COVID-hit UK sports bodies get fiscal aid

Article posted by Coliseum, April 5^th, 2021

Image: Leicester Tigers

The English Football League (EFL) recently agreed to a new £117.5m (€137.7m/$161.7m) funding package from MetLife Investment Management, the institutional asset management business of MetLife Inc., to support Championship Clubs in meeting Pay As You Earn (PAYE) liabilities. This is an initiative for Championship clubs who is suffering major revenue erosion as fixtures continue to be played sans fans.

The ‘EFL’ stated that the above decision has been taken as per an announcement made in December 2020 in respect of up to £50m of financial aid being made available for League One and Two Clubs by the Premier League, who have also provided a payment commitment of up to £15m in support of the EFL securing this loan facility.

The English Football League is a league competition featuring professional association football clubs from England and Wales. Founded in 1888 as the Football League, the league is the oldest such competition in world football.

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New Jersey (US)-based MetLife Investment Management provides public fixed income, private capital and real estate investment solutions to institutional investors worldwide. MetLife Investment Management is the institutional asset management business of MetLife, Inc., one of the world’s leading financial services companies.

The transaction was agreed with MetLife Investment Management following a competitive bidding process in which the EFL received solicited and unsolicited financing proposals from a wide range of potential private financing providers and UK banks alongside discussing loan options with the UK Government that could not be progressed due to the restrictions being imposed.

The ‘EFL’ further stated that this funding commitment from MetLife Investment Management will provide immediate additional funding to Championship Clubs, who have now played the equivalent of a full season without spectators in attendance and during which time have lost approximately £150m in gate receipts and missed out on other matchday revenue streams as the COVID-19 situation starts taking a turn for the worst in certain parts of the globe.

The size of the loan facility being provided by MetLife Investment Management matches the total amount requested by Championship Clubs.

Stated EFL Chair, Rick Parry, “This past month has marked an unwelcome anniversary for football with supporters now being unable to attend matches for a 12-month period, resulting in multiple negative consequences. This is, therefore, a much welcome, timely package of support for Championship Clubs, whose operations have continued to incur significant costs without generating anywhere near normal levels of revenue.”

Added Parry, “I’d like to thank MetLife Investment Management for the positive, proactive approach they adopted throughout our negotiations and for meeting our requirements in what are a unique set of circumstances. The support will be pivotal to clubs being able to re-evaluate their financial position and help them start to plot their way out of the pandemic and plan with greater certainty for 2021-22 when we are hoping for the return of fans in large numbers.”

Steven J. Goulart, President, MetLife Investment Management and Chief Investment Officer, MetLife Inc., remarked, “We know that a healthy and vibrant football environment with strong and resilient clubs is important for the U.K. We’re pleased to work with the EFL so that they can support their Championship Clubs with additional funding in a time of need, further building a strong and sustainable football landscape and ultimately supporting the communities of which they are a part.”

Financing details:

MetLife Investment Management was advised by Linklaters (multinational law firm headquartered in London) in respect of their provision of this loan facility;
As part of this financing package, the EFL obtained an investment grade private credit rating from Fitch Ratings;
This was reflective of the underlying credit strength of the EFL and enabled the League to secure attractive and competitive financing terms;
The loan facility is provided to support clubs in the Championship to meet PAYE liabilities up to the end of June 30^th, 2021; and
Any club in receipt of a loan payment as detailed will be required to continue to maintain compliance with the EFL’s financial regulations.

UK Govt fiscal shield

The UK Government has announced the latest tranche of funding from the winter phase of its Sport Survival Package, which will see £88 million (€103.3m/$121.6m) in loan support provided to Premiership Rugby Union clubs.

‘Premiership Rugby’ stated that clubs have been through a rigorous application and due diligence process to determine their financial needs. The support will cover essential survival costs due to the lack of spectators for an extended period due to the COVID-19 curse. In many cases, owners have been required to inject additional support alongside that provided by the Government to protect their clubs.

Premiership Rugby is an English professional rugby union competition. The Premiership consists of 12 clubs, and is the top division of the English rugby union system. Premiership clubs qualify for Europe’s two main club competitions, the European Rugby Champions Cup and the European Rugby Challenge Cup.

Premiership Rugby clubs are largely reliant on ticket sales and fans attendance in stadia to remain solvent. This funding will allow the league to complete its 2020-21 seasons.

‘Premiership Rugby’ further stated that the above move follows the Government recently announcing more than £40 million provided to support grassroots rugby union clubs, up to £5.5 million to support the launch of the men’s Championship competition earlier this month and £1.1 million for professional women’s rugby, including the Premier 15s and COVID-19 related costs for the Red Roses’ Women’s Six Nations campaign.

Stated Culture Secretary Oliver Dowden, “We know that the restrictions on spectators continue to have consequences for many sports. That includes Rugby Union and its clubs at the elite level through to the grassroots. That’s why we’re helping our major spectator sports, with money already benefiting more than 100 organizations, from women’s football, to netball, badminton and basketball, with more to follow as we navigate our roadmap back to normality.”

Added Dowden, “This funding will support the survival and continued visibility of men’s domestic rugby union at the highest level, allowing the league to complete its season.”

Darren Childs, Chief Executive of Premiership Rugby, commented, “In our hour of need, this Government offered the financial help so urgently needed to allow Premiership Rugby clubs to continue to entertain fans with enthralling games. But more importantly to survive the pandemic so they can continue to play such an important role in the communities they serve.”

Added Childs, “We have now completed almost two full seasons without fans in stadia, with the loss of matchday revenue, and that would not have been financially possible without the help of the Government’s Winter Sport Survival Package. When the country emerges from the pandemic, the Premiership clubs will continue to play a pivotal role in the future health of the nation. We see these loans as a vote of confidence in Premiership Rugby and our clubs to be able to fulfill that role.”

Childs further stated, “On behalf of everyone involved in Premiership Rugby, I’d like to thank Sport England, the Department for Digital Culture, Media and Sport, HM Treasury and the Government more broadly for their work to safeguard our sport.”

Chair of the independent Board, Sir Ian Cheshire, stated, “Rugby union is a sport of significant profile and one which relies on much of its income coming through spectators, so the pandemic has had an especially damaging financial impact on its top-tier men’s clubs. Alongside the funding that has already gone to grassroots clubs and professional women’s rugby, the confirmation of this funding for men’s Premiership Rugby clubs is pivotal in helping these clubs continue to operate while carrying the season through to its end.”

Added Cheshire, “Rugby union is a sport of significant profile and one which relies on much of its income coming through spectators, so the pandemic has had an especially damaging financial impact on its top-tier men’s clubs.”

The £300 million winter phase of the Government’s Sport Survival Package is focused on helping those major spectator sports severely impacted by coronavirus restrictions survive the winter.

In addition to support for men’s Championship, women’s and grassroots rugby union, over recent weeks funding has also been provided to National League and women’s football, badminton, basketball, netball and ice hockey.

Submissions for support have been made from individual sports to an independent decision-making Board, supported by Sport England.

Sport England is the governing body responsible for distributing funds and providing strategic guidance for sporting activity in England.

The Sport Survival Package is the most generous bespoke support from any Government for its domestic sport sector in the world. It comes as part of the sector benefiting from more than £1.5 billion worth of business support that has been made available by the Government, including the furlough scheme, business rates relief and business interruption loan scheme that has helped many sports clubs and leisure businesses to survive amid the COVID clobber which has forced the United Kingdom to go into a second lockdown though lockdown measures are slowly being eased with the vaccine rollout.

Earlier this month, the UK Chancellor, Rishi Sunak, announced a further £300 million of support via the Sport Survival Package that is expected to benefit major summer spectator sports such as cricket, tennis and horse racing, as the path out of lockdown continues and sports stadia initially open at reduced capacities. Further details, including how cash will be distributed, how organizations can apply and timeframes, will be announced by Sport England in the coming weeks.

Further confirmations of funding from the Sports Winter Survival Package will be made in due course.

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