July 24, 2021

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How JPMorgan Chase got European football so wrong

How JPMorgan Chase got European football so wrong
But America’s largest bank hadn’t foreseen it: following a massive backlash from fans, sports governing bodies, British Prime Minister Boris Johnson, French President Emmanuel Macron and even the British royal family, efforts to form the European Super League they crumbled within a matter of days.

Six English Premier League clubs – Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham Hotspur – announced their retirement on Tuesday. Italian giants Inter and AC Milan and current Spanish leaders Atletico Madrid followed suit on Wednesday.

“I don’t think that project is still up and running”, Andrea Agnelli, president of Italian club Juventus and one of the key architects of the plan, he said Wednesday.

The 12 teams that tried to form the doomed league have been accused of trying to orchestrate a massive cash grab by isolating themselves from the competition, a goal that goes against the traditions of European football.

JP Morgan (JPM), which provided a € 3.5 billion ($ 4.2 billion) loan to start the project, is now portrayed as a volunteer accomplice of billionaire club owners who intend to line their pockets while undermining one of the prized assets. cultural heritage of Europe with its roots in work – class communities.
The bank faced criticism and mockery on social media for its role in the deal. A Twitter user sarcastically included a screenshot from Jamie Dimon’s recent letter to shareholders, in which the CEO states that “companies must earn the trust of their customers and communities by acting ethically and morally.” Others joked about the end of the “JPMorgan Cup” and criticized American efforts to “invade” European sport.

How did JPMorgan get so wrong?

That bank said Friday that it “clearly misjudged” how the proposed Super League would impact football.

“We clearly misjudged how this deal would be viewed by the football community at large and how it could impact them in the future. We will learn from that,” a spokesperson for JPMorgan Chase told CNN.

A source familiar with the discussions said that the bank’s involvement was checked by an internal committee that evaluates potential agreements for reputational or credit risks. The credit institution had predicted that there would be controversy, but in the end it would be a question “it is up to the world of football to decide”.

“There is always a great emotional component [sports]”the source said.” When making a financial decision on a loan, you have to try to put the emotions aside. “

The source spoke of discussions about forming a league had been going on for several years, although JPMorgan was not involved in any negotiations between the clubs.

The bank had existing relationships with many of the teams involved. He provided stadium funding for Real Madrid, whose president Florentino Perez was also to lead the Super League.

The debt financing deal was a long-term gamble, with funds that had to be repaid over 23 years and secured by the competition’s future broadcasting rights, which should have been extremely profitable.

But JPMorgan clearly underestimated the magnitude of the backlash, which the source admitted was “extraordinary”.

The bank will not suffer a financial loss if the project does not go ahead. But among some fans of this sport, his image was very successful.

“The reputational risk of being the main financier … is enormous,” commentator Ben Marlow wrote in a column published this week in the British newspaper The Telegraph. “Bankers will see it as a gift.”
The Guardian noted that it is good that JPMorgan has not yet launched its new digital bank in the UK.

“If that were the case, the boycott calls would probably have already been heard,” wrote financial editor Nils Pratley.