Business | Banking
Lender Emirates NBD launches fund targeting global football sector
Gulf lenders are gradually taking more interest in the global sporting industry, which is becoming a major money spinner.
- By Saifur Rahman, Business Editor
- Published: 23:22 November 6, 2008
Dubai: Gulf lenders are gradually taking more interest in the global sporting industry, which is becoming a major money spinner.
Emirates NBD, the UAE's biggest lender, on Thursday said it has launched its Hero Global Football Fund targeting the $20 billion (Dh73 billion) global football sector and has added it to its investment portfolio. This comes a few weeks after Abu Dhabi's United Group 90 per cent stake in Manchester City football club and Formula 1, followed by repeated attempts by Dubai International Capital to acquire Liverpool.
"The Fund is a closed-ended unit trust domiciled in Jersey. It is planning to raise £100 million plus of investments, across three currency classes, with a minimum individual investment of $100,000," Emirates NBD said in a statement.
The fund will have a life of five years.
Industry value
Rick Pudner, chief executive of Emirates NBD, said, "Middle East investors are seeing the value of the sports industry in general and the football sector in particular, and we're excited to build on that."
However, industry officials feel, although the market is still cash-rich, corporatisation of sporting entities has a long way to go.
The fund will recruit mainly young players from around the world but especially from Africa, South America and the Far East. It makes a profit by selling players' registrations and other economic benefits, such as image rights, to professional clubs.
"At Emirates NBD, we strive to provide our customers and stakeholders with innovative products that add value to their investment portfolios.
"Now, through the Hero Global Football Fund, Emirates NBD can show its clients that you don't have to be a billionaire to invest in this booming industry and, at low minimums, you too can participate in the transfer market which has shown itself to be a huge growth area of the game," Pudner said.
Through the fund, investors can benefit from the rapid growth of the football industry, which saw the main European leagues earn more than 13 billion euros in 2006.
Advisory Board members include David Davies O.B.E., former Executive Director of the English Football Association; David Elleray, a former referee; and Alan Hansen, a former professional footballer who played more the 600 games for Liverpool, winning 17 major honour.
"In addition, as part of its commitment to invest in the development of football in the UAE, the Fund has reached an agreement with the Al Ahli Club to identify promising players for further training and development through the fund and its associates," the statement said.
Emirates Investment Services Ltd (EIS), a subsid-iary of Emirates NBD, helped to structure the fund.
The fund has also made a private investment into the Glenn Hoddle Academy, a specialist academy set up by the former England player and manager for young players who have been released by their clubs.
The fund targets a minimum internal rate of return (IRR) of 10 per cent, and, although returns are likely to fluctuate, Jamal Bin Ghalaita, general manager for Consumer and Wealth Management at ENBD, said, stressing that the success of the fund is not linked to finding a "star" player.
"The business model is realistic, assuming that two thirds of players will not become professionals. Of those that do make it, many will join second-tier clubs. The financial success of the fund does not depend on finding the next David Beckham: rather, on producing a steady flow of competent, professional footballers," he said.
Recruitment: Focus
The fund will attract and recruit players from across the world and also deal with clubs worldwide, although a prime focus is likely to be European clubs which are keen to recruit promising young players from Africa, South America and the Far East. The fund's focus will be mainly on European football as it is home to the world's richest leagues. For example, in 2006, the English Premier League generated the highest revenue of any football league, with 2 billion euros (Dh9.4 billion) whilst the second-tier English League - the Championship - ranks as the sixth richest league in the world, with 460 million euros in 2006.
Alan Hansen, member of the Advisory Board to the fund says: "In the current financial climate, it will provide a vital source of funding for clubs worldwide to keep and develop their talent."
Emirates NBD is the biggest banking group in the Middle East by assets and the biggest banking group in the UAE by market capitalisation. As of September 30, 2008, total assets were Dh285.3 billion.
Ahmad Al Kamali, chairman, Individual Games, Al Ahli Club, welcomed the launching of the Hero Global Football Fund: "This initiative will take the local football to new heights."
Is the regional sports industry strong enough to be corporatised? Is it going to be a lucrative market? What kind of returns can the regional investors expect?
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