Never let it be said that JPMorgan can’t read the room.
The bank that once told you bitcoin was a fraud before launching its own digital coin has excelled itself in the public relations front by backing the most controversial initiative to beset sport since Tonya Harding’s mates took a baton to Nancy Kerrigan’s landing knee.
You would think JPMorgan would know a thing or two about league tables by now, but its decision to bankroll a breakaway European Super League that would enrich the already wealthy and keep them safe from relegation or any meaningful level of risk was remarkably tone deaf.
Even banks usually accept that you will drop out of league tables if you’re no good
On Sunday, 12 clubs including Real Madrid, Barcelona, Juventus, Manchester United and Liverpool announced their decision to ditch 70 years of European football tradition and go it alone in a new continental league for which they would never have to qualify and could never be removed.
Even banks usually accept that you will drop out of league tables if you’re no good.
Within 24 hours, the clubs were being threatened with legal action from every local and international footballing body you can think of. They were being howled at by governments and the UK royal family, ditched by sponsors and, most of all, berated by fans.
Indeed, the following night, Liverpool FC fans were burning their own shirts outside an away game in Leeds. Having driven all the way to Leeds to do this, then they drove home again, hopefully in replacement shirts, because it is still chilly in Yorkshire in April.
Just 24 hours later, the whole thing fell apart, with club chief executives offering fulsome apologies and, in some cases, resigning.
Sole own goal
It was really not a star you’d want to hitch your wagon to. But JPMorgan did, and apparently it did so alone.
It had sole underwritten a €3.5 billion loan secured on future broadcast earnings from the new league. The loan was going to pay a lovely rate of 2% to 3%, but it is probably just as well the whole thing capsized, because JPMorgan would have had a hell of a time syndicating it, such was the level of public opprobrium to the enterprise.
As a rule of thumb, one imagines that the only banks that could have participated without enraging their entire retail base are those that call football soccer and therefore can’t be trusted anyway.
So, what was the house of Pierpont doing? One can’t ignore the bank’s connections to some of the great and the good – and we use the term figuratively, because they’re really neither – of the footballing executive world.
Real Madrid and its president Florentino Perez, who was the main agent of the breakaway idea, are longstanding JPMorgan clients; the bank is involved in financing the renovation of the Bernabéu stadium where the club plays.
And Ed Woodward, the vice-chairman of Manchester United, worked at JPMorgan in M&A, including advising the Glazer family on a notorious leveraged buyout of United which saddled the club with millions of pounds of debt as it effectively paid for its own acquisition.
Woodward was the first executive to fall on his sword: within two days of the breakaway announcement, the club confirmed he will be gone by the end of the year.
ESG downgrade
The furore was sufficient for Standard Ethics to lower its sustainability rating on JPMorgan Chase to E+ from EE-. This isn’t quite the damning verdict it appears to be to anyone thinking of school grades – the range only goes from EEE to F – but, in the Standard Ethics world, that’s a downgrade from investment grade to lower investment grade, from adequate to non-compliant.
“Standard Ethics judges both the orientations shown by the football clubs involved in the project and those of the US bank to be contrary to sustainability best practices,” states the agency.
In truth, Euromoney isn’t sure that European football is a model of sustainability at the best of times, but JPMorgan is to be commended for its noble attempt to make it even worse.
A spokesman for the bank glumly conceded: “We clearly misjudged how this deal would be viewed by the wider football community and how it might impact them in the future. We will learn from this.”
Own goal? Oh, one for the ages.
