West Ham have been borrowing money secured against their future TV rights since 2013. These short term loans help with the club’s cash flow particularly around the summer transfer window. Clubs such as West Ham, Everton and Southampton agree to borrow money on agreement that their installments from the TV broadcast revenue from the Premier League are paid directly to the offshore lender which why they have often been compared to payday loans.
The problem is these offshore lenders are based in the British Virgin Islands and despite rumours of high profile, well known businessmen funding these lenders no-one knows for sure who is behind them.
Prior to the financial crash of 2008 clubs often used to rely on bank overdrafts often called revolving credit facilities in business but post 2008 banks wouldn’t lend to risky football clubs for fear of administration.
In 2014 David Sullivan acted as a bank to loan West Ham money after British banks refused to loan money to the club at favorable rates.
The mood appears to be changing and with the new £5.5bn TV rights deals for the Premier League UK banks might be ready to re-engage with football clubs again.
Yesterday we broke the news that the Premier League wants to outlaw offshore lending from next season for fear that the practise damages the football brand.
West Ham have most recently borrowed from a company called Rights and Media Funding Limited formally JG Funding which is based in the UK and regulated by the FSA. However, Rights and Media Funding Limited receives its money from two offshore lenders in the Isle of Man which link back to a company called Mousehole Limited in the British Virgin Islands. It remains to seen whether West Ham will fall foul of the new rules next season.
