The sports bond scheme offering a new way to invest - Spear's Magazine
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The sports bond scheme offering a new way to invest

The sports bond scheme offering a new way to invest

Sam Forsdick speaks to ex-Morgan Stanley banker, Fausto Zanetton, about his sports investment platform

Not every football club manages to hit the hundred million pound revenue streams of the Premier League’s elite. For sports teams looking to raise capital there are few other options than to try and court a big money owner. That was until Tifosy, the world’s first sports investment platform.

Tifosy is for those smaller teams looking for short-term investment to help reach the heady heights of sporting giants like Manchester United. The firm was set up by former banker and business advisor, Fausto Zanetton and Gianluca Vialli, former Chelsea and Italy striker.

Zanetton used to work at Morgan Stanley where he worked with clients in media and sports. ‘It gave me a good understanding of the ecosystem,’ says Zanetton. He and his business partner Vialli found a gap in the market: ‘The top 10-15 sports franchises can get investment from several places, they can go to a bank, get bonds or launch an IPO. But below that elite group are clubs that rely on local banks and wealthy owners to invest.’
Tifosy uses an online platform to issue bonds and connect clubs directly to their fans. It’s one of the great untapped markets – sports clubs are massive brands with social media followings that any company would be envious of. The issue comes with turning those fans into money; only a limited number of them can buy tickets, so how do you involve the rest?

Zanetton explains that Tifosy is the solution to this, ‘It is a new way for clubs to raise capital and for fans and investors to get involved whilst supporting their team.’ The bond scheme it previously launched in the UK saw League Two’s Stevenage raise £600,000 for a new North Stand.

The latest club to utilise Tifosy is Championship side Norwich City which raised £5 million through a bond issue to update their youth academy. ‘The club set a very competitive rate of 8 per cent interest,’ said Zanetton, ‘5 per cent cash and 3 per cent club credit with a one off cash bonus for investors if Norwich get promoted to the premier league.’
But of course any investment comes with risks. ‘Sports clubs are businesses with volatile earnings; there is a relegation risk and once the parachute payments stop the financial profile of the club can look very different.’

However it’s not all doom and gloom. ‘Sports clubs are surprisingly resilient. Bankruptcy rates are very low and they have a high brand value that offsets most of the risk. Tifosy is accredited by the Financial Conduct Authority and Zanetton claims they, ‘would never put a bond on a platform where we don’t believe they can pay it back.’ Norwich City for example has no external debt, ‘In cases where there is significant external debt, equity may be an option. Although this is a very different investment option that would attract different investors.’

Zanetton is already looking at ways to extend their offering beyond football. The FCA authorisation is a license passport that is recognised across the whole of Europe. The fact that all transactions take place online, including investor certification, means there are few barriers to investment. Tifosy are already looking to expand into cricket and rugby in the UK and basketball in Italy, where investment opportunities for clubs are limited.
Zanetton hopes that Tifosy will open up the sport investment market that will enable everyone to invest in sports, fairly and transparently.

Sam Forsdick is a graduate journalist at Spear’s



 

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