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Bank to issue interest rate hike decision JACK BARNETT AND STAFF
PRIVATE EQUITY SHOPS BUYING INTO EUROPEAN FOOTBALL LIKELY TO WANT A SAY OVER GOVERNANCE – INCLUDING THE END OF RELEGATION MATT HARDY PRIVATE EQUITY buyers flooding into Premier League and European football are likely to want more of a say over the rules of the game, top lawyers have told City A.M., including the potential introduction of ‘closed leagues’ without promotion or relegation. The value of deals in Europe’s top five leagues – England, France, Germany, Italy and Spain – catapulted from €66.7m (£57m) in 2018 to €4.9bn (£4.2bn) in 2022. Recent deals include the £2.5bn purchase of Chelsea by a private equity consortium led by Todd Boehley, and the purchase of AC
Milan by US outfit Redbird for £1.2bn, itself buying from private equity house Elliott Advisors. The Pitchbook report reveals some 35 per cent of top clubs across Europe have some level of private equity, venture capital or private debt participation either as majority or minority owners, with owners attracted by potential broadcast revenues and the value of the historic brands. Tom Smitham, senior associate at Charles Russell Speechlys, said the increased investment from private equity firms could lead to pressure on regulatory and governance systems. “In the future we would expect to
2018
£57m Private equity investment in European football
2022
£4.2bn Private equity investment in European football
see investors looking to more actively influence the evolution of football regulation (and indeed regulation in other sports) at national, European and international level in areas such as financial fair play structures, potential salary caps, closed leagues and multiple club ownership arrangements,” he said. “Such regulations have the potential to significantly limit costs associated with running clubs, provide a more secure investment platform and open up further investment opportunities across multiple jurisdictions, all of which will be highly attractive to private equity investors.”
Today’s report states that over a third of Big Five clubs have US-based participation involved and that a deal for Manchester United – valued at $6bn (£5.1bn) – would see the valuation of dealmaking this year surpass €10bn (£8.59bn) for 2023. Nicolas Moura, the author of the report, told City A.M. that the Premier League remains the go-to league despite the cost of forcing the door down. “If you’re a billionaire buying for ego and prestige then I think you’re more likely to go for a Premier League club and pay a premium for [the likes of] Manchester United – but you’re getting move value in a league like France’s Ligue 1,” he said.
THE BANK of England is expected to hike interest rates for the 14th time in a row today as it continues its fight against soaring inflation. At midday today, members of the nine-strong Monetary Policy Committee (MPC) are expected to knock on another increase to the UK’s official interest rate. Analysts are divided as to whether the MPC will opt for a 25 or 50 basis point increase – taking rates to 5.25 or 5.5 per cent respectively. Most yesterday thought the former more likely but either would represent the steepest rates since March 2008. Just a couple of weeks ago, money markets thought Bank governor Andrew Bailey and the rest of the MPC would repeat last month’s chunkier rate increase of 50 points. However a sharper-thanforecast reduction in headline and core inflation rolled back bets on a larger move. CPI inflation fell to 7.9 per cent in June, matching the Bank’s forecast and down from 8.7 per cent in May. The Bank is almost certain to revise down its inflation projections in a new set of forecasts this week, indicating Prime Minister Rishi Sunak may meet his goal of halving the cost of living to around five per cent by the end of the year. £ CONTINUED ON PAGE 2
When America sneezes... London stocks tumble after shock US debt downgrade JACK BARNETT LONDON’s FTSE 100 plummeted yesterday after a top credit ratings agency slashed its outlook on the US’s finances. The capital’s premier index slumped 1.36 per cent to 7,561.64 points, while the domestically-
focused mid-cap FTSE 250 index, which is a better reflection of the health of the UK economy, fell 1.33 per cent to 18,812.88 points. Late on Tuesday, Fitch, one of the world’s most influential credit rating agencies, downgraded its assessment for the US’s debt position one level to AA+ from AAA.
The latter is the top rung on Fitch’s rating ladder. Credit rating agencies use a tiered system to illustrate how likely they think a country is to repay its debts. Their assessments are closely watched by financial traders. Fitch said “repeated debt limit standoffs” prompted the decision.
Back in June, US lawmakers after weeks and weeks of failed negotiations, voted to lift the cap on how much the government is able to borrow from $31.4 trillion. Without the agreement, there was a real risk the US would have failed to make good on some of its debt, likely sparking chaos in global
financial markets. City traders seemingly absorbed Fitch’s fresh judgement poorly, ditching London-listed stocks. Just six stocks finished in the green on the FTSE 100 . European shares also came under heavy fire, while Wall Street’s top indices all opened sharply lower.
INSIDE BAE SYSTEMS POSTS BUMPER RESULTS P3 ASDA AT RISK OF £1.2BN EQUAL PAY CASE P5 AVIATION’S RECORD SUMMER P5 OPINION P12-13 IN DEFENCE OF THE NEGRONI P16