JP Morgan has confirmed it will finance the breakaway
The Juventus share price (BIT:JUVE) is up by 17.85% on Monday evening after the Italian giant confirmed plans to join the European Super League, along with 11 other European football clubs.
While Manchester United (NYSE:MANU), another member of the group trying to pull away from UEFA competetions, saw its share price close nearly 10% higher at $17.69.
On Sunday evening twelve football clubs, including six English teams, disclosed their intention to be part of a breakaway entity, forming a European Super League.
It is expected that membership of the Super League will significantly bolster member club’s finances. A pot of €3.5bn, it is reported, will be shared by 15 clubs upon joining, and would allow the club’s to offset cash flow shortages caused by the pandemic, in addition to supporting infrastructure investment plans.
JP Morgan, the US investment bank, will underwrite money in loans for the teams involved.
The clubs have pledged €10bn as a “solidarity” payment to the European football pyramid over 23 years, which is claimed to be more than the current offering by UEFA.
In the case of Juventus and other Italian clubs, struggles with securing significant broadcast revenues are thought to have played a factor in their decision to secede. Serie A’s deal with DAZN, worth €2.5 billion deal, or €840 million per season, to broadcast the majority of games between 2021 and 2024, was less than previous years.
In February 2020 the Juventus share price was valued at €1.24. A month later it had plummeted by over 50% to 61 cents.
Some speculative members also saw their share prices rise, such as Germany’s Borussia Dortmund, whose shares rose 8 per cent despite the club confirming they would not take part in the new league.
The news of rising share prices can be seen as a positive reaction by investors according to FXStreet, given the fact that many of the clubs in question are cash strapped.