rates than would ordinarily be possible.

The relief fund was initially set to be made available to clubs who compete in European club competitions, such as the Champions League, Europa League and Conference League. The repayment of the borrowed money would be hooked to future payments owed to clubs by UEFA for their participation, which can be worth tens of millions each year.

UEFAs website said last December: Starting with an estimated initial amount of 2billion, the financing programme is expected to grow over time.

UEFA also said that Citigroup had been appointed as the sole global coordinator bank for the programme and added: If approved, it could be operational as early as Spring 2022.

The fund was further marketed to clubs at the General Assembly of the European Club Association in the Austrian capital of Vienna in March, leaving many hopeful of receiving funds ahead of this summers transfer window. Yet this did not materialise. In May, Bloomberg reported UEFA had paused plans for the rescue fund due to concerns about how money would be distributed to the clubs and how UEFA would balance its role as a competition organiser, a regulator and also a facilitator for lending (although UEFA itself would not have been the lender).

Now, however, UEFA is publicly attributing the delay to the war in Ukraine, which is one of the concerns outlined by UEFAs finance committee.

The committee is chaired by Gill, who is also UEFAs treasurer, and has three further members: the Hungarian banker Sandor Csanyi, the French Football Federations director general Florence Hardouin and the Finnish Football Association president Ari Lahti.

When asked to outline the finance committees concerns, the UEFA spokesperson said: The UEFA Finance Committee has been consulted on the initiative several times since its inception. Its members pointed out these new risks that have unexpectedly hit the broader world economy after more than 10 years of stable, low-interest-rate conditions.

UEFA, though, marketed the proposal to clubs at the ECA General Assembly in late March over a month after the Russian invasion of Ukraine began.

European footballs governing body is still to communicate a change to the plan in correspondence to clubs, while senior ECA sources also indicated they remain in the dark as to the reasons for the fund not going ahead. This is despite repeated attempts by senior ECA personnel, as well as Paris Saint-Germain president Nasser Al-Khelaifi who is also the ECA chairman and a member of the UEFA Executive Committee to raise the issue with UEFA officials in meetings.

A UEFA spokesperson said clubs would be updated on the status of the project at an ECA board meeting in late August and at the UEFA Executive Committee in September. The spokesperson added there was a need to carefully assess the ongoing volatile market situation and evaluate several alternatives before entering into its execution. UEFA added it is wary of triggering unintended consequences by executing the rescue plan.

Not all club executives spoken to by The Athletic felt the fund was as necessary as some suggest, with one executive arguing it could be used to benefit clubs who had been poorly managed even before the pandemic, while adding that European football had proved itself to be more resilient than first feared when the pandemic came along. There had been apocalyptic predictions that clubs would go under.

Many domestic leagues, however, have seen a vast reduction of transfer market spending, with the Premier League proving to be a notable exception. Clubs in Turkey, for example, had theorised that loans to leading European clubs such as Fenerbahce, Besiktas and Galatasaray would have a waterfall effect for middling and smaller clubs in the country as the larger clubs would invest the money received in the transfer market. Sceptics, however, would caution that a waterfall or trickle-down approach sometimes simply further entrenches the power and privileges of those at the very top of an industry.

There is, however, widespread agreement among many club executives that UEFA erred in announcing and marketing the fund before securing approval from its own finance committee, as some clubs had already started to budget their plans around the loans. Indeed, some argued UEFA, conscious of the ongoing threat posed by the proposed European Super League, had been keen to make bold pledges to safeguard European footballs finances to ensure the ongoing loyalty of clubs across Europe. UEFA rejects this suggestion.

A UEFA spokesperson insisted the organisation would finance any consultancy fees associated with the thus far unsuccessful project, rather than transfer the burden to clubs.

UEFA further countered: ItwasUEFAs duty to presentandexplain the programme in detailto the clubsinorder togaugetheir interestinthe initiativeand get theirpreliminaryapproval.In effect, clubs were presented with numerous updates on the plan, including a final update on the fund during ECAs General Assembly in Vienna. In every presentation made to ECA, it is explained that the programmes implementation remains subject to UEFAs Executive Committee approval, following Finance Committee decision.

Citibank did not respond to a request for comment.

(Top photo: OZAN KOSE/AFP via Getty Images)

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Exclusive: Clubs fear UEFA will withdraw 2bn COVID-19 relief fund - The Athletic