S&P Capital IQ’s Credit Football League

Author: Pavle Sabic, FRM Director, Credit Market Development S&P Capital IQ pavle.sabic@spcapitaliq.com Twitter: @pavlesabic www.spcapitaliq-credit.com What’s the Score? S&P Capital IQ’s Credit Football League Spurred on by the 2014 FIFA World Cup, football is fast emerging as an investment sector in its own right, with Europe’s biggest clubs ranking alongside household-name media and entertainment corporations. From foreign billionaire owners, bank lenders, and large corporate investors to day-trading stock pickers, ‘following the team’ has taken on a whole new meaning as the share prices and financial standings of clubs are monitored. These would-be investors in football – known, of course, as soccer in the United States – are simultaneously drawn to the potential opportunities offered by the sport and concerned by the potential risks. This new trend, whereby football teams are expanding their sources of finance, brings major credit risks and forms an essential pillar for any investment decision which needs to be understood holistically. However, as the UEFA Champion’s League, one of football’s most lucrative drivers of profit, gets underway, investors can take heart from the existence of a link between a club’s revenue and match performance on the one hand, and the equity market’s perception of its credit risk on the other. Success on the field, in other words, apparently has bred success off it.