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Not many football clubs have the balance sheet or cachet to borrow money on the debt markets. This week, I’ve been particularly intrigued by Inter Milan’s efforts to refinance existing debt. The reigning champions in Serie A, the top football division in Italy, are operating in an environment that’s vastly different from when the club issued its debut €300m bond in 2017.
Market conditions are . . . volatile. Traders are worried about rising interest rates — and the effect on borrowing costs — as the US Federal Reserve tries to get a grip on inflation. When you throw into the mix that, like many clubs, Inter suffered big losses during the pandemic, it shouldn’t be a surprise that the club is now borrowing at a rate of 6.75 per cent rather than the 4.875 per cent achieved in 2017, a sign of the risks in European football.
But first, let’s get into the money of the Winter Olympics . ..
Do read on — Samuel Agini, sports business reporter
Measuring the true cost of the Beijing 2022 Olympics
With less than a week to go until the start of the 2022 Winter Olympics, last-minute preparations are under way: athletes are getting in their final training, hotels and venues are open for arrivals, and authorities in Beijing are telling locals not to respond to any motor vehicle accidents for fear of potentially interacting with Olympic participants who may be carrying Covid-19.
That’s just one unprecedented development of many for the second pandemic-era Games in as many years, as host nation China seeks to pull off the world’s largest sporting event while keeping its zero-Covid policy intact. Strictures include sequestering a community of 20,000 volunteers, 25,000 stakeholders, and 2,900 athletes in a fully secluded bubble, forbidding commercial air travel to depart China in favour of charter flights, and minimum daily PCR tests for all.
But at what cost?
In a literal sense, hosting an Olympics in the pre-coronavirus age was a gargantuan and costly task. Russia famously spent $50bn to stage the Sochi 2014 Winter Games, which makes the original Beijing 2022 budget of $1.56bn look like a bargain by comparison. China is reusing some of its venues from the 2008 Summer Games, including the Bird’s Nest stadium, but organisers tell Scoreboard that despite unforeseen costs associated with Covid-19 protocols, they’ve made modifications “by cancelling or simplifying some activities”, including the welcome ceremony and torch relay.
The full bill won’t be known for months to come. It was only in December that Tokyo organisers confirmed the receipt for the first Covid-19 Games was $12.7bn, nearly double their original budget.
It’s not only the hosts facing staggering charges — as one Tokyo 2020 sponsor’s chief executive told the FT’s Leo Lewis, their company spent $100m on the games for “effectively zero” benefit.
So far, the run-up to Beijing has been marked by deafening silence from top Olympic sponsors, who for months have been challenged by human rights groups and journalists including at the FT to explain how the billions they pay the International Olympic Committee for exclusive licensing rights are or are not supporting China’s abuse of its minority Uyghur population, which the US and other Western governments have deemed a genocide.
Like Tokyo, Beijing 2022 will have virtually no spectators, which also means sponsors have bailed on lavish hospitality or large public product demonstrations. But as a measure of how truly unusual these Games will be, consider that Comcast‘s NBCUniversal, the US broadcast rights holder and driver of the lion’s share of IOC revenues, is for the first time keeping most of its sport announcers home.
Though television ads for the Winter Olympics have blanketed its airwaves since the holidays, executives made no direct mention of the event on Comcast’s quarterly earnings call on Thursday — compared with this past July, when NBCUniversal chief executive Jeffrey Shell said in the midst of Tokyo that “it’s impossible to understate the importance of the Olympics to NBCUniversal . . . We have 4,000 people literally working on it.”
Most of all, the next three weeks in Beijing could settle more than just gold, silver, and bronze on the slopes: with geopolitical tensions, the rising cases of the Omicron variant in China, and a stifling environment for big business, the stakes for a safe and healthy Games have rarely been higher.
Behind the Premier League’s overflowing stadiums
If there was ever any doubt that fans would return to English Premier League matches after lockdown, the numbers prove that fandom survived the pandemic.
An average of almost 39,600 people attended the first 204 league games of the season, according to sports marketing agency Two Circles, putting the League on course to achieve record attendance figures this season, as reported in the FT this week.
That’s more than welcome to the division’s 20 clubs, which lost out on £1.3bn of broadcast and match-day revenues across the 2019-20 and 2020-21 seasons, during which fans were largely barred from stadiums because of coronavirus restrictions.
Whereas broadcast deals are centrally negotiated by the league itself, clubs are responsible for their own ticket sales and the delicate balance between lucrative “posh” seats in hospitality and the price of standard admission.
As noted by Kieran Maguire, a lecturer in football finance at the University of Liverpool, clubs have been operating at close to full capacity for some time, so meaningful matchday revenue increases in future seasons are hard to achieve.
Despite the risk of further lockdowns or limits on fan attendance, clubs have their eye on expansion. Manchester United is weighing up a modernisation of its 73,050-capacity Old Trafford stadium — the biggest in the league — that could include the addition of several thousand seats.
As United is a listed company, the Glazer family must weigh up the impact on the share price and future returns, and whether additional ticket sales can help the club compete against Abu Dhabi-backed champions Manchester City and Roman Abramovich’s Chelsea when paying to buy players and fund their wages. Liverpool, owned by John Henry‘s Fenway Sports Group, is adding 7,000 seats to Anfield.
The motives are different for other clubs. Everton is building an entire new stadium, while Leicester City has also set out plans to expand its home ground. Both clubs could use the extra revenues to bolster their ambitions of challenging to finish in the top four, guaranteeing participation in the lucrative Uefa Champions League, the most prestigious Europe-wide club competition. Also in that bracket is West Ham, which has also been granted permission to increase capacity.
This time, the arms race is around the pitch.
Spanish tennis icon Rafael Nadal is gunning for a record 21st grand slam title at the Australian Open this Sunday against Russia’s Daniil Medvedev. Meanwhile, this week the tournament backtracked from a policy of ejecting spectators for wearing T-shirts in support of Chinese player Peng Shuai, who has largely disappeared from public view after alleging she was sexually assaulted by a senior Chinese Communist party official.
China’s president Xi Jinping and Olympics chief Thomas Back discussed the “closed-loop” system designed to inhibit the spread of coronavirus at the Winter Games as they met in person ahead of the event amid intense scrutiny of the International Olympics Committee’s relationship with the communist regime.
Beijing also tightened Covid-19 restrictions in parts of the capital to minimise the risk of disruption to the Games, with the city set to welcome overseas athletes, media and officials for the event.
The UK government revealed that its Future Fund pandemic financing scheme for fast-growth “innovative” but often loss-making businesses has taken an 8 per cent stake in the owner of Bolton Wanderers, a club that plays in the third tier of English football.
The potential looming sale of National Football League‘s Denver Broncos franchise could fetch a deep-pocketed buyer a record $3bn tax write off, calculates Sportico, which also reports that New York-based boutique bank Allen & Co is set to run the potential sale process.
The US National Football League hired Cynthia Hogan, former vice president for public policy and government affairs at iPhone maker Apple, as senior adviser to commissioner Roger Goodell. Previously deputy assistant to president Obama, she will advise on “strategic league initiatives”.
Check out this new English song for the #Beijing2022 #WinterOlympics! It features trendsetting Chinese idol Zeng Shunxi and #Chineserap star CDREV to celebrate the impending Beijing Winter Olympic Games, which opens on February 4. pic.twitter.com/d6vb69mSYy
— Global Times (@globaltimesnews) January 25, 2022
Each Olympics is as much an event about sports as it is about kitsch. This week, Chinese state media released a marketing-cum-music video for the Winter Games, sung and rapped in English for a global audience. The move takes a page out of China’s 2008 playbook, when their Olympic theme “You and Me” became a domestic hit. This year’s message, “Join Us In Winter” offers a subtle difference: the world is going to China, on China’s terms.
Scoreboard is written by Samuel Agini, Murad Ahmed and Arash Massoudi in London, Sara Germano, James Fontanella-Khan, and Anna Nicolaou in New York, with contributions from the team that produce the Due Diligence newsletter, the FT’s global network of correspondents and data visualisation team
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