Manchester City, the Premiership football club, is on the brink of agreeing a £44 million sterling (€69 million) securitisation deal with Bear Stearns, the US investment bank.
The agreement, over 25 years, is set to give the football club an immediate cash injection. In return, it will ring-fence income from the sale of match tickets to repay interest owed on the sum.
The deal heralds a shift of investor interest in the football sector.
While institutional interest in football club shares has plummeted, new debt financing instruments, which take advantage of the ability of football clubs to generate large amounts of cash from the sale of match tickets, have become attractive to potential investors.
The deal is believed to have been made possible by Manchester City's forthcoming move to the stadium that hosted the recent Commonwealth Games.
It will take over the stadium, which will be able to seat 48,000 fans far more than can watch the club at its Maine Road ground, at the start of the 2003-04 season.
The new debt instruments take advantage of the loyalty of football fans who pay to watch their teams even when they are not performing well rather than the club's financial performance. - (Financial Times Service)
