The Football League is considering taking out a business loan to help some of its clubs survive the season amid doubts the Premier League will provide the financial bailout requested by the government.
Sports messaging learned that EFL executives had discussed a loan with several commercial lenders, including hedge fund MSD UK Holdings, which had previously loaned money to several clubs in the past 12 months, including Derby County and Sunderland .
The EFL is reportedly looking for a £ 250million Premier League aid package payable over the next four years. But no deal was reached, so they were forced to pursue other options. It is believed that talks with potential lenders have focused on a lower amount installment loan, which will be reviewed monthly.
EFL, led by boss Rick Parry, plans to take out a business loan to help clubs
Clubs have lost £ 50million due to missing receipts following the lockdown at the end of last season. A further loss of £ 200million is expected if crowds are not allowed in the new campaign, which is due to start two weeks on Friday.
The involvement of private equity would represent a major change for football, although the EFL has had no choice but to look at other sources of funding for struggling clubs.
Culture Secretary Oliver Dowden made it clear in May that Premier League financial support for the rest of the pyramid was a prerequisite for government approval of the project. But nearly three months later, top clubs have yet to make offers to lower league teams and detailed negotiations have yet to take place.
Premier League chief executive Richard Masters said in June that EFL had not asked for help
The only help the Premier League has provided so far has been to advance the EFL’s £ 55million solidarity money this month which was paid earlier this summer and half of the next payment of £ 55million due next January, which has been transferred to clubs, as well as three months of royalty royalties from Sky Sports TV to help clubs start the season.
As a result, the EFL is confident that all 72 clubs have enough money to survive until the end of October, but if crowds remain off-limits or severely restricted at this point, additional funding will be required.
Sports messaging has been told that at least six clubs have serious concerns about their ability to make it through the season, with Wigan, Oldham, Charlton and Southend among those seen as at risk.
Wigan was relegated after being hit with a points deduction for entering administration
Given the uncertainty on the crowd, a structured loan will likely be more preferable to the EFL than a one-time lump sum, as they hope that the clubs’ eventual losses will be significantly less than their worst-case projection of 200. million pounds, a figure that will ultimately be determined by the percentage of fans able to attend matches in the coming season.
Meanwhile, Sports messaging may also reveal that league clubs have abandoned plans to introduce a salary cap next season, which remains a draw in League One and League Two.
The controversial issue will be revisited in the fall.