Nearly £300m of loans from the Bank of England to two of the Premier League’s biggest clubs have led to accusations that the central bank’s emergency Covid-19 support facility could have a distorting effect on the competition.
Arsenal and Tottenham Hotspur have borrowed a combined £295m through the BoE’s “Covid Corporate Financing Facility”, a form of low cost borrowing only open to “larger” firms with an investment-grade credit rating.
But the London clubs’ tapping of the facility has led some smaller rivals to cry foul, because they say they are ineligible to borrow under the terms of the scheme.
One club chairman claimed the interest rates offered on the BoE loans were cheaper than those on offer from other government-backed Covid loan schemes.
“It’s a competition-distorting government bailout for select clubs,” said the chairman of one Premier League side who, in common with other executives who spoke to the FT, asked not to be identified. “Either we all have access to it or we don’t . . . [there’s] no chance Arsenal or Tottenham are borrowing at [that rate] from anybody else.”
Smaller Premier League clubs, with substantially lower revenues and constantly at the risk of relegation from the league, say they are unable to gain the required credit rating making them ineligible for the scheme.
That has caused anger as the government has been reluctant to provide other forms of support, omitting much of professional football from a wider £250m UK sports rescue package last year. A backlash against some clubs including Tottenham and Liverpool using the furlough scheme for non-playing staff has made others reluctant to use another state backed financial support option.
“It’s slightly galling some clubs were hugely criticised for using the furlough scheme . . . we don’t get access to the [Bank of England scheme],” said a Premier League club chief executive.
Another club chief said: “It feels strange that state aid is being refused to most clubs because it’s not palatable from a PR perspective but Arsenal and Spurs have borrowed a quarter of a billion pounds between them.”
Arsenal, which is owned by US billionaire Stan Kroenke, said this month it had borrowed £120m under the scheme “to assist in managing the impact of the revenue losses attributable to the pandemic”. The loan is repayable in May.
Spurs drew £175m through the facility last year. The club, which is owned by Bahamas-based billionaire Joe Lewis, said at the time that the pandemic could wipe out more than £200m in revenues by the end of June 2021 as a result of being unable to sell tickets to fans.
Arsenal said: “The CCFF is designed to provide short-term finance at commercial rates during the pandemic to companies that have strong investment ratings and which make significant contributions to the British economy. We met these criteria and it’s sensible and prudent business to use this facility which will be repaid in full plus interest.”
Spurs declined to comment.
The government insists all professional football teams are free to take advantage of other support schemes, such as the Coronavirus Business Interruption Loan Scheme (CBILS) or the Coronavirus Large Business Interruption Loan Scheme (CLBILS).
But the CBILS scheme is only open to companies with an annual turnover below £45m. According to Deloitte’s annual review of English football finance for 2018/19, the lowest earning club, Huddersfield Town, made revenues of £122m.
The CLBILS scheme, which offers loans of up to £200m to companies with annual revenues over £45m, would potentially be open to Premier League teams.
But one executive said the scheme was not an attractive option because the commercial lenders providing the state backed loans were unlikely to offer finance at similarly competitive rates to the BoE scheme.
The BoE declined to comment but the Treasury said: “The purpose of the Covid Corporate Financing Facility is to help big companies to sustain the jobs and suppliers that rely on them. The Coronavirus Large Business Interruption Loan Scheme is also available for companies to borrow up to £200m.”