Hedge Funds Invest In Soccer Transfer Market

Nov 1 2011 | 12:58pm ET

The European debt crisis has opened an unusual opportunity for a growing number of hedge funds: investing in European soccer players.

At least three such funds exist, financing teams' acquisitions of players in exchange for a cut when those players are once again sold on the transfer market, Bloomberg News reports. Unlike in the United States, where, for instance, baseball strictly limits the amount of money that changes hands when a player is traded, in Europe teams are free to sell their talent to the highest bidder. And investors are permitted to finance those transfer until international soccer rules, although the U.K.'s Premier League banned the activity after a 2007 scandal.

Portugal's Banco Espirito Santo has run its fund since 2009. The Benfica All Stars fund, which finances acquisitions by Lisbon's S.L. Benfica, posted a 64% return on one resale, that of Angel di Maria to Real Madrid last year. All told, the fund has owned stakes in 24 Benfica players.

Teams, including Atletico Madrid, Turkey's Besiktas, Spain's Getafe, Real Zaragoza and Sporting Gijon have turned to hedge funds as banks become increasingly wary of financing player acquisitions. But the move comes at a price, as player transfers are a major revenue stream for many European clubs.

In addition to Espirito Santo, London-based Doyen Capital and Quality Sports Investments, a joint-venture between Creative Artists Agency and athletic agency Gestifute SA, also offer teams financing, frequently as part of sponsorship agreements.


In Depth

Q&A: Decathlon Capital On Revenue-Based Alternative Lending

Oct 30 2017 | 3:49pm ET

The explosion in private credit activity since the end of the financial crisis is...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Saxby: Not All EBITDA Is Created Equal

Nov 30 2017 | 8:02pm ET

Record levels of dry powder are driving competition among private equity firms to...