Hedge Funds Soccer
Hedge Funds Look to Score from Soccer Trades
Hedge funds and soccer wouldn't seem to go hand-in-hand, nor would you expect a hedge fund to be looking for the next Ronaldo in order to make a big gain. However, in Spain, Portugal and Turkey hedge funds are looking to replicate the type of eye-popping 64% return that Banco Espirito Santo SA made by bankrolling the signing of talented players and taking a cut from the sales to other teams.
Quality Sports Investments Ltd., based on the island of Jersey in the English Channel, and London-based Doyen Capital Partners LLP are working with teams including Atletico Madrid, Sporting Lisbon and Turkey’s Besiktas to bankroll signings in return for a share of any profit when the players are traded to another club.
The investments -- which yielded returns of as much as 64 percent per player for a fund managed by Banco Espirito Santo SA -- are taking hold in Spain as banks refuse to extend credit to clubs, according to former league vice-president Javier Tebas. The trend is undercutting club’s ability to make money from player sales, one of their main sources of income, said Jose Luis Sanchez, head of “Senales de Humo,” an Atletico fan club.
“This is a short-term fix that only benefits a select group of investors and team owners,” Sanchez said. “It’s no way to develop a soccer team.”
As well as buying shares in transfer rights when players move teams, the funds are buying stakes of under-contract squad members. Banned by the English Premier League since 2008, the purchases are allowed by Zurich-based soccer ruler FIFA as long as investors don’t interfere in player trades.
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