EFL considering bank loan to help clubs survive with at least SIX teams struggling to see out the new season... and the Premier League are failing to provide a bailout
The Football League are considering taking out a commercial loan to help some of their clubs survive the season due to doubts over whether the Premier League will provide the financial bailout that has been demanded by the Government.
EFL executives have spoken to several commercial lenders about a loan, including hedge fund MSD UK Holdings, who have already lent money to several clubs over the last 12 months, including Derby County and Sunderland.
The EFL are understood to be seeking a £250million aid package from the Premier League payable over the next four years. But no agreement has been forthcoming, so they have been forced to pursue other options. The talks with potential lenders are believed to have centred on a phased loan for a smaller amount, to be reviewed monthly.
The clubs lost a combined £50m through missing gate receipts after lockdown at the end of last season. A further loss of £200m is expected if crowds are not permitted in the new campaign, which is due to start two weeks on Friday.
The involvement of private equity would represent a major change for football, although the EFL have had little choice but to examine other sources of funding for struggling clubs.
Culture secretary Oliver Dowden made it clear in May that financial support from the Premier League for the rest of the pyramid was a prerequisite for Government endorsement of Project Restart. But almost three months later, the top-flight clubs have yet to make an offer to lower-league sides and detailed negotiations have yet to take place.
The only assistance provided by the Premier League to date has been to advance the EFL this month’s £55m solidarity money that was paid earlier this summer and half of the next £55m payment due next January, which has been passed on the clubs, along with three months’ worth of Sky Sports TV rights fees to help the clubs start the season.
As a result, the EFL are confident all 72 clubs have enough money to survive until the end of October but, if crowds remain prohibited or severely limited at that stage, further funding will be needed.
At least six clubs have serious concerns about whether they will be able to get through the season, with Wigan, Oldham, Charlton and Southend among those thought to be in danger.
Given the uncertainty over crowds, a phased loan is likely to be more preferable to the EFL than a single lump sum, as they are hopeful that the clubs’ eventual losses will be significantly lower than their worst-case projection of £200m, a figure which will ultimately be determined by the percentage of fans that can attend matches in the upcoming season.
The championship clubs have abandoned plans to introduce a salary cap next season, which remains an aspiration in League One and League Two.
The controversial issue is to be revisited in the autumn.