Super League: JPMorgan bets $ 4.8 billion to disrupt football | Business and economic news

U.S. investment bank JP Morgan Chase & Co has agreed to underwrite an initial investment of $ 4.2 billion that could reach $ 4.8 billion to help set up the Super League, sources told Bloomberg .

JPMorgan Chase & Co. is funding the biggest upheaval in European football since the 1950s in a € 4 billion ($ 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 investment of € 3.5 billion to help set up the Super League, a figure that will total € 4 billion after additional payments and expenses, according to a report. person close to the case. The investment, currently funded by JPMorgan, could be offered to investors at a later date, the person added, asking not to be identified as the talks are still private.

A group of the richest football clubs in the world, including Manchester United and Real Madrid, have said they will break away from the prestigious UEFA Champions League and form their own Super League. The big names – six from England, three from Italy and three from Spain have signed up so far – are said to be played midweek. Along with 15 permanent teams, five more will qualify to participate each year.

The clubs have signed a binding agreement to commit to being in the Super League for a number of years, according to people with knowledge of the agreement. The binding agreement was a major driver of JPMorgan’s investment, the people added. JPMorgan’s funding has been set at an interest rate of between 2% and 3%, and over a period of 23 years, one of the people added.

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

The new league would be the biggest reshuffle in European football since the formation of the Champions League in 1955. The national leagues of England, Spain and Italy, the governing body of sport in Europe, as well as FIFA , the global governing body and host of the World Cup, have all fought back, threatening the clubs with legal action and expulsion from their domestic leagues.

JPMorgan’s ties to flagship sports agreements go back almost 20 years. In 2003, he advised the American Glazer family on their Manchester United FC takeover. He continued to work on the club’s initial public offering almost a decade later. Manchester United is one of those who 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 has advised Rocco Commisso, the Italian-American owner of Mediacom LLC, on his takeover of Serie A team ACF Fiorentina, and US billionaire Dan Friedkin on his takeover of AS Roma. He also helped FC Internazionale Milano and Roma sell bonds backed by future media income, and Spain’s Real Madrid raised funds to renovate their iconic Santiago Bernabeu stadium.

“I am not surprised that a bank like JPMorgan is preparing its European sports activity,” said Nikhil Bahel of sports investment group Elysian Park Ventures. Bahel said the impact of the Covid-19 pandemic has left many teams and leagues financially exposed. “In my opinion, there is a realization here in Europe that the current funding model for these organizations needs to be revisited.”

The role of the US investment bank is vital as it gives the Super League the financial cover to stake billions of euros in guaranteed broadcast rights so that clubs can attempt to earn more revenue through the Separatist League. .

While the new league would free clubs from playing smaller teams that bring in less income, it also exposes them to the threat of being ostracized by the domestic leagues and many fans. The fact of going up the drawbridge and granting certain teams the status of permanent member breaks with a founding principle of international football – that anyone can qualify – or not qualify – for the most prestigious competitions. .

–With help from Fareed Sahloul.

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