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The European Super League’s precipitous rise was matched only by its stunning fall.
This week, the breakaway men’s soccer league involving Europe’s biggest sporting names fell apart just days following its unveiling. Nine of the 12 founding clubs reversed their decision to participate in the initiative after fans protested in the streets of London, while soccer pundits and politicians voiced their opposition all week. The Super League was designed to compete alongside the popular Champions League, the continent’s highest-ranking club competition.
JPMorgan had committed to funding the clubs’ upfront costs for the league with a loan of 3.5 billion euros ($4.2 billion) that offered between 2% and 3% in interest and would have matured over 23 years.
But in a U-turn on Friday, a spokesperson for the US bank said it had “clearly misjudged how this deal would be viewed by the wider football community and how it might impact them in the future.” They added, “We will learn from this.”
This followed numerous fans calling for a boycott of JPMorgan for funding the Super League.
Typically, a loan of this size and stature would have been structured with a breakup fee for JPMorgan, but the spokesperson declined to comment on the matter.
The US bank had pondered taking the deal into the syndicated-loan market to spread the fundraising among other banks, but was also prepared to remain the sole lender if its peers weren’t comfortable with the risk, sources familiar with the financing said.
“The secret sauce at the top level is all about advertising, broadcast, and merchandising revenue,” said one senior banker who opposed the initiative. “I don’t like it, but it’s a numbers game.”
An untried and untested league was expected to be a tough sell in the bank or bond market. Public outrage aside, credit experts questioned a new deal with few comparable transactions, clubs with heavy debt levels, and little clarity over cash-flow potential from broadcast rights or advertising, sources said.
“Could the Super League fund itself in the bond market? I’m not so sure,” a second senior banker said. “Highly depends on how much leverage they want to put on.”
It’s not uncommon for soccer clubs to raise funds in the international bond market. Manchester United, the wealthiest club in England, has done so, but not even an institution with such a bank balance can escape criticism.
“That had a strong brand, history. Things this doesn’t have,” the second banker said when comparing potential deals between Manchester United and the Super League.
And given the public backlash, a syndicated loan or a bond deal could have proved a public-relations disaster for those involved.
‘Amen, brother’: A victory for the fans
A third banker monitoring proceedings rejoiced, “Amen, brother,” as the clubs started backing out of the initiative this week. A fourth, pondering the financing, hoped the clubs had negotiated a “no deal, no fee” structure with JPMorgan.
While the Super League sought to pad the pockets of its founders, rival soccer clubs, fans, and UK Prime Minister Boris Johnson vehemently opposed the formation of the breakaway tournament.
The founders would have been guaranteed a place in the Super League each season, while a further five would be granted entry through qualification. The Champions League allows any European team to qualify through successful performances in their respective domestic competition.
On Tuesday, all six founding English Premier League clubs — Manchester United, Manchester City, Chelsea, Liverpool, Tottenham Hotspur, and Arsenal — backed out of the Super League, while Italian clubs AC Milan and Inter Milan, and Spain’s Atletico Madrid followed suit on Wednesday.
Tottenham Chair Daniel Levy said, “We regret the anxiety and upset caused.”
The Super League’s three other founders — Spain’s Real Madrid and Barcelona, and Juventus of Italy — have not formally withdrawn from the league, but believe the project will not immediately proceed.
Eleven of the 12 founding clubs — Barcelona, Real Madrid, Manchester United, Liverpool, Manchester City, Chelsea, Tottenham, Juventus, Arsenal, Atletico Madrid, and Inter Milan — were listed in the top 20 of Deloitte’s 2021 Money League, an annual analysis that profiles the financial performance of the highest revenue-generating European soccer clubs.
“There are 30 baseball teams. Can you imagine if the top 10 teams just broke away? The Yankees, Boston, or Dodgers,” the first banker said. “The small market teams just get squeezed out. No matter if they’ve won a World Series. It’s just crazy.”