Premier League rivals cry scandal over BoE Covid loan program
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Nearly £ 300million in Bank of England loans to two of the Premier League’s biggest clubs has led to accusations that the central bank’s Covid-19 emergency support facility could have a knock-on effect. distortion on competition.
Arsenal and Tottenham Hotspur have borrowed a total of £ 295million through the BoE’s Covid Corporate Financing Facility, a low-cost form of borrowing open only to “large” companies with a credit rating top quality.
But London clubs’ exploitation of the facility has led some smaller rivals to cry foul as they say they are not eligible to borrow under the terms of the program.
A club president claimed that the interest rates offered on BoE loans were cheaper than those offered by other government-backed Covid loan programs.
“This is a government bailout that skews competition for some clubs,” said the chairman of a Premier League team who, like other leaders who have spoken to the FT, has asked not to be identified . “Either we all have access to it or we don’t. . .[there’s]no chance that Arsenal or Tottenham would borrow from [that rate] from someone else.
Small Premier League clubs, with significantly lower incomes and constantly at risk of being relegated from the league, say they are unable to achieve the required credit rating, making them ineligible for the program.
This has caused anger as the government has been reluctant to provide other forms of support, omitting much of professional football from a larger £ 250million UK sports rescue package Last year. A backlash against some clubs including Tottenham and Liverpool using the non-playing staff leave program made others reluctant to use another option of state-backed financial support.
“It’s a bit maddening, some clubs have been criticized a lot for using the leave scheme. . . we do not have access to [Bank of England scheme]”said a managing director of a Premier League club.
Another club chief said: “It is strange that state aid is being denied to most clubs because it is not acceptable from a public relations point of view, 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 £ 120million under the scheme “to help manage the impact of lost income from the pandemic”. The loan is repayable in May.
Spurs pulled £ 175million through the facility last year. The club, which is owned by Bahamian-based billionaire Joe Lewis, said at the time that the pandemic could wipe out more than £ 200million in revenue by the end of June 2021 due to the inability to sell tickets to the fans.
Arsenal said: “The CCFF is designed to provide short-term finance at commercial rates during the pandemic to companies with good investment ratings and making a significant contribution to the UK economy. We have met these criteria and it is wise and prudent to use this facility which will be repaid in full plus interest.
Spurs declined to comment.
The government insists that all professional football teams are free to take advantage of other support programs, such as the Coronavirus Business Interruption Loan Program (CBILS) or the Interruption Loan Program. activity for coronavirus (CLBILS).
But the CBILS program is only open to companies with an annual turnover of less than £ 45million. According to Deloitte’s annual review of English football funding for 2018/19, the lowest-paying club, Huddersfield Town, had a turnover of £ 122million.
The CLBILS program, which offers loans of up to £ 200million to companies with annual revenues above £ 45million, is said to be potentially open to Premier League teams.
But an executive said the program was not an attractive option because commercial lenders providing the state-guaranteed loans were unlikely to offer financing at rates as competitive as the BoE’s program.
The BoE declined to comment, but the Treasury said: “The purpose of the Covid Corporate Financing Facility is to help large companies maintain the jobs and the suppliers that depend on them. The Coronavirus Large Business Interruption Loan Program is also available for businesses that can borrow up to £ 200million. ”