to grow, Sussex-based lessor New Century Finance has created a
niche market for itself by discounting football transfer
fees.
However, despite reporting profits 10 percent lower at year-end
in August than at year-end in 2007, Richard Price, who created NCF
in 2000, remains positive: “What you need to realise is that the
majority of deals come after the transfer window closes. Clubs
agree to transfer a player, but will only work out the finance
afterwards.”
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NCF, which also finances waste energy, discounts transfer fees
for clubs, as well as other streams of receivables such as TV
rights and stadium development.
The lessor closed deals with Premiership and Championship clubs
worth £9 million (€11.2 million) in September and, by the end of
October, it is expected to have closed deals worth £18 million.
“Football remains a steady market due to the TV rights involved
and the club season tickets, which are sold well in advance,” Price
said.
In September, auditors KPMG released a study analysing football
transfers. Geoff Mesher, head of KPMG Forensic’s sports disputes
team, agrees that TV rights are the biggest source of income into
the game in England.
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By GlobalDataHowever, in his report he added: “The broadcasting industry is
one of the first to feel the pinch when advertisers cut back on
spending. I’m not so sure budgets will be as good as the last time
TV contracts were negotiated; and this is likely to have an impact
on how much money clubs can spend on player transfers.”
The average Championship player transfer was worth £2.5 million
this year and Price expects this amount to increase.
In the Premiership, where Price conducted his first Islamic
finance deal this year, average transfers are worth £8 million.
Deloitte’s Annual Review of Football Finance calculated that since
the 2002/03 transfer season, total transfer expenditure by English
clubs has exceeded £2.3 billion.
Looking forward, KPMG’s Mesher predicted a polarisation between
a minority of players who will command high transfer fees and the
rest, for whom transfer fees could decline.
“It will be really interesting to see how that works out,” says
Mesher. “A lot of clubs are operating with debt. How will banks
react when the clubs need to refinance, in a year’s time? Will
their lending policies be tighter or will the liquidity crisis be
over?”
Price has gradually built up a network of reliable contacts who
bring him the business that he then presents to his exclusive
funding panel of five banks.
“Banks tend to be wary of financing football transfers because
they don’t know the industry. The risk is that a buying club
defaults on payments, but this has not yet happened in the UK,”
said Price.
Jason T Hesse
