The Premier League will ban West Ham and other clubs from borrowing money from shadowy offshore unregulated lenders from next season.
Starting in 2018, clubs will only be allowed to borrow against their broadcast income from firms regulated by the U.K.’s Financial Conduct Authority, the Premier League said in an e-mail.
That will rule out opaque, offshore funds like British Virgin Islands-based Vibrac Corp, which previously was a particularly prolific lender to clubs including West Ham, Southampton and Everton.
The league already prohibits teams from using unregulated lenders to borrow against player trading income.
“They want to deal with greater transparency in terms of the people that are lending money to their clubs,” said Martin Blake, a London-based lawyer speaking to Bloomberg.com “There is a perception that some of the funds that are lending aren’t as transparent as they would like.
Graham Shear, a lawyer at Berwin, Leighton, Paisner who represents Vibrac, declined to comment.
Clubs typically borrow against their annual share of broadcast revenue from the Premier League. Lenders typically charge around 7 percent interest for a loan against broadcast income, said a person familiar with the agreements who asked not to be identified because the terms are private.
West Ham has most recently borrowed from a company called Rights and Media Funding Limited formally called 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 based 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.
