The financing of activities through the issue of bonds is a novelty that could be extended to many European football clubs. Roma could follow this path too.
If we had a time machine and we could go back 15 years we would not be able to find solid bonds between finance and football. No one could have ever imagined that nowadays financial strategies would have been pivotal to shape the future of football clubs. However, here we are! Football is not only a sport anymore but a complex business that must be run properly to avoid bankruptcy.
Several European clubs are, therefore, thinking to issue bonds in order to finance their activities. This financial strategy is not very complex but it requires competences that goes beyond the mere result of a match. For those who are not familiar with finance, a bond is a financial instrument used to provide assistance to a company in order to get a profit later one. Whoever invests in a bond buys part of the debt of a company becoming its creditor. Unless a default occurs (bankruptcy), the company must return to the investor the subscribed capital to a predetermined maturity plus the interest stipulated in the contract.
In the current situation of European football, clubs need continuous funding to be part of the elite to pursue expansion plans through the construction of new stadiums or the improvement of existing ones. As reported by ‘Calcio e Finanza’, the analyst Omri Stern highlighted that nowadays “the credit standing of the clubs is supported by the performance and loyalty of the fans.” The good results on the field allow clubs to generate more revenue and seal better commercial and television agreements. A solid base of loyalists can provide a protective bearing in adverse times.
It is well-known that Roma is working hard to build its new stadium. Reportedly, James Pallotta is finalizing an agreement with Goldman Sachs and other financial institutions to obtain the necessary economic resources for the Stadio della Roma. According to the Italian outlet ‘Il Sole 24 Ore’, Pallotta’s objective would be to collect approximately €300-400 million and the financial instrument used could be the issuance of a bond for institutional investors. However, a decision on this matter has not been taken so far.
Several financial pundits believe that bonds are perfect financial instruments albeit football is a difficult industry to be managed and supported in the current regulatory and organizational context.