“I can announce something that will change in an extraordinary way the future revenue of the club for years to come,” he said in October. “The board of directors have approved the acceptance of requirements to take part in a future European super league of clubs, a project put forward by the biggest clubs in Europe.”
Though providing few details, Mr Bartomeu became the first senior football executive to publicly confirm the existence of a radical project — one that, for months, had been discussed only in fevered WhatsApp messages and clandestine meetings between the sport’s power brokers as the coronavirus crisis threatened their revenue model.
The richest clubs were contemplating a breakaway competition that would supersede the existing structure of the world’s favourite sport. The motivation was clear: to secure more frequent matches between heavyweight European teams, believing this will draw higher broadcasting and sponsorship income and create a better spectacle on the pitch.
Although such a move risks the ire of loyal supporters — who remain energised by local rivalries — club owners are running increasingly international brands, with fan bases in the US, China and beyond. And with the globalisation of football came a sense of entitlement. The biggest sides drew the largest worldwide audiences and so therefore should gain an even greater share of the financial rewards.
Yet a super league also risks devaluing or even destroying the very thing that has transformed top clubs into multibillion-euro companies: existing national and continental contests that have built followings over decades.
It is not a new idea. In the early 1990s, a group led by Silvio Berlusconi, the former Italian prime minister, media mogul and one-time owner of AC Milan, considered a breakaway European competition. Again, in 2016, some of the continent’s biggest clubs, including Germany’s Bayern Munich, discussed joining a new tournament backed by US billionaire Stephen Ross, according to leaked documents revealed by Der Spiegel magazine.
On each occasion, the game’s governing bodies avoided a revolt by ensuring more money from existing competitions flowed to the wealthiest clubs. This has exacerbated the imbalances within the sport. Revenues at the 10 richest clubs in Europe were €6.3bn last season, up from €2.6bn a decade earlier, according to the consultancy Deloitte.
These increases reflect gains from broadcasting and sponsorship deals across football. But a handful of top clubs in each of the “big five” leagues of England, Spain, Germany, Italy and France have pulled away from their national peers, partly through regular appearances in the elite Champions League, where every year €2bn in prize money and TV contracts is distributed between participating clubs.
Qualification for that tournament stems from performing well in national leagues, ensuring domestic competitions have remained vibrant. Some of the wealth from European competitions is shared through “solidarity” payments worth €130m last season to clubs in smaller countries.
A breakaway that does not depend on qualification via a domestic league would create an unbreachable chasm between the biggest teams and the rest of the game. If the rupture occurs, “this fairytale of being in the same football family comes to an end”, says the head of a top national league, referring to the interconnected nature of the sport at all levels. “But it depends if the clubs have the courage. I’m not sure they will really dare to do so.”
Using Covid ‘to prove a point’
Interviews with more than 20 leading club, league, media and financial executives — some speaking on the condition of anonymity — suggest a breakaway league is more likely than ever before. They highlight three main factors: a new “international match calendar”, which dictates the timing of club and national team competitions, expires in 2024 and is set to be renegotiated; the financial impact of the pandemic; and a new generation of institutional investors, particularly from the US, driven more by financial returns than emotional ties.
Gianni Infantino, president of Fifa, world football’s governing body, says agreeing the new 10-year calendar “is crucial for the future” of the sport and should be settled next year. Some football executives suggest the disclosure of the super league talks are a bargaining chip to force Uefa, European football’s governing body, to cram more lucrative Champions League ties into this busy schedule.
“History repeats itself,” says Andrea Agnelli, president of Juventus, champions in Italy for the past nine years, and chair of the powerful European Club Association, which represents more than 200 top teams. He is, instead, spearheading efforts to reform existing continental competitions. “Go back and look at what happened 25 years ago when changes were first introduced to the Champions League,” he says. “Everyone was against it. Now, everybody loves it.”
The talks are happening against a backdrop of financial anxiety. Across Europe, lost match-day income because of empty stadiums, as well as discounts demanded by broadcasters and sponsors for postponed games during lockdowns, will result in €3.6bn in lost revenues over the next two years, according to the ECA.
Barcelona has reported a coronavirus-induced shortfall of over €200m, leading to a pre-tax loss of €100m last season, which has accelerated the breakaway discussions, according to people briefed on the talks.
“It’s essentially using Covid and the existing chaos . . . to prove a point,” says one club owner. “Small clubs in certain countries can’t survive the crisis and [the super league] is the way to protect football.”
The other major factor is the arrival of owners and investors seeking a return on investment from the game. This includes billionaire US moguls, such as John W Henry, who bought English Premier League champions Liverpool in 2010, and is in talks over a stock market listing of his sports holdings — which also includes baseball’s Boston Red Sox — valued at $8bn.
US investment banks have helped England’s Tottenham Hotspur and Italy’s Inter Milan tap bond markets. Hedge funds are lending to clubs and, in the case of Elliott Management at AC Milan, acquiring them.
“The mindset of the Americans when it comes to capital is the thing that’s really different this time,” says a top European football official. “You have the Glazers [the family which owns Manchester United] and John Henry who have spent time understanding the game. You have money from private equity pouring into Italian football.
“You have Wall Street,” he says. “It’s pretty relentless and they will come again and again.”
$6bn debt financing package
Mr Bartomeu’s resignation was forced by an impending vote of no confidence from Barcelona’s members. His parting shot was an attempt to establish a legacy beyond being the man who fell out so badly with Lionel Messi — the club’s greatest ever player — that the Argentine forward threatened to leave.
He discussed going public with the true mastermind of the super league: Florentino Pérez, Mr Bartomeu’s counterpart at bitter Spanish rivals Real Madrid, according to people familiar with the discussions.
For more than a year, Mr Pérez has sought private backing for his plan. It would involve up to 20 clubs in a “closed” division from which teams cannot be relegated, playing midweek games to allow clubs to continue to participate in their domestic leagues at weekends. It is viewed as a replacement for the Champions League, rather than threatening the primacy of domestic leagues.
Mr Perez initially approached private equity groups, such as CVC Capital Partners, before a plan was developed with investment bank JPMorgan, which is assembling a $6bn debt financing package to launch a European Premier League, according to those with knowledge of the talks.
As first reported by Sky News, the money would be paid back against future media rights sales, will cover start-up costs and guarantee prize money to clubs. Real Madrid, Barcelona, CVC and JPMorgan all declined to comment for this article.
The structure follows the model of US sports such as the National Basketball Association, and is designed to provide more consistent revenues by guaranteeing an increased number of European matches.
It also envisages governance reforms relatively uncommon in football, such as the introduction of player salary caps, which could boost profitability if it can rein in spiralling wages and transfer fees that make up the biggest cost at most clubs. In the 2018-19 season, player salaries in clubs in the big five national leagues increased by €1bn to €10.6bn.
“The point of the European super league project is to create a monopolist employer of players,” says François Godard from research group Enders Analysis. “Cost control is where they must take action.”
The super league discussions are having repercussions across the sport. In February, a group of key figures in English football, including Mr Henry and Joel Glazer, co-chairman of Manchester United, began discussing “a reset of the economics and governance” of the game in England dubbed “Project Big Picture”.
Among the proposals was reducing the number of teams in the Premier League from 20 to 18, and eliminating one of the domestic knockout competitions. This would make room for more European matches. When the plans leaked in October it caused a furore, with critics accusing bigger clubs of a power grab.
One leading European club executive, however, says the subsequent collapse of the talks could work to the benefit of the leading English teams: “The Project Big Picture discussions with Liverpool and United is a way to justify their future decision [to join the super league],” they say.
Liverpool and Manchester United declined to comment for this story.
Separately, plans put forward by a mixture of clubs and investors to create a new competition featuring top clubs in Scotland, Sweden, Norway, Denmark and Ireland — discussed with JPMorgan and other private equity groups — broke down in recent weeks, according to people with knowledge of the talks.
The talks ended, they say, when Celtic, the Scottish club that would have been its biggest participant, backed out. The Glasgow-based club, declined to comment.
A €1.6bn deal for CVC and Advent International to take a 10 per cent stake in Serie A, Italy’s top league, has also been disrupted by the rumblings around a rival super league. The private equity groups want a “breakaway clause” to be inserted in the agreement, fearing that if it goes ahead it could damage the value of the Serie A media rights.
Paolo Dal Pino, Serie A’s president, rejects the idea, saying: “There is absolutely no way we accept clauses like this.” The other option for the private equity groups, according to people close to their deliberations, is to invest in the super league itself.
Big clubs getting bigger
The super league discussions are filling a vacuum created by the breakdown in talks over radical changes to the continent’s existing club competitions. Last year, Uefa and the ECA proposed reforms which envisaged a promotion and relegation system, with the top 24 teams in the Champions League gaining automatic qualification for the following year’s competition.
Those plans were shelved amid a fierce fightback from smaller clubs, national leagues and fan groups. Mr Agnelli maintains that changes to the Uefa competitions are needed to retain enthusiasm among younger audiences. “It’s not about today or next cycle,” he says. “It’s about 15-20 years from now . . . what I would like is that football remains, if not increases, it’s premium position as the best sport in the world.”
These reform talks — paused due to the pandemic — have been given new urgency. The idea gaining the most traction is to replace the opening Champions League group stage — in which groups of four teams play each other home and away — with a so-called “Swiss model” based on chess competitions.
Each team would play 10 matches against 10 different opponents. Those with the best records would qualify for the knockout rounds.
This Swiss model is generating excitement because “for the first time in history, these Champions League teams would be ranked together on the same table”, says a person with knowledge of the plans. Another possibility is slimming down the latter stages, replacing home and away legs with one-off ties — a format instituted last season due to the pandemic.
These tortuous discussions may stall again, as smaller clubs and leagues worry that altering the status quo cuts them further adrift from the game’s financial giants.
Lars-Christer Olsson, chair of European Leagues, the body which represents national competitions, insists there are “red lines” in any format changes. This includes maintaining the link between performance in domestic leagues in order to qualify for European contests.
“We don’t want anything to be established to make the Champions League closer to a private league at the top of the European pyramid,” says Mr Olsson.
Many football executives don’t believe that top clubs will really join a breakaway. English teams, in particular, risk devaluing the Premier League, which has multiyear broadcasting contracts worth £9.2bn — more than any other domestic league competition.
Others ask whether the game’s superstars would even want to play in it. Without Fifa’s explicit approval, players could be prevented from featuring for their national teams. That would mean missing the World Cup, the quadrennial tournament that many footballers consider the sport’s true pinnacle.
Whether through an enhanced Champions League or a breakaway, many are convinced of the final result: more money-spinning ties between Europe’s biggest clubs, further cementing their places in the sport’s hierarchy.
“Financial power is transforming sporting power,” says a top European football administrator. “This is a very dangerous game.”
‘It has never been like this’: US house price spiral worries policymakers
House prices are rising in many major economies. This FT series explores whether these increases are sustainable.
A decade ago, the average house in Ohio’s leafy state capital Columbus would sit on the market for almost 100 days before being sold. Today, a similar property sells in just 10 days.
“It has never been like this,” said Michael Jones, a real estate agent at Coldwell Banker Realty with more than 20 years’ experience in central Ohio. “It’s unprecedented.”
US policymakers are becoming increasingly concerned about the rising price of housing for both homeowners and renters, as the broadest global house price boom for at least two decades drives up living costs.
“Today, it is harder to find an affordable home in America than at any point since the 2008 financial crisis,” Marcia Fudge, US housing and urban development secretary, said at a recent congressional hearing.
Nationally, house prices in May were 16.6 per cent higher than the year before, according to the latest S&P CoreLogic Case-Shiller index update — the biggest jump in more than 30 years of data and up from 14.8 per cent in April.
“A month ago, I described April’s performance as ‘truly extraordinary’, and [now] I find myself running out of superlatives,” said Craig Lazzara, global head of index investment strategy at S&P Dow Jones Indices.
The pace of price growth and sales has been particularly fast in smaller cities, suburban enclaves and towns.
Columbus’s housing market has exploded since the start of the pandemic, as historically low interest rates, remote working, increased demand for larger homes and a relatively limited supply of houses for sale sparked a feeding frenzy among prospective homebuyers and a windfall for sellers.
Homes in Columbus sold more quickly than in any other large metropolitan US area, according to Zillow, the property website. Almost three-quarters of Columbus properties were under contract in less than a week in April. Other fast-moving areas included Denver, Colorado, and Salt Lake City, Utah.
The fierce competition means many properties are selling at a significant premium to their listing price, favouring those on higher incomes or younger first-time buyers whose parents are willing to stump up the cash required to win a bidding war.
FT Series: Global house prices — raising the roof
House prices are rising in many major economies — but is it sustainable?
Part 1: How the pandemic has triggered the broadest global house price boom in more than two decades
Part 2: Buyers flock to smaller US cities, renewing policymakers’ concerns about affordability and risk
Part 3: Netherlands grapples with the social consequences of rapidly rising house prices
Part 4: Why Berlin’s renters want to expropriate their homes from Germany’s publicly listed landlords
Part 5: Should house prices count in inflation data, and what can central banks do about the economic effects?
Columbus’s average sale price has jumped 15.8 per cent in the past year, according to Columbus Realtors, the local industry body of which Jones is president.
“People say to me, ‘Don’t you love this market?’” he said at a recent open house for an almost 6,000 square foot family home with a listing price of just under $1m in a residential neighbourhood east of downtown Columbus.
“I say, ‘Not especially, because I represent buyers and sellers alike’,” he added. “Somebody is a loser here.”
Other places have experienced even more frenetic sales. Median home prices in Austin, Texas, have risen 40 per cent year on year, according to online real estate brokerage Redfin. Buyers have also flocked to Phoenix, Arizona, where prices are almost 30 per cent higher in the same period. In Detroit, Michigan, they have risen 56 per cent.
Suburban enclaves and smaller towns have also benefited. Redfin reported last month that median home prices in “car-dependent” US areas had surged at twice the pace of those in “transit-accessible” cities since the start of the pandemic — with the former gaining 33 per cent while the latter increased 16 per cent.
Across the 30 largest metropolitan areas in the US, Columbus, along with St Louis, Missouri, and Tampa, Florida, logged some of the biggest net increases in people arriving in the area, according to an analysis of US Postal Service records of mailing address changes by commercial real estate and investment firm CBRE.
Most moves came from the “surrounding area”, defined as a few hours’ drive from the householder’s previous address, the analysis suggested.
The house price spiral is feeding into the rental market too. According to Apartment List, a listings website, national median rent has risen 11.4 per cent so far this year, more than three times the average increase in the same period in the previous three years.
“The high cost of housing keeps millions of families up every night,” Fudge warned. “They wonder if they can afford to keep a roof over their head — and still manage to keep their lights on, to pay for their prescriptions, to put food on their tables.”
Industry experts say the pace of price growth is set to slow as supply begins to catch up with demand.
The number of existing-home sales rose 1.4 per cent month on month in June, according to the National Association of Realtors. Lawrence Yun, chief economist at the industry body, said supply had “modestly improved in recent months due to more housing starts and existing homeowners listing their homes, all of which has resulted in an uptick in sales”.
Real estate experts and economists surveyed by Zillow expect price growth to peak this year and then ebb.
“At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year,” Yun said.
Daryl Fairweather, chief economist at Redfin, said “homes that would have gotten 20 offers are now getting only two or three”.
But she added that while “we are already seeing demand start to stagnate”, prices were not coming down significantly — suggesting that policymakers’ concerns about affordability are likely to persist.
Federal Reserve chair Jay Powell recently said that today’s trend looked distinctly different to the one a decade ago that pre-empted what was at the time the worst recession since the Great Depression — but he called the problem of housing affordability “a big one”.
“Housing prices are moving up across the country at a high rate,” he told a congressional committee last month.
Although he acknowledged that it was “not being driven by the kind of reckless, irresponsible lending that led to the housing bubble that led to the last financial crisis”, he warned that it “makes it more difficult for entry-level buyers to get into the housing market, so that is a concern”.
Square’s $29bn bet on Afterpay heralds future for ‘buy now, pay later’ trend
Jack Dorsey’s biggest gamble to date has sent ripples around the fintech and banking world, with investors betting that Square’s $29bn all-stock deal to acquire Afterpay signals the “buy now, pay later” trend has staying power.
BNPL relies on an emerging thesis that millennials and Gen Z consumers distrust traditional credit, but still want to borrow money to buy goods. Afterpay allows shoppers to split the cost of goods into four instalments with no interest — but a late fee if payments are missed.
“We think we’re in the early days of the opportunity facing us,” said Square’s chief financial officer Amrita Ahuja, speaking to the Financial Times. “From a buy now, pay later perspective, we see, with online payments alone, a large and growing opportunity representing $10tn in payments volume by 2024.”
The deal sees Square join an increasingly crowded space, alongside big players such as Sweden’s Klarna, Silicon Valley-based Affirm and PayPal, with Apple also exploring the market. The sector also faces a brewing regulatory battle, as legislators question an industry that lends money in an instant, often without a traditional credit check to ensure a consumer will be able to pay off their debt.
“This decade is going to be the upheaval of the banking industry,” Klarna’s chief executive Sebastian Siemiatkowski, said on CNBC on Monday. “I’m a little bit surprised to see consolidation happening this early, at this level, but at the same point in time I think this is directionally what we’re going to see.”
BNPL has exploded in popularity over the past year thanks to the coronavirus pandemic-driven boom in online shopping, but industry executives said it had shown strong growth well before the pandemic, alongside a broader trend for more flexible financing among traditional lenders.
Leading into 2020, banks including JPMorgan Chase, American Express and Citigroup each launched flexible payment options tied to existing credit cards as an answer to point-of-sale financing.
The past 18 months have seen a meaningful uptick in the number of retailers willing to adopt the extra financing option. “There’s a little bit of FOMO setting in,” said Brendan Coughlin from Citizens Financial Group.
Afterpay was among the pioneers in BNPL. It was founded by Sydney neighbours Nick Molnar and Anthony Eisen in 2014, and today facilitates global annual sales of $15.6bn.
The company went public on the Australian Securities Exchange in 2016 at a valuation of A$165m (US$122m). In May 2020, Chinese tech giant Tencent paid about A$300m for a 5 per cent stake in the Australian group, which was by then worth about A$8bn.
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The Afterpay tie-up will enable Square to offer BNPL services to its millions of merchants, who processed payments worth $38.8bn in its most recent quarter, while also tapping into Afterpay’s clients, which include Amazon and Target.
The company will also integrate Afterpay into its Cash App, which has about 70m users and is slowly being built out as a one-stop financial services shop for payments, cryptocurrency, saving and investing.
“All of a sudden, you’ve got probably the most compelling super app outside of China,” said DA Davidson’s Chris Brendler, who is an investor in both companies.
Investors appear convinced. Despite the deal coming at a 30 per cent premium to Afterpay’s most recent stock price, the news sent Square’s share price up 10 per cent by Monday’s close.
“This is certainly a bull market deal,” said Andrew Atherton, managing director at Union Square Advisors. “People are rewarding Jack Dorsey for being bold and for making a big bet.”
Square’s entry into BNPL comes as the sector is becoming increasingly competitive.
Klarna increased its valuation from $11bn in September 2020 to $46bn in June of this year, making it the most valuable standalone company in the industry.
Shares in Affirm, the US online lender led by PayPal co-founder Max Levchin, rose 15 per cent on Monday following news of the Afterpay deal. Affirm, which went public in January and is now valued at $17bn, recently expanded its partnership with Shopify to offer BNPL services to the ecommerce platform’s US merchants.
PayPal first moved into BNPL back in 2008 when its then-parent eBay bought Bill Me Later. A year ago, PayPal launched Pay in 4, a six-week instalment offering that is free for both consumers and merchants, alongside its longer-term PayPal Credit service.
Earlier this year, Apple was recruiting staff for its payments division with experience in BNPL, as it looks to expand Apple Pay and its Wallet app. Bloomberg reported last month that the iPhone maker was working with Goldman Sachs to develop an Apple Pay Later service.
Industry executives warn, however, that the more crowded market could erode the businesses’ margins, while flustered consumers may also be put off by the rapidly growing number of checkout options.
“The current state of affairs, where you have seven buttons when you go to checkout, I don’t think is a sustainable state of affairs,” said one consumer finance executive at a top US bank. “I think we are in an interim period.”
A bigger threat still is the sector’s immature and inconsistent regulatory environment.
“It’s what everyone is calling the Wild West,” said Alyson Clarke, an analyst at Forrester. “There is no onus on them to make sure that you are of financial health to be able to repay that loan.”
Some companies do a “soft” credit check that briefly examines a person’s position but “not as much as they should be doing if they are lending you money”, Clarke said. “Afterpay doesn’t do any of that.”
A survey of Australian consumers, compiled by the country’s financial regulator in 2020, suggested 21 per cent of BNPL users missed a payment in the previous 12 months. Almost half of them were aged 18 to 29. Morgan Stanley analysts have estimated Afterpay makes about $70m a year on late fees.
The UK’s financial regulator has said BNPL players should be forced to adhere to its credit rules as a “matter of urgency”. In the US, a government consumer protection agency issued guidance urging caution around “tempting” BNPL deals.
In a hint at further possible tensions, Capital One in December became the first major credit card company to block its customers from using its cards to pay off BNPL purchases, calling the practice “risky for customers and the banks that serve them”, according to Reuters.
Afterpay board member Dana Stalder said the company welcomed regulation. “Buy now, pay later is just a friendlier consumer product,” he said. “Consumers understand that, they’re not dumb. This is why they are voting with their feet.”
Additional reporting by Richard Milne
UK pushes floating wind farms in drive to meet climate targets
In waters 15km south-east of Aberdeen, renewable energy companies are preparing to celebrate yet another landmark in the drive to end Britain’s reliance on fossil fuels.
Five wind turbines, each taller than the Gherkin building in the City of London, fixed to 3,000-tonne buoyant platforms have been towed to the UK North Sea from Rotterdam where they will form part of the Kincardine array, the world’s biggest “floating” offshore wind farm.
Wind farm developers have dabbled since the 2000s with floating technology to overcome the limitations of conventional offshore turbines. These are mounted on structures fixed to the seabed and are difficult to install beyond depths of 60m, which makes them unsuitable for waters further from shore where wind speeds are higher.
Floating projects, which are anchored to the seabed by mooring lines, are rapidly moving from the fringes to the mainstream as countries turn to the technology to help meet challenging climate targets.
Britain was the first country to install a floating offshore wind farm off the coast of Peterhead, Scotland in 2017. But existing floating projects are modest in size. The Kincardine array has an electricity generation capacity of 50MW compared to 3.6GW for the world’s largest conventional offshore wind farm.
Now the bigger wind developers are stepping up a gear with plans to build more schemes on a larger scale.
Denmark’s Orsted, Germany’s RWE, Norway’s Equinor along with the UK’s ScottishPower and Royal Dutch Shell are some of companies on a long list of bidders vying to build floating schemes in an auction of seabed rights for about 10GW of offshore wind projects in Scottish waters. The bidding round closed in mid-July with the winners expected to be announced in early 2022.
The UK is separately examining an auction exclusively for floating wind in the Celtic Sea, the area of the Atlantic Ocean west of the Bristol Channel and the approaches to the English Channel and south of the Republic of Ireland.
Developers expect the costs of floating projects to fall rapidly as more projects are deployed. In 2018 floating wind costs were estimated at more than €200 per megawatt hour, nearly double the cost of nuclear power in the UK.
The Offshore Renewable Energy Catapult, a UK technology and research centre, is hopeful developers will be able to build “subsidy free” floating projects at prices below forecast wholesale electricity costs in auctions as early as 2029. Conventional offshore wind developers reached this inflection point in a UK government auction in 2019.
UK prime minister Boris Johnson, who is hosting the UN’s COP26 climate summit later this year, has set a 1GW floating target out of a total 40GW offshore wind goal by 2030. He has underlined the importance of accessing the “windiest parts of our seas” as part of the UK’s goal to cut carbon emissions to net zero by 2050.
Other countries including France, Norway, Spain, the US and Japan are pursuing the technology, which experts said would particularly appeal to countries with limited access to shallow waters, or where the geology of the seabed makes it impossible to install conventional “fixed-bottom” turbines.
WindEurope, an industry body, predicts one-third of all offshore wind turbines installed in Europe by 2050 could be floating.
Countries pursuing floating wind are interested in it “not just as an opportunity to deliver net-zero targets. It has a real potential to be a driver of economic growth as well,” said Ralph Torr, a programme manager at the Offshore Renewable Energy Catapult.
Much like how the UK supply chain has lost out to foreign companies in the construction of conventional wind offshore farms — despite Britain having more than anywhere else in the world — there are concerns the mistakes will be repeated for floating technology. Manufacturing work for the Kincardine project was carried out in Spain and Portugal and the turbines and foundations assembled in Rotterdam.
Competition with other markets was already high as they all tried to gain a “first-mover advantage”, said Torr, who warned the UK government’s 1GW floating wind target by 2030 was not “going to unlock huge investment in the supply chain or infrastructure because it’s [just] a handful of projects”.
The Offshore Renewable Energy Catapult and developers are urging the government to commit to a second target in 2040 for floating wind, which they believe would provide confidence to industry to invest in the necessary facilities in Britain.
“Because floating [wind] becomes economic in the 2030s, it’d be much better to understand what the longer term pipeline is,” said Tom Glover, UK country chair at RWE. He added that in the Scottish seabed rights auction, developers had to “provide a commitment and an ambition for Scottish content”, which should benefit the local supply chain.
Wind developers are conscious that UK suppliers need time to gear up. Christoph Harwood, director of policy and strategy at Simply Blue Energy, which is developing a 96MW floating scheme off the coast of Pembroke in Wales, said projects that were larger than the earliest floating schemes but were not yet at a full commercial scale would be important in that process.
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“If the UK supply chain is to benefit from floating wind, don’t rush into 1GW projects, take some stepping stones towards them,” he said.
Tim Cornelius, chief executive of the Global Energy Group, which carries out offshore wind assembly work at the Port of Nigg on the Cromarty Firth in north-east Scotland, said the size of floating wind turbines offered opportunities to UK suppliers.
The floating turbines are much bigger than their conventional offshore counterparts so need to be built closer to their point of installation, which precludes using the lowest cost manufacturers in China and the Middle East.
The floating turbines require “an astonishing amount” of deepwater quayside space at ports, Cornelius explained. His company is looking at creating an artificial island for quaysides in the Cromarty Firth in Scotland, which he says would require a “material investment but is entirely justifiable as long as developers are prepared to commit”.
But he warned that “as it currently stands, the [UK] supply chain isn’t in a position to be able to support the aspirations of the [floating offshore wind] industry”.
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