International footballers playing in the English Premier League are manoeuvring to defend their multimillion-pound pay packets from the effects of Brexit by hedging against the drop in sterling.
Just as clubs in England’s top football division have taken advice on how Britain’s looming departure from the EU is affecting their efforts to sign players, overseas stars are taking steps to manage the pound’s fall against the euro.
Argentex, a boutique currency trading company that specialises in services to the sports market, said there had been a 43 per cent increase in the volume of currency being hedged by its sporting customers since the Brexit vote.
The company, whose clients include Manchester City football club and the England and Wales Cricket Board, allows individuals and companies to lock in the current exchange rate for several months, paying a fee of 1-3 per cent of the total amount hedged.
Argentex said more than $100 million of currency from clients - which includes footballers and other sports organisations - had been hedged since 2016.
"In the Premier League, foreign nationals from 65 countries account for 70 per cent of players, the highest of any league in the world," said Jon Goss, head of partnerships at Argentex.
He said such a diverse league meant hedging was often used as “a defensive mechanism”, adding that players “repatriate wages paid in sterling to different countries as well as purchase assets and goods overseas”.
Sterling has fallen 14 per cent against the euro since the Brexit vote, though most of this drop was in the first few months after the referendum. However, it has suffered a further 3 per cent fall in the past three months.
Executives at the biggest English football clubs say they routinely hedge against currency movements, earning euros from playing in European competition and dollars from international sponsorship deals. However, smaller clubs with fewer international revenue streams may have been stretched by the drop in the pound.
Last year, Manchester United, the world's wealthiest club in terms of revenues, said new signings from overseas had begun to ask to be paid in euros rather than sterling. But it declined such requests because it did not have enough of the currency in hand.
At the time, Cliff Baty, Manchester United's chief financial officer, said: "A lot of European players will want to be paid in euros, understandably to a degree. But we are a sterling company...[AND] managing that is quite tricky." – Copyright The Financial Times Limited 2018
