Major League Soccer today announced it will leverage a historic $25 million loan from a syndicate of black banks, marking the first time a sports league has entered into a major commercial deal exclusively with black banks. Facilitated by the nonprofit National Black Bank Foundation (NBBF), the partnership is the latest milestone in a series of MLS’s ongoing efforts in the area of diversity, equity and inclusion.
“Major League Soccer’s partnership with the National Black Bank Foundation is a tangible step in efforts to close the racial economic gap in the United States, and it’s the right business decision for us,” the commissioner said. of the MLS. Don Garber. “As a league, we continue to increase our racial justice initiatives. In order to have a real impact, economic justice must be part of the equation. This transaction with a syndicate of community-focused black banks is an important step, and we hope it will raise awareness of the importance of black-owned banks and their impact on the economy.
The transaction announced today, coupled with the league’s strong credit rating, will increase banks’ capital cushion through fees and interest earned, creating additional capacity for new lines of credit for consumer and business loans. small businesses in communities of color across the country. To facilitate the loan, NBBF organized a syndication team led by Atlanta-based Citizens Trust Bank and New York-based Carver Federal Savings Bank.
“Major League Soccer has raised the bar for American business with this transformative partnership,” said NBBF co-founder and general counsel, Ashley Bell, mentioned. “If other leagues and big businesses follow the MLS model, the lives of Black families across the country will change for the better because their local Black bank will have the capital resources to approve historic numbers of home and small business loans. “
Black banks fuel social mobility in the United States by connecting borrowers of color to capital. However, the sector’s impact has been limited by chronic and acute undercapitalization which has restricted the flow of credit it could create for underserved borrowers.
According to the Federal Reserve, the black-white economic gap in the United States has remained virtually intact since the civil rights movement. Historical efforts by black families to escape the continuum of poverty by creating intergenerational wealth, primarily through home ownership and small business entrepreneurship, have been thwarted by racialized access to credit. In 2020, lenders turned down black mortgage applicants at a rate 84% higher than white borrowers.
Reaching major deals with black banks like MLS has done is one step in many to erase America’s racial wealth gap. These partnerships diversify the portfolio risk of black banks and increase their capital capacity to create and extend credit and other wealth-creating services to black borrowers.
About half of all black American households were unbanked or underbanked in 2019, compared to just 15% of white families. Lack of access to essential financial services has forced black households to resort to expensive alternatives like check cashing services, payday loans, money orders and prepaid credit cards. Over a financial lifetime, these fees can total more than $40,000, according to the Brookings Institute.
As part of this partnership, MLS will work with the National Black Bank Foundation, 100 Black Men of America, Inc., the National Coalition of 100 Black Women, and Black Players for Change to educate their constituents and members about empowerment programs economic.
MLS and the National Black Bank Foundation have worked with leaders across the league, including club owners, current and former MLS players and league officials, to bring this historic partnership to fruition.
The syndication team was led by lead arranger Citizens Trust Bank and co-lead arranger Carver Federal Savings Bank. Other syndicate members include Alamerica Bank (Birmingham, Ala.), Carver State Bank (Savannah, Ga.), Columbia Savings & Loans (Milwaukee), Mechanics & Farmers Bank (Durham, NC), and Unity National Bank (Houston). Comer Capital Group, LLC acted as financial and syndication advisor, and Dentons US LLP acted as advisor.
In October 2020, MLS unveiled a series of initiatives aimed at combating racism, advocating for social justice and increasing black representation in sports. Using the league’s resources and platform to make tangible contributions to closing the racial wealth gap is an important part of MLS’s commitment to diversity, equity and inclusion.