Investment funds are putting football at the frontline of the next financial crisis

WHEN you think of the Bermuda Triangle, you think of ships going missing at sea, compasses going haywire, and planes falling out of the sky. 

But the phrase made popular by thriller writers, sci-fi buffs and disaster movie directors obsessed with a strip of the North Atlantic Ocean bounded by Florida, Puerto Rico and Bermuda is also now being used to describe a financial strategy being utilised by private equity firms to deploy funds from the insurance industry.

These private equity firms are acquiring and partnering with U.S. life insurance companies and using the premiums those companies generate from the people who buy their policies to fund their aggressive investment in industries like football. 

It’s a strategy that some analysts have dubbed the Bermuda Triangle because it has three points - the private equity firm pulling the strings, the insurance company bringing in the money, and the offshore reinsurer in a jurisdiction like Bermuda, which reinsures the risk. 

Reinsurance is essentially a form of insurance for insurance companies, which allows them to transfer risk.

For the insurer, the Bermuda Triangle strategy offers a way of exploiting loopholes between regulatory bodies, because they would be required to set aside more capital to cover their liabilities in the U.S. than they are in Bermuda, where oversight and transparency are more limited. 

This frees up capital for the private equity firm to use to chase higher returns. But it’s often the insurer which goes on to make the investment, and therefore the policyholder who might ultimately lose out.

And it’s a strategy being put increasingly under the spotlight because of the risks involved, as seven football clubs around the world have already discovered at great cost.

The sad example set by 777 Partners

777 Partners, a Miami private equity firm, once owned majority stakes in the football clubs Genoa, Standard Liege, Red Star Paris, Hertha Berlin and Vasco da Gama, plus minority positions in Sevilla and Melbourne Victory. But none of these clubs prospered under the company. 

During their ownership, clubs controlled by 777 suffered transfer embargoes, a points deduction, and struggled under the weight of crippling debts. Fans protested against 777’s involvement, and the firm eventually collapsed last year after failing with an ambitious and costly takeover of Everton. It is now in the hands of restructuring experts, fighting off a slew of lawsuits from creditors. 

Football finance expert Kieran Maguire, from the University of Liverpool, told Play The Game: “777 managed to con people because they were effectively robbing Peter to pay Paul, moving assets around the group and shifting balances, giving the impression they had more cash than they actually had. It was a Ponzi scheme which eventually destroyed itself.” 

In the end, 777’s co-founder Josh Wander, and its former CFO Damien Alfalla, were criminally indicted by the Department of Justice in relation to a 500 million US dollar scheme to defraud lenders. The United States Securities and Exchange Commission also brought a civil fraud indictment against 777. All of this was a disaster for the clubs, which ended up seized by 777’s biggest creditor, A-CAP. 

777 employed the Bermuda Triangle strategy. It tapped policyholder premiums from U.S. insurers owned by A-CAP and another firm, SILAC, and used them to buy not just football clubs but two budget airlines, a film studio, and a fleet of Boeing jets. 

But many of its investments turned bad. When its Australian airline Bonza was liquidated, it had over 60,000 creditors. Other portfolio companies filed for bankruptcy or were wound up.

The firm’s problems reached a tipping point when its offshore reinsurance arm, 777re, was placed under the administrative control of the Bermuda Monetary Authority in the fourth quarter of 2023. 

It then had its licence revoked after an investigation found it had “invested too much in affiliated assets, suffered from inadequate corporate governance, and had not received sufficient capital contributions from its parent company.” 

This had implications for the U.S. insurance companies which had helped fund 777’s activities. One state regulator even declared three of them insolvent and in need of rehabilitation because they had pumped over 2.1 billion US dollars into 777-affiliated investments - including the football clubs - and received “virtually no return”. The case went to mediation and was later settled out of court.

But the question remains: was 777 Partners an isolated case, or could other private equity firms who employ the Bermuda Triangle strategy be exposing football to similar risks?

Tom Gober, an independent forensic accountant and certified fraud examiner who has spent 40 years focusing on the insurance industry, says 777 is “definitely not” an isolated case, and that football should beware. 

“There are other companies doing the same thing, accepting lots of risk, but like 777, all of their information and the risks their insurers have taken on are offshore, where we can’t see them. There is a lack of transparency, and that is a problem.” 

More and more clubs are exposed to the strategy

More than 36 clubs in Europe’s five biggest leagues now have private equity, venture capital or private debt participation (investors funding non-bank loans to companies) through majority or minority stakes, including a majority of clubs in the Premier League, according to PitchBook research. 

Not all of those companies employ the Bermuda Triangle strategy. But some of those that do are household names in the world of finance, and others are also well-known in football. 

Chelsea co-owner Todd Boehly, who owns Eldridge Industries, was a pioneer of the strategy. And four other big private equity firms with a growing interest in the sport also rely on it. 

Apollo Global Management recently launched a 5 billion US dollars investment vehicle to buy stakes in clubs, acquiring a majority share of Atletico Madrid and a minority holding in Wrexham.

Apollo also made an 80 million GBP loan to Nottingham Forest and has also explored financing for European football transfers. 

Ares Management is an investor in Chelsea and a major backer of John Textor’s Eagle Football MCO vehicle, which owns Olympique Lyonnais, RWDM Molenbeek and Botafogo. 

Canadian investment fund Brookfield purchased Internazionale Milano owners Oaktree in November 2025. KKR is in talks to buy Arctos Partners, which has investments in Paris St-Germain, Atalanta and Liverpool owners FSG. 

There is no suggestion that any of these companies has done anything wrong, or that any of them have engaged in the kind of fraudulent activity 777 has been accused of. All of them also dwarf 777 in size. But they do demonstrate how the wider football industry is becoming more and more exposed to a strategy which failed spectacularly in 777’s case, and some analysts are worried. 

Gober said: “I have access to the data of all 705 U.S. life and annuity insurers, and I can see that the number of them in similar situations to 777 is far greater than I anticipated. All these private equity companies are doing the same things to varying degrees, and sadly in much larger dollar amounts.”

The health care industry is already paying the price

The amount of money these companies are deploying is eye-watering. According to credit ratings agency AM Best, U.S. life insurers transferred more than 40% of their reserves to offshore reinsurers in 2023 alone, and that is a 26% increase since 2016. In its 2025 Annual Report, the U.S. government’s Financial Stability Oversight Council (FSOC) valued this offshore capital transfer at over 1 trillion US dollars. Bermuda remains by far the most popular destination for this money.

Victor Hong is a senior risk manager and former regulator whom multiple global financial institutions have hired to detect emerging risks, leading to his serial whistleblowing. 

He told Play The Game: “The insurer is often closely affiliated with its reinsurer, which resembles an air passenger buying crash insurance from the pilot.” 

And in Hong's opinion, the private equity firm at the top of the triangle is not the one that could fail, “because it’s the insurer and its individual policyholders, which hold the debt. They are the ones that would lose out.” In such cases, what then happens to the football clubs relying on such companies for funding?

Hong continued: “Private equity firms take money out of the companies they buy, and if the company they bought then fails, they don’t suffer any of the losses. Look at the healthcare industry and the damage that’s been done there by private equity.”

Private equity firms typically acquire companies via leveraged buyouts, using relatively little of their own cash and financing the rest with debt that is placed on the target firm's balance sheet. They also tend to ruthlessly cut costs within those companies in order to sell them on at a profit at a later date. For both these reasons, they have faced criticism when it comes to their entry into the healthcare market.

The Center for American Progress published a report last October stating that private equity firms “burden healthcare organisations with unmanageable debt.” And a 2023 research paper cited by the AMA Journal of Ethics stated that “private equity acquisition was associated with a 25.4% increase in hospital-acquired conditions.” 

In addition, research published last September by Annals of Internal Medicine showed that after U.S. hospitals were acquired by private equity firms, patient death rates in the emergency departments rose by 13% compared with similar hospitals, most likely as a result of reduced staffing levels.

“How different is a bunch of doctors in a hospital from a bunch of athletes at a football club?” Hong said. 

In other words: If you get rid of too many doctors, patients suffer. What happens if you sell off players at a football club?

Aside from the risk of asset-stripping in this way, there are other, broader risks being flagged by market watchers, which suggest private equity firms that employ the triangle strategy are among the most exposed to a potential downturn in the U.S. economy.

The insurance sector is the biggest threat to financial stability

Financial Times reporter Toby Nangle is quoted in a recent report by the UK House of Lords saying: “The strongest candidate for a risk to financial stability looks to be from the insurance sector.” 

This is partly because around one third of the U.S. insurance industry’s assets of 6 trillion US dollars are parked in private credit - a form of non-bank lending which is coming under growing scrutiny for being more risky than traditional bank loans. 

Two high-profile examples of private credit risk were the sudden bankruptcies in the U.S. last year of auto parts supplier First Brands and car dealership Tricolor, which rattled global debt markets. Both firms took on private credit loans that they ultimately could not pay back. 

In response, JP Morgan’s CEO Jamie Dimon said: “When you see one cockroach, there’s probably more” signalling his belief, which is shared by many analysts, that they may not be the only companies in danger of getting into this sort of financial distress.

The private equity firms that are investing in football soon had questions to answer about whether they had any exposure to these bankruptcies, with executives from both Apollo and Ares quizzed on the matter last year in earnings calls - webcasts where they discussed their financial performance with investors.

This came, in part, because it is largely private equity firms which do this kind of lending. And in the first quarter of 2025 alone, private equity firms were behind 70% of large bankruptcies in the U.S. 

The House of Lords report cited above warned that interconnections between the private credit market and the life insurance sector “have grown considerably,” and that “the failure of First Brands and Tricolor has increased regulatory scrutiny of these risks.”

Increased scrutiny is a good thing, as the Bank for International Settlements (BIS), in a report last year, warned “life insurers have increasingly shifted their investment strategies towards riskier assets” which “often lack transparency” and are not easily converted into cash without losing their market value. 

The BIS, a Swiss-based international financial institution, concluded that any losses incurred by a single insurer exposed to these riskier investments could spillover into the wider economy. 

It said: “In light of the sector’s size, market footprint, common exposures and interlinkages with the rest of the financial system, such an event could have systemic implications.” 

This is what Bank of England Governor Andrew Bailey was referring to when he warned that problems in private credit could even be “a canary in a coal mine” for another global financial crisis. Such a crisis would put huge pressure on firms which have leveraged the Bermuda Triangle strategy and invested in football.

A 2024 report by Markowski Investments described private equity itself as a “bubble” in danger of popping, adding that many such firms “are currently struggling to find buyers for their investments,” and that the situation represents “a ticking time bomb that could cause severe financial instability.” 

Those investments largely sit on the books of U.S. life insurance companies, and now include things like football clubs.

Gober believes a downturn is “inevitable” at some point, and that a domino effect could result, forcing some life insurance companies out of business. 

One such, private equity-owned PHL Variable, is already heading that way. It was first placed into rehabilitation in May 2024 by regulators in its home state of Connecticut, and authorities are now grappling with a 2.2 billion US dollar hole in the company’s accounts. Payouts to policyholders have been limited, effectively withholding nest eggs worth at least 400 million US dollars.

But this could be just the tip of a very large iceberg. Gober told Play the Game: “It’s going to be more systemic than an individual company. Other companies are likely to fail.”

Football could therefore be at the frontline of the next global financial crisis.