SKINT Premier League clubs are considering payday-style loans with huge interest rates to stay in business.
City investors are looking to cash in on the economic crisis caused by the pandemic by charging 25 PER CENT on borrowings up to £100million.
⚠️ Read our coronavirus in sport live blog for the latest news & updates
Premier League clubs could turn to payday-style loans to help them through the financial crash brought about by coronavirus
At least four struggling Prem outfits are at the mercy of private equity or venture capitalist firms offering loans at rates massively above the Bank of England base rate of 0.1 per cent.
Lack of match-day revenue and the uncertainty of how and when football will return have created a black hole in revenue for clubs.
And with games behind closed doors a realistic prospect for the immediate future, clubs are unable to borrow cash against season ticket sales and normal game-day income.
They are also discouraged from using potential earnings from broadcast deals as collateral for loans and their cash flow is severely diminished.
A financial expert involved in the loans said: “Football has lived way beyond its means for years and now they’ve run out of money.
“It’s like any other market in a downturn, so when you’re desperate for money you go to the people who have it and they dictate the terms.
“Firms are being asked for loans from clubs who don’t necessarily have the assets to command better rates.
“Liquidity in football clubs is very low and most of those looking for cash are asking for tide-over money of £30m-50m over six months.
“There’s no rule to say the lender can’t set whatever rate it likes if they know the client is desperate.”
The date of the Premier League’s return could be announced at the end of the week.
Club bosses and top flight chiefs will hold a series of virtual meetings this week outlining the plans part of phase two of Project Restart.
And the first game back could be a blockbuster between Tottenham and Manchester United in London.
Meanwhile, the Football League could see “50 or 60 clubs” go bust as a result of the coronavirus crisis, Huddersfield Town owner Phil Hodgkinson has warned.
Simon Jordan asks players where they draw the line when it comes to Premier League return
Source: Soccer - thesun.co.uk
