Why Could JPMorgan Finance a Football Competition with $5B?

European football has gained a growing global audience over the past years and decades, making it a major industry with a rising market size and annual revenues growing from about EUR 13.6 billion in 2007 to roughly EUR 29 billion before the coronavirus pandemic.

Accordingly, a dozen of Europe’s biggest football clubs want to boost their revenues, especially after being hit with the pandemic that prevented spectators from attending matches, thus leading to huge losses in ticket and merchandise sales, by creating a new competition for the continent’s elite clubs, called the new European Super League.

JPMorgan Chase & Co., one of the top ten banks in the world, could soon be offering EUR 4 billion ($4.8 billion) to finance the establishment of this competition.

The bank will underwrite an initial investment of EUR 3.5 billion, a figure that will rise to EUR 4 billion with additional expenses, as Bloomberg reported.

Half of the 12 teams come from England, while the six come from Spain and Italy, with three from each. All clubs have agreed to commit to becoming regular participants in the competition, by signing a binding agreement, according to the Financial Times.

The clubs were encouraged by a EUR 200m-300 million welcome bonus by JP Morgan Chase, who will provide the aforementioned 23-year funding with an interest rate of 2-3%.

It is worth noting that the competition has come under a lot of scrutiny from FIFA and UEFA.

Moreover, the Prime Minister of the UK, Boris Johnson, has also come in opposition to the competition, tweeting recently that “Plans for a European Super League would be very damaging for football and we support football authorities in taking action. They would strike at the heart of the domestic game, and will concern fans across the country.”

“The clubs involved must answer to their fans and the wider footballing community before taking any further steps,” he added.

The competition is seen as a threat to other regional and international competitions, such as the UEFA Champions League and the FIFA World Cup.

On the other hand, the competition Chairman Florentino Perez, who is also the President of Real Madrid, has defended the competition, saying it will save football and help European clubs make up for their recent losses due to COVID-19.