German bank hails 'above expectations' launch of football finance unit in midst of pandemic: Targets €500 million business volume
9 March 2021
Oldenburgische Landesbank started offering football finance solutions in April last year and has already achieved a business volume of €250 million.
CFO Dr Rainer Polster says football finance is a "building block" in the bank's corporates and SME segment.
The bank is just one of several financial institutions such as MSD Capital who in 2020 entered the market for receivable financing and classic lending.
Clubs' need for financing has never been greater than since the start of the pandemic, resulting in an influx of new players on football's discreet loan market.
Despite never commenting publicly, few have made as much noise as MSD Capital that has provided loans to clubs such as Southampton and Burnley in relation to ALK Capital's takeover, but there are others who have gone more under the radar.
The market of football financing lives strongly on word of mouth
One of them is Oldenburgische Landesbank (OLB), a more than 150-year-old German bank who launched a football finance unit in April last year, providing receivable financing and traditional lending solutions focusing on the top five European leagues, according to its CFO, Dr Rainer Polster.
"Football finance requires very specific know-how and good networking in the community. That's exactly what we brought on board last year with our new team of football finance experts," he says.
Polster describes the launch of OLB's football finance unit, a team consisting of former employees with rivals in the football finance sector Internationales Bankhaus Bodensee (IBB), as "above our expectations."
Accordingly, the unit has achieved a business volume of €250 million - but their ambitions go well beyond that.
The company targets a business volume of €500 million in the coming years, highlighting the potential of the market dominated by banks such IBB, Macquarie, Santander and UK merchant bank Close Brothers.
"The market of football financing lives strongly on word of mouth. As mentioned before, we see ourselves well positioned here. In our first year on the market, we have made a small but fine name for ourselves," Polster says.
With total assets of around €20 billion, OLB's football finance unit is still just a small part of the total business, but Polster says that doesn't prevent the bank from valuing every customer like any other corporate client.
He says the unit is a "building block" in OLB's corporate strategy and corporates and SME segment, one of three besides private customers, and specialised lending which includes acquisition finance, commercial real estate finance, and, to a small extent, ship finance.
Evidently, the coronavirus pandemic has seen transfer activity decrease markedly across Europe with clubs this season having spent 46 per cent less on players compared to the year before - €4.1 billion against €7.6 billion in 19/20.
One would think less players transactions would have made it harder for OLB and any other bank to grow their business in the sector, but Polster explains other developments have helped drive performance.
"On the one hand, the impact of the coronavirus pandemic brings some uncertainty, which makes professional risk management all the more important," he says.
"But on the other hand, we do not see any significant decline in financing volumes despite a lower overall number of transfers."
In particular, that's because even though the number of transfers has decreased, the interest in receivable financing has increased, according to Polster.
"Lower or non-existent sponsorship income or ticket revenue tends to be compensated for by increased sales of receivables from transfer agreements, which has been an advantage for our business model," he says.