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How To Invest In Football Club

How To Invest In Football Club

By: DanB

 

You don’t have to be a billionaire oil magnate to invest in a football club; putting your money into something you care about can feel more rewarding than shares in some faceless plc. But if you put your head before your heart, is it a smart investment?

Football Supporter
If you have a spare few billion lying around and feel like buying a football club and assembling a dream team, you’ll have seen plenty of your rival oligarchs beating you to the punch over the past few years.

But even if you don’t have the money to buy Messi and Ronaldo for your team, you might still want to buy shares in football clubs. It’s worth considering what you expect to get out of owning a small part of your team, as well as weighing it up against other investment options.
Can you invest in football teams?
Most British teams are owned by private investors, meaning you won’t be able to pick up shares in the club. However, there are a few publicly listed teams including Celtic, Birmingham City, Manchester United and Arsenal.

How to buy shares in a football club
As well as making sure your team is currently publicly traded, you’ll also need to check the following:

The share price, to make sure you can actually afford to buy any. Each share can sometimes cost thousands of pounds, which won’t help if you’re just looking to make a small investment
Some clubs offer “Fanshare” schemes that allow you to buy a fraction of a share instead – this might be a more affordable option if it’s available.

Whether the club will pay you a dividend. Most clubs don’t, so if you’re expecting a regular return for your money, you might be better off investing elsewhereInvesting in Arsenal FC.

If, for example, you chose to invest in Arsenal, you’d need a serious amount of spare capital if you wanted to buy individual shares, since they cost around the £15,000 mark each! However, the club do offer a Fanshare scheme, which allows you to invest smaller amounts to buy a percentage of a share instead.

The scheme lets you make monthly contributions, so if you invested enough, you could eventually end up owning an entire share. This would give you a place at their AGM and some voting rights, but your influence in the club’s direction would be minimal and no dividends have been paid in more than 30 years.

Investing in Manchester United
Let’s take a closer look at the stock market fortunes of one of the biggest clubs in the world, Manchester United.

The club first went public in 1991 on the London Stock Exchange but only sold half of the shares they wanted to. As the club’s fortunes increased over the 90s, so did the share price – especially when there were rumours of a buyout.

From 2004, the Glazer family bought 98% of the club’s shares and delisted the team from the London Stock Exchange. The takeover was funded by getting the club into debt.

There was another public offering of shares in 2012 to raise extra funds, but only 10% of the club was floated, and this time it was on the American stock exchange.

The owners intended to keep half of the profits made by the sale. Shareholders do not receive a dividend or have any control over how the company is run.

Manchester United had a difficult 2013/14 season on the pitch, which led to their share price falling. However, talk of a new kit deal that would bring huge amounts of extra revenue into the club pushed the share price up, so it’s not just what happens on the pitch that affects the price
Fan ownership schemes.

Football club investment isn’t limited to buying shares in the big teams. Putting money into your local club might not be the most profitable way to invest, but it can be rewarding in different ways: from having more influence in how the club is run to seeing the difference your investment is making.

Around thirty UK football clubs are owned by supporters’ trusts, including several that are run democratically, where each member is only able to buy one share each, or is only allowed one vote. Fan-owned teams include AFC Wimbledon, Exeter City, FC United of Manchester and Wycombe Wanderers.

In 2010, green energy businessman Dale Vince became the majority shareholder in Gloucestershire’s Forest Green Rovers, who play in England’s fifth tier. Although the club’s fortunes have only improved a little on the pitch since his investment, Vince has been able to bring his own values to the club – the keen environmentalist has brought solar panels, vegan food, an organic pitch and an emphasis on environmental awareness to the club.

Even fans with far smaller stakes to invest have been able to save clubs threatened with extinction. The largest British club owned by its fans is Portsmouth FC; the Pompey Supporters’ Trust bought the club in 2013 after it had again fallen into administration. One of Greece’s biggest sides, Panathinaikos, were taken over in 2012 by the Panathenian Alliance, a group that allowed thousands of fans to own a stake in their ailing club.

In Spain, Real Oviedo had amassed enough financial problems to put their future in jeopardy until an internet campaign and the support of some high profile ex-players brought in enough investors to secure the club’s existence. This CNN article looks into Oviedo’s tale in greater detail.

Is investing in a football club a good idea?

Despite the ever-increasing price of match tickets and merchandise, Premier League clubs generally have large net losses, relying on huge debts or their rich owners’ munificence to fund their spending. Going further down the leagues, it’s even tighter, as only three teams in the second tier made an operating profit in the 2012/13 season.

There aren’t many teams that you can buy shares in, and sports teams hardly ever perform well on the stock market compared to other companies. They also don’t usually grant shareholders any level of control over company decisions.

As clubs very rarely pay dividends, the only chance of making a profit would come from selling shares for more than you bought them. Share prices often rise and fall for a range of reasons; rumours of takeovers can push the price up as much as events on the pitch, which can benefit short term speculators looking to make a quick buck more than long term investors.

So football shares aren’t the most stable form of investment out there for anyone looking to make a sure profit. But they could be what you’re looking for if you want to invest in something that interests you.

Shares in one of the big clubs might be worth it if a shareholder certificate for the team you love is enough. But if you want to see your money go towards something more tangible, helping out a team that really need it might be your most rewarding option.

Other ways to invest for profit
If the limited returns of football club shares don’t sound so tempting, there are plenty of other ways you can invest in the rest of the stock market; read our guide, How to Start Investing in Shares.

Alternatively, you could use other investing methods to try to make some profit from your knowledge of the beautiful game.

Spread betting on football results allows you to place bets on a huge range of factors, from the number of goals in a game to the bookings or even offside decisions. But you could also use financial spread betting to make money from predicting the movement of teams’ share prices. Spread betting can lead to considerable losses if you’re not careful; make sure you read our guide on Getting Started with Spread Betting.

With Contracts for Difference you can profit when shares fall in price, as well as when they rise, since you don’t actually buy the shares. Read our guide, Contracts for Difference Explained, to find out what you need to know.

If you have a large amount to invest or will rely at all on any income you might make from it, consult an Independent Financial Advisor first to make sure you understand exactly what you’re doing; follow our 5 Step Plan to Finding an IFA You Can Trust with Your Money.

Source: www.money.co.uk/article/1010401-how-to-invest-in-your-football-club.htm

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