Bournemouth have an extensive knowledge of
financial peril, have twice been almost condemned to oblivion – once in 1997, when supporters
fundraised £35,000 at the Winter Gardens concert hall to stave off liquidation, and
then again in 2008, when chairman Jeff Mostyn’s blind generosity kept the club afloat. Ten years ago, Mostyn was told, during a private
meeting with administrator Gerald Krasner, that the club would be liquidated live during
a press conference unless the chairman — who would be stood at the back of the room during
the briefing — indicated during it that he would save the club. He duly nodded in
agreement to help the Cherries avoid liquidation by a matter of minutes and threw another £100,000
of his money into the club’s debt void. Today, the circumstances at Bournemouth are
a world away. The club now boast players on seven-figure salaries, they fly to matches
that are further north than the Midlands, and are preparing to construct a new training
ground at Canford Magna. Their financial footing not only appears secure, it’s on a whole
new plane. The appearance, then, of two multi-million-pound
loans on Companies House last week, may well have caught some by surprise. Two days after Bury were expelled from the
Football League, Bournemouth registered that they had agreed to borrow around £16 million
from an Australian bank called Macquarie, who have, in the past, been criticised over
their ruthless pursuit of profits. The mere reference to loans, and the spectre of debt,
is one that, unsurprisingly, alarms supporters. The loans are related to the instalments due
for the transfers of Tyrone Mings to Aston Villa and Lys Mousset to Sheffield United,
and they mark the first time Bournemouth have engaged in something called transfer fee factoring. In a nutshell, the club has agreed to borrow
money they are expecting to receive from future instalments from those transfers — a cash
advance for a small fee. Defender Mings was sold to Aston Villa for
£26.5 million during the summer, of which £6 million is due in July 2020 and £6 million
further in July 2021. Bournemouth have instead borrowed that money in advance from Macquarie,
who will collect the instalment fees themselves. In the case of Mousset, the club will receive
an advance of £4 million. Bournemouth are not alone in entering agreements
with Macquarie to factor transfer fee instalments. Watford borrowed money from the Australian
bank as part of Richarlison’s £50 million transfer to Everton last year, Middlesbrough
have done it on several occasions, such as with two outstanding instalments of €1.6
million and €1 million for Martin Braithwaite’s move to Leganes, while Leicester City borrowed
money to immediately bolster their coffers instead of waiting for payments due from Riyad
Mahrez’s £60 million move to Manchester City in 2018. On the surface, this appears to be a relatively
new phenomenon, but as Richard Price explains, it is actually a far more common practice
than many realise. Price is the chief executive of New Century Finance, who work with Close
Brothers banking group exclusively on transfer agreements in the UK. “We were the first to do (transfer fee factoring).
Literally, the first to do it. We came up with a structure that was robust from a credit
point of view,” “I would say in the Premier League, a minimum
of 75 percent of clubs have done it and in the Championship, they nearly all do it at
some time or other. It’s another form of lending from a borrower who is not going to
take other security.” The practice does not just involve transfer
fees, as some clubs also borrow money ahead of their instalments for television rights
or sponsorship deals. It is more prevalent in the UK than abroad, according to Price,
although it is more popular in Spain and Italy, and less so in France and Germany. Factoring is useful for clubs because it helps
improve cash flow, offering a clear explanation as to why Bournemouth may have decided to
borrow money against their transfer instalments, especially with the construction of their
new training ground expected to begin in the next few weeks. Leicester City did something similar with
Mahrez’s transfer ahead of the construction of their new training ground, which began
in April this year and could cost up to £100 million. The Mahrez payments were structured
in instalments, with Manchester City due to pay £36 million in two payments of £18 million,
in July 2019 and 2020. The Foxes used a loan from Macquarie to get hold of that money sooner,
with their new facility in mind. Improving cash flow also explains why they insisted
Harry Maguire’s £80 million fee from Manchester United was to be paid up front. Any loan will come with a charge. Price, who
works for one of Macquarie’s competitors, estimates loans can cost around seven-and-a-half
percent for a one-year deal, and closer to six percent for a three-year deal. For most clubs, it is a price worth paying,
not only because of cash flow benefits but also to help pay for an up-front VAT payment,
which does not take into consideration the staggered nature of a transfer fee. “We are seeing increased interest in the
financing of future transfer receivables from football clubs as a way of managing their
working capital,” explains Jerry Korczak, a managing director for Macquarie’s Commodities
and Global Markets division. “One reason, unknown to most fans, is that
the sale of a player incurs a VAT payment. For example, although a club may sell a player
for £10 million, it may be receiving those funds over two years. So, it may be receiving
£5 million now but it also has a VAT bill of £2 million due, and it may still need
to buy a replacement player. “As the club may need to spend more than
the £3 million it has, this form of financing is an efficient way to bridge the deficit.”
Macquarie are unusual in that they publish the charges on Companies House, potentially
as part of its security for their arrangements with Bournemouth and others. Close Brothers,
however, keep the matter entirely confidential and out of the public eye, with future payment
from the buying club acting as their only security. This perhaps explains why the practice
has flown under the radar somewhat. Price believes publishing on Companies House
may allow Macquarie to offer a slightly lower fee, although he says it could affect the
club’s credit rating because anyone can see the agreement. Bournemouth do not comment
on financial matters but the club are happy that the agreements are transparent. Macquarie
did not comment on why they publish agreements on Companies House. So, should Bournemouth and other fans be worried
about their clubs borrowing money in this way? “No, I don’t think so,” says Price.
“As far as the fans are concerned they read in the paper that Tyrone Mings has gone to
Aston Villa. They see that he’s gone for say £25 million. Most fans will think they’ve
got the £25 million already. And in fact, they haven’t. “It’s all about cash flow. Every company
has cash flow ups and downs, and getting money in that’s already owed to you early, it’s
useful. It’s a form of factoring.” Kieran Maguire, a lecturer in Football Finance
at the University of Liverpool who also keeps a close eye on the financial health of all
92 English football clubs, is also not against the practice. “I’m completely agnostic on this,” he
says. “There are a variety of ways of clubs arranging loans. The best and the cheapest
is owner’s interest fee loans but sometimes owners can’t, or decide they don’t want
to go down that particular route. “In terms of transfer fees, this money is
ring-fenced, so the banks are effectively guaranteed those transfer fees being paid
to them and they see it as a low risk form of lending.” For Bournemouth, then, rather than a case
of accumulating the dreaded debts of the past, transfer fee factoring may well be a means
by which the construction of their new future can begin.

Why Did Bournemouth Borrow £16m from an Australian Bank?

76 thoughts on “Why Did Bournemouth Borrow £16m from an Australian Bank?

  • September 20, 2019 at 5:31 am
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    First

    Reply
  • September 20, 2019 at 5:31 am
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    First!

    Reply
  • September 20, 2019 at 5:31 am
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    cuz they wanted money THE END

    Reply
  • September 20, 2019 at 5:32 am
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    Should have been a Tifo finances

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  • September 20, 2019 at 5:32 am
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    Epic bruh moment

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  • September 20, 2019 at 5:32 am
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    nice video.

    Reply
  • September 20, 2019 at 5:33 am
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    We love these videos!

    Reply
  • September 20, 2019 at 5:34 am
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    Bruh i'm first

    Reply
  • September 20, 2019 at 5:36 am
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    Why is there 2 comments that says First?

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  • September 20, 2019 at 5:36 am
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    Great video!

    Reply
  • September 20, 2019 at 5:37 am
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    Macquarie was not pronounced correctly, can’t blame you though – need the accent.

    Reply
  • September 20, 2019 at 5:39 am
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    Notification squad!

    P.S. This comment is borrowing likes against future Tifo videos.

    Reply
  • September 20, 2019 at 5:40 am
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    I was listening to this and I was like "I've never heard of McWary" Then I realised he meant Macquarie.

    Reply
  • September 20, 2019 at 5:42 am
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    AFC Bournemouth has such a great history. Shows lots of fan support, loyalty, community, ambition, and work towards success… what an amazing team to follow

    Reply
  • September 20, 2019 at 5:42 am
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    Wouldn't this negatively effect other statements though like potentially income? I think its a very interesting practice and I definitely want to know more. The Athletic are making sports journalism smarter than I could've imagined.

    Reply
  • September 20, 2019 at 5:43 am
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    But like why Australia? Why not America or other countries?

    Reply
  • September 20, 2019 at 5:44 am
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    The "L" from "Leicester" is missing @4:05 but there when the sentence is finished @4:11

    Reply
  • September 20, 2019 at 5:46 am
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    Fuck the Athletic, tifo on YouTube is free. Knowledge is power and should be free

    Reply
  • September 20, 2019 at 5:48 am
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    Arsenal is getting laughed at because this summer they are rumored to have only £45m budget in transfer, but in reality we know they sign almost worth of £150m, so alot of people including journalist first time reporting that Arsenal paid this fee in 'installments' as an excuse of why Arsenal can pay such money.

    A thing that actually exist since the dawn of football transfer and every club who make a big money deal actually doing.

    Reply
  • September 20, 2019 at 5:53 am
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    this could explain why nantes were so bent on getting sala’s transfer fee instalment

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  • September 20, 2019 at 6:00 am
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    Ummmm….maybe because they wasted 19 mil on Solanke.

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  • September 20, 2019 at 6:05 am
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    Can confirm Macquarie are bastards. They get about half of all fines paid using mobile speed cameras in Australia.

    Reply
  • September 20, 2019 at 6:21 am
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    It's 'McWorrie' Tifo brah

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  • September 20, 2019 at 6:21 am
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    It's not prounouced mac-querie but mac-quarry

    Reply
  • September 20, 2019 at 6:26 am
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    Make Videos on Complicated Transfers in football history.

    Reply
  • September 20, 2019 at 6:40 am
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    5:11 Why, Tifo, Why! Their eyes… staring right through me…

    Reply
  • September 20, 2019 at 7:31 am
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    If this is in FM21 I might have to become an accountant.

    Reply
  • September 20, 2019 at 7:40 am
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    It would be awesome if there werent only stories from this web page. Please do a video on the rise and fall of Luzenac AP.

    Reply
  • September 20, 2019 at 7:43 am
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    My 2nd favorite club

    Reply
  • September 20, 2019 at 7:52 am
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    Mike Ashley just did this at Newcastle except the money is being used to buy shops …. then Mike gets his money back via TV deal money.

    Reply
  • September 20, 2019 at 7:53 am
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    So much happens behind the scenes to keep a football team going 👀

    Reply
  • September 20, 2019 at 7:56 am
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    Could you please make a video on the new rb Salzburg team under Jesse marsch or a player profile on erling haaland braut.
    Keep the good work up as always👍

    Reply
  • September 20, 2019 at 8:36 am
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    I want to ask, how come every other video is just a recycle of an athletic article?.

    At least for me your best work comes from when you do the original content, not an in depth analysis on an article.

    Reply
  • September 20, 2019 at 8:38 am
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    Everybody: enjoy! You're witnessing football's death.

    Reply
  • September 20, 2019 at 8:47 am
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    Why’s mings wearing the 17/18 home kit when he joined in Jan 18/19

    Reply
  • September 20, 2019 at 8:50 am
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    fuck the athletic

    Reply
  • September 20, 2019 at 9:01 am
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    Guess everyone wins

    Reply
  • September 20, 2019 at 9:19 am
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    People were making fun of Arsenal for signing players on instalment deals this summer but as this video perfectly demonstrates… That's how seemingly all transfer deals are done these days. I mean I'd find it hard to imagine there's a club out there who can feasibly just dish out £100m in full at any given time.

    Reply
  • September 20, 2019 at 9:26 am
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    One of the best articles you've released, thoroughly enjoyed it

    Reply
  • September 20, 2019 at 9:33 am
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    so football is basically a pyramid scheme with banks taking a cut to move it along.

    Reply
  • September 20, 2019 at 9:49 am
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    Why should a bank not pursue a profit, ruthlessly or otherwise? They Banks. That's what Banks do and what I, as a shareholder, think they should do under whatever circumstances.

    Reply
  • September 20, 2019 at 10:04 am
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    Make a video on the Neymar transfer

    Reply
  • September 20, 2019 at 10:13 am
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    Tifo Football the Australian bank is pronounced “Macquorie”

    Reply
  • September 20, 2019 at 10:32 am
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    Great stuff. Love videos like this.

    Reply
  • September 20, 2019 at 10:36 am
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    5:38, I'm confused about the VAT point. When selling a player, doesn't the club just transfer that cost to buyer? Like normal things in shops?

    Reply
  • September 20, 2019 at 10:36 am
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    MA CWUARR REAAAAA 😂😭

    Reply
  • September 20, 2019 at 10:38 am
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    Talk about Flamengo who cares about bournemouth

    Reply
  • September 20, 2019 at 11:08 am
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    Love the video, but the name of the bank is pronounced Mac-quarry, not Mac-wary

    Reply
  • September 20, 2019 at 11:17 am
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    The way he says Macquarie would make Uni students more suicidal

    Reply
  • September 20, 2019 at 11:23 am
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    Now if you could just do a tactical breakdown of the way Bournemouth play under Eddie Howe, and his unwavering want to only every use two central midfielders, that would be perfect.

    Reply
  • September 20, 2019 at 11:26 am
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    its not ma queer E

    Its MA – Quarry – E

    Reply
  • September 20, 2019 at 11:49 am
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    HES THERE HES THERE

    Reply
  • September 20, 2019 at 12:18 pm
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    Wait…
    The yanks are taxing us again

    Oh fuck…

    Reply
  • September 20, 2019 at 12:20 pm
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    Wtf are those eyes?

    Reply
  • September 20, 2019 at 12:32 pm
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    Love the chanel especially ”tactics explained”, player profiles and the podcast but enough is enough. Is this tifofootball or the athletics chanel? Is it possible to get more content about tactics etc. and expand to different leagues?

    Reply
  • September 20, 2019 at 1:07 pm
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    ma-kwor-ee not mac-kware-ee

    Reply
  • September 20, 2019 at 1:54 pm
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    so basiclly football is now a business ?

    Reply
  • September 20, 2019 at 2:04 pm
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    Bankers will stop at nothing to manufacture profits out of nothing. Ultimately it's a side effect of bloated transfer fees.

    Reply
  • September 20, 2019 at 2:11 pm
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    Why are you talking about factoring like it's sorcery or something insane and new? It's standard procedure

    Reply
  • September 20, 2019 at 2:18 pm
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    maquarie… ‘mack-kwa-rie’

    Reply
  • September 20, 2019 at 2:55 pm
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    Consistently great! Big fan. And what I'm saying is true because it's on the internet. 😎

    Reply
  • September 20, 2019 at 2:57 pm
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    Funny how his name is Price

    Reply
  • September 20, 2019 at 3:23 pm
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    These videos are on another level! Love em!

    Reply
  • September 20, 2019 at 4:17 pm
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    Please can u make a video of quique Sanchez flores tactics at Watford

    Reply
  • September 20, 2019 at 4:24 pm
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    Eicester city

    Reply
  • September 20, 2019 at 4:33 pm
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    HOLY SHIT! You mentioned Bury, I must be hallucinating!

    Reply
  • September 20, 2019 at 4:35 pm
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    6:15 Of course Price is going to pretend transfer fee factoring is a good idea, it is how he pays his mortgages, supercar leases and luxury yacht payments. Do not trust the salarymen of the transfer markets or universities any more than you trust the Jeffrey Skillings of the California energy market. Rentier capitalism enslaves many and corrupts the few at the top.

    Reply
  • September 20, 2019 at 4:38 pm
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    This is so bizarre! If the buying club wants to pay in instalments, they should be the ones to take out a loan

    Reply
  • September 20, 2019 at 4:49 pm
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    As a Bolton fan I have always had respect for Bournemouth . because of the way then stayed up that season even though they started it on -17 points, I hope we can stay even with our points deduction

    Reply
  • September 20, 2019 at 4:52 pm
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    Tifo can you please do a video on Famalicão. They were promoted to the Portuguese top flight for the first time last season but are already top. It would make a really interesting video.

    Reply
  • September 20, 2019 at 4:54 pm
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    This comment was originally featured on the Athletic, the best place to read about football online.

    Reply
  • September 20, 2019 at 5:03 pm
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    …I fucking hate capitalism.

    Reply
  • September 20, 2019 at 5:04 pm
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    To give Ryan Fraser as a signing on bonus so he stays?

    Reply
  • September 20, 2019 at 5:42 pm
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    Are y'all planning on revisiting the "Club X Finances explained" series? I really enjoyed those videos breaking down the health of teams like Palace, United, etc. I realize it might not be super profitable content for your videos but I haven't found content like that elsewhere.

    Reply
  • September 20, 2019 at 6:39 pm
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    First: it's pronounced Mack-Quarry. Second: It's one of the biggest corporate banks in the world. They are specialists in organising private equity consortiums for acquisition and funding of large infrastructure (airports, tollroads, water works, etc.). Third: They've been operating in London since the 70s.

    Reply

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