Zanetton (Tifosy): «Clubs in crisis should also think about alternative financing»
For Fausto Zanetton, CEO of Tifosy, whether to offer equity or issue a bond depends on the club's financial situation and the objectives it wants to achieve.
di Marcello Frisone
3' di lettura
«In this time of crisis for the sports world, many clubs might not survive. For sure it is worth exploring alternative financing solutions», says Fausto Zanetton, former investment banker at Morgan Stanley and Goldman Sachs, CEO of Tifosy (co-founded with Gianluca Vialli), the company that deals both with online investment (through equity and bonds) and M&A and advisory services for raising capital in sport. Last year, the company acted as advisor to a group investors on the potential acquisition of Sampdoria, although a deal was ultimately not reached.
For what reasons should a sports club resort to the issue of equity/ bonds and not to the classic banking channel?
Probably the number one reason, aside from the general fact that most clubs do not have access to bank funding or capital markets, is the flexibility of the solutions and how they can be tailored to the club's specific needs. For example, bonds can be structured with early repayment or roll-over clauses which a bank would typically not allow. These are targeted to supporters of the club and sports fans in general, so they can include incentives designed to appeal to that audience, such as performance-based bonuses, or interest paid partly in credit to be spent at the club. An offering like this can also be a very powerful engagement tool, a way of connecting with a supporter base and allowing them to be part of the club's journey, to make a contribution to its success.
Do you only offer the digital infrastructure to host the offer (the platform) or do you also deal with the preparation of information documents and the business plan to be presented in support of the capital raise, as well as all the marketing activities to launch the 'initiative?
Our model is “end-to-end”: we handle everything from the design of the offer structure through documentation, hosting the online platform, marketing and investor engagement. Much of the work we do requires authorisation from a financial regulator and cannot be undertaken by the club itself – for example we are required to approve all promotional materials and ensure they carry the appropriate risk warning, and the reality is that sports clubs do not have the resources or expertise required to put together and distribute an offering in a professional way.
How is your economic offer structured? Do you charge a fixed fee and a variable on the capital actually raised? How high are the costs?
Because of the amount of work required up front on due diligence, offer structuring and documentation drafting, we ask clients to pay an initial up-front fee. But this is subtracted from the final fee, which is variable and based on the success of the raise. We like having a model in which we are fully aligned with our clients, with everyone incentivised to raise the capital required by the club.
On what basis do you select the projects that come to you? Do you have any quantitative (financial statement) and qualitative reference indicators for selecting companies?
We are very selective. Our job is to raise capital for clubs, but also to protect investors. We carry out full legal and financial due diligence on all clients and work hard to ensure the risks are acceptable and the rewards are appropriate.
On what basis do you decide whether it is better to issue a bond or club equity?
It comes down to the club situation, financial position and objectives. For infrastructure projects such as stadium or training ground development, debt often makes sense. However, some clubs are not in a position to consider taking on further debt and issuing equity might make sense – this also gives supporters a greater sense of ownership in the club, which can be an important aim in itself.
Of the projects launched in Italy by Tifosy in the past years, have they all been successful or has any of them fallen short?
In our early days some of our donation crowdfunding projects did not hit their targets and we learned a lot. Since we have been a regulated company and offered financial investments, all of our projects in Italy and elsewhere have met their objectives.