Fintech Italian platform Epic is placing a 10 million euros issue of so-called minibond by a Series A Italian soccer team. The bond has a 7 years maturity with an amortizing structure (with a 2 years’ grace period) and pays a 7.5% fixed coupon, MF Milano Finanza writes today,
Founded by former top banker Andrea Crovetto, Epic sim is betting on the football sector as a new source of business for its digital platform born to connect investors with entrepreneurs looking for equity or debt capital. Epic named minibond to be issued by football teams as “footbond”.
As for today the only bond issued by an italian football team was the 200 million euros bond by AS Roma issued last February, while the 300 million euros’one announced at the end of 2014 by FC Inter was never placed. However in the last few days il Corriere dello Sport wrote that Inter’s owner Erick Tohir is thinking to try it again.
Epic sim in a reserved document distinguishes between two categories of football teams: the incubators category and the pure soccers category. The first one having a business model focused on capital gains from selling soccer players and the second one focused instead on maximising profits from sport performances.
Incubators football teams benefit of lower income from merchandising and sponsors versus total income with respect to pure soccers due to their less brand strenght and smaller number of supporters. However incubator teams’ revenues from capital gains from sales of players are higher as a percentage of their total income (25% versus 10%) so that their profits are higher.
This means, EPic concludes, that incubator football teams might be interesting minibond issuers from investors’ point of view. Epic calculates that a 10 million euros minibond will allow a football team to buy 100 tickets paying young footabll player 50k euros each (for a total of 5 million euros) leaving the other 5 million euros for financing the company growth i.e. (investments in infrastructures, events, merchandising),
As for the minibond issue Epic is now placing, proceeds from the bond will be used by the footcall team to buy young talents, to build a new sport center and to pay for general expenses relating to managing the stadium. The issuer has already a good experience in making young talents to grow and can count on a parachute mechanism if is forced to go back in Series B from Series A.
Whenever a Series A footbal team goeas back to Serie B, Epic sim counts that it looses more than 4 million euros in net profits. However all Series A football teams actually benfit of a parachute mechanism that might limit damages from loosing income from tv rights. Every football team going to Series B will receive 15 million euros, if it has been in Series A for 3 seasons or more; 10 millions for two seasons and 5 millions for only one season.