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Banking on FOOTBALL!?

Banks and Football are closely related than one would think. The common elements of Banking and Football are given below:

  1. GOALS

Whether it is an individual, an organization, a football club – all of these entities set up self-established goals. A bank might set goals for achieving a certain number of new account holders by the end of the financial year, an individual might decide to invest in real estate at the end of the year. Football Clubs also set goals for themselves. Since the League and Cup matches go on throughout the year, setting up of goals which are achievable are of utmost importance. These goals will changes as the Season progresses. Financial goals for individuals are absolutely necessary and Banks must provide all the banking services of Savings Bank Accounts, Loans as and when required

  • Corporate Governance Stability

Banks require a stable corporate environment. In a Bank, the Board of Directors must back the CEO. Similarly in the Football Club, the President of the Football Club must back the Manager of the Club in order to help the club reach new levels of success.

  • High debts

India culturally has a reputation for high leverage companies. Banks have recently increased the number of Non Performing Asset’s that they have increased their debt portion of the total capital. The future of Liverpool Football Club, owned by Tom Hicks and George Gillett, depends on the willingness of Royal Bank of Scotland and Wachovia to refinance a £350m loan to the US sports franchise owners due next month. Purchasing players on loan has recently been a temporary solution for clubs which benefit both the club and the players

  • Large Audience

The presence of a large audience helps in creating maximum revenue. The past decade has seen a large number of changes. In 2009, the 5 Ballon d’Or award winner Cristiano Ronaldo transferred from Real Madrid to Manchester United at £80million. In 2018, the current transfer record was set by the transfer of Neymar Jr. from Barcelona to Paris Saint-Germain for £198 million on 3rd August 2017. Banks have largely been sponsoring football clubs in order to showcase their services of Savings bank accounts

  • Advice

Football clubs require financial advice and this advice is provided by Banks. Whether it is the tallying of the Club’s balance sheets or home grown player developments, Banks help in ironing out the financial frailties of an Asset like a Football Club. Pricing the tickets correctly in order to make maximum revenues, expanding stadiums at the right time at the right cost are some of the decisions Banks help football clubs with.

  • Large Administration Costs

Football clubs are not easy assets to own and control, question persists in the boardrooms of clubs – are banks tiring of their relationship with football or do they still believe that many football clubs, with their loyal followings and their guaranteed TV rights income, are a safe bet? Football has been a banker’s playground for much of the last decade. In the last decade, there were deals that have been struck with Russian oligarchs like – Roman Abramovich, owner of Chelsea Football Club, Middle Eastern royalty, Sheikh Mansour, owner of Manchester City Football Club.

  • Large Revenue Generation

The buying market for football clubs may continue to look thin, but that does not necessarily put their lending banks into a panic. Their argument is that football revenues look a lot more solid than those in some other sectors, such as retail.

In the present environment, “Football clubs, at least at the top end, are reasonably robust in a downturn. The profits are remaining the same, and in some potentially increasing, so the earnings profile of football clubs is pretty robust.” Banks like Barclays have sponsored the Premier League for many years. Barclays has sponsored it for so many years that a large number of the youth remember the league as the “Barclays Premier League” and not the “English Premier League”

Therefore, football and banks are very common. Football clubs and football leagues are majorly lucrative for Banks to enter into sponsorships.

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