Financier banking on flexible football transfer strategy
London (AFP) – Even for the heavyweights of world football, raising vast sums of cash to fund transfers can be tricky. That’s where Jason Traub’s firm 23 Capital comes in.
The company is operating at a rarefied level — it is reported to have helped finance the deals that took France’s World Cup-winning striker Antoine Griezmann from Atletico Madrid to Barcelona last year and Atletico Madrid’s purchase of Joao Felix from Benfica.
Co-founded by Traub and Stephen Duval six years ago, 23 Capital markets itself as a “capital and solutions company focused exclusively on the sports, music and entertainment sectors”.
Its USP, essentially, is that it has more flexibility than a traditional bank. It gives clubs an alternative way of raising cash to sign players and greases the wheels of the football transfer industry.
The market is huge. Clubs from Europe’s ‘Big Five’ leagues in England, Spain, Italy, France and Germany combined to spend a record £5 billion ($6.5 billion, 5.9 billion euros) on transfer fees during the 2019 summer transfer window, according to auditors Deloitte.
But while the numbers are eye-watering, a large proportion of the value of many clubs lies in their players, or “intangible assets” as Traub told AFP at the company’s headquarters in London.
Traub said banks, when asked by clubs for a loan, may not take into account the value of the players. That means clubs are pushed to seek alternative financial providers.
“In a bank balance sheet of a football club, you have your stadium but then you have this significantly typically larger asset base around intangible assets — players,” he said.
“So that’s a huge amount of capital tied up. These are hundreds and hundreds of millions of pounds.”
Traub said clubs do not have the option to apply for financing as if they were a high-street store.
“I mean if you come in off the street to, for instance, Metro Bank and say, ‘Look, we have £800 million worth of intangible assets on our balance sheet so how much are you going to loan us?’
“That is going to be a quick conversation. So really that’s where we came and understood that rationale.”
Timothy Bridge, a director at Deloitte’s Sports Business Group, said clubs had a number of avenues they could pursue to finance player transfers.
“Traditional banks may not be the outlet that provides the financing for player transfer receivables (or assets) but there are an increasing number of options for clubs,” he said.