Private credit funds target English clubs with squad-backed loans

Private credit lenders are seeking to expand into English football through loans sized against the estimated value of playing squads, introducing financing structures that could give creditors priority over proceeds from future transfers.Discussions about ‘squad-value financing’ are gathering momentum among clubs, lenders and specialist advisers, according to the Financial Times, as private capital ownership creates opportunities for more complex borrowing arrangements.Fasanara chief executive Francesco Filia told the FT: “Football clubs need capital on a timetable that does not always match when revenues arrive. Our sports receivables and squad-backed financing strategy aims to bridge that gap.”The proposed structures differ from established transfer receivables financing, where clubs borrow against money already contractually owed following a completed player sale.Some squad-value arrangements instead involve security over hypothetical receivables from transfers that have not yet been agreed, with the amount available to borrow linked to assessments of the squad’s market value.According to people familiar with the discussions, lenders holding that security would not be able to compel a club to sell a player, but would have first call on an agreed portion of the proceeds once a sale took place.That distinction leaves transfer decisions with the club while committing some potential future income to repayment, reducing the cash available from subsequent sales for other purposes.Tifosy and private capital manager Fasanara have developed squad-value financing in European football, with loans equivalent to approximately a quarter of the value of participating clubs’ squads, the FT reported.Clubs in Spain, Portugal, Italy, France and Belgium have already used such arrangements, while their adoption in England remains more limited.London-based sports finance business 23 Capital, which was wound down during the Covid-19 pandemic, has relaunched with squad-value lending as a central part of its offering, according to the report. The company declined to comment.Burnley are among the few English clubs to have used structures in which borrowing amounts are partly determined by player valuations, although those loans are also supported by a wider pool of assets.The financing can address a timing mismatch between expenditure and income, such as funding January recruitment before repaying borrowing with receipts from summer sales.However, bridging that gap does not remove the underlying risk if anticipated sales fail to materialise or generate less than expected, leaving clubs dependent on the terms and repayment requirements of their borrowing.Squad valuations are estimates rather than guaranteed sale prices, with the amount ultimately realised dependent on market demand and the circumstances in which a transfer is negotiated.The push comes as the Independent Football Regulator warns that rising debt, widespread losses and dependence on owners are weakening English football’s financial resilience.Against that backdrop, squad-backed lending offers another source of liquidity, but also makes future transfer income an increasingly important part of clubs’ financing obligations.The central question is whether the borrowing supports manageable short-term cash requirements or enables spending that leaves clubs needing future player sales to meet commitments already incurred.