Institutional private lenders have become an “important part” of football’s financial landscape, reflecting the search for new investment opportunities and the growing complexity of football itself, according to PGIM.
Josh Shipley, PGIM’s European head of private equity, called the “modern” football club “a business hungry to navigate complex financial needs”.
He noted that non-bank lenders, particularly private equity firms, are stepping in “to complement and supplement the offerings of traditional lenders” amid changes on both the supply and demand sides of the market.
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He noted that, on the supply side, banks are already under pressure from regulations, balance sheet restrictions, and a preference for short, conventional loans, which means that they are often “not suitable for financing related to sports operations or old infrastructure”.
Meanwhile, private debt as an asset class has grown, as investors look for new export opportunities “as activity backed by traditional sponsors slows down”.
“Football, supported by global demand, rising business values, and tangible assets such as media rights, stadiums, and brands, has become a natural fit for the head of the institution,” Shipley explained.
On the other hand, football is becoming more sophisticated, as clubs hire academy-level finance teams, and engage “more and more” with financial markets, while European leagues have “encouraged greater financial control at club level”.
“This has created a natural fit with private lenders who can underwrite complexity and structure around specific assets or income streams,” he added.
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Shipley noted, however, that banks have not completely withdrawn and continue to offer variable credit facilities or working capital lines, while private loans provide long-term, flexible financing.
“Over time, the increasing participation of institutional funds has coincided with the rebalancing of European football assets. Although revenue growth has been an important driver, a large part of the increase in business value has been supported by high multiples, reflecting improved governance, professional training, and greater investor confidence,” he said.
Shipley highlighted the importance of infrastructure funding as European clubs look to modernize stadiums to match their global peers in terms of “size, modernity and commercialism”.
“Financing these assets requires long tenors, flexible amortisation, and structures that see the relative stability of ticket and hospitality income, even if pitch performance fluctuates,” he added.
However, he said risk is an “unavoidable factor” in football financing, explaining the possibility of withdrawals, operational fluctuations, and regulatory changes, which have “material effects” on cash flow and valuation.
“An effective credit system requires clearly acknowledging these risks and mitigating them through the use of appropriate leverage, diverse partner pools, and strong deal packages,” according to Shipley.
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