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Wednesday, May 19, 1999 Published at 09:38 GMT 10:38 UK


Business: Your Money

Share in your team's success

Manchester United are the best bet for a stock market winner

When the final whistle blows at the FA Cup Final between Manchester United and Newcastle, the result will cause a variety of reactions - from the players, from the fans, and on the stock market.

Both clubs are among the two dozen who have turned themselves into public companies and 'floated' their shares on the stock market.

What happens on the field can affect the performance of the shares.

But while diehard fans might relish the chance of owning a chunk of their team, is football investment a sensible option if you want to make money?

You need only look at the figures to get the answer. Most clubs are trading well below their issue price.


[ image:  ]
Aston Villa floated at £11.00, but by the end of the season, they were down to £4.90.
Charlton Athletic's relegation from the Premiership saw their shares fall to 38.5p, having floated at 80p.
And Millwall shares were issued at 20p and now trade at around 1p each.

Compare this performance with Manchester United shares. In May 1994 they traded for just under 31 pence. Five years later, in March 1999, they peaked at £2.40 and currently cost about £1.88.

Football shares are "not the shares to be in at the moment," said Stan Lock, of London brokers Brewin Dolphin. "If I had to buy a share, it would be Manchester United, because I think someone might come back with a bid for them."

Sector needs a kick-start

And the consensus seems to be that the only action that can kick-start this lethargic sector will come in the boardroom and not on the pitch.


[ image: Charlton (in red) are one of many clubs whose shares have nosedived]
Charlton (in red) are one of many clubs whose shares have nosedived
"Takeovers are the only thing that will boost prices," said Stan Lock. "The only shares we sell at the moment are to supporters, and they are taking minimal amounts."

There once was a boom in football shares, boosted by several sports investment funds, which specialised in club shares.

"What happened was that three sports funds were set up a couple of years ago and they moved the market. The stock went up and when the bubble burst it was quite a big bang", recalled Mr Lock.

An example is the Singer & Friedlander football fund, launched two years ago with BBC pundit and former Liverpool star Alan Hansen as an adviser. Units have been trading at around 75% of their launch value.

What happens on the pitch does move the market, but not always how you would expect. The day after Manchester United lifted this year's Premiership, their stocks rose by just 0.5p.

Arsenal did the league and cup double, but their shares have since halved in price.

Europe leads the way

There were high hopes that the £623m bid of satellite broadcaster BSkyB for Manchester United would galvanise the market, but it was blocked by the Trade Secretary, Stephen Byers.

Shortly afterwards, the American-owned NTL cable TV company pulled out of a £160m deal to buy Newcastle.

Many observers believe the UK will eventually follow the European model, where many clubs are owned by media magnates, or industrial giants such as Fiat.


[ image: Revenue from TV is vital for the game]
Revenue from TV is vital for the game
"I think in the future it's all going to happen again," predicted Stan Lock of Brewin Dolphin. "If someone like Carlton or Granada came in for Manchester United they could get the go-ahead.

"The BSkyB decision was a bad one because it would have brought more money into football. It all boils down to the TV rights."

But while analysts have generally regarded football clubs as poorly managed and unaware of the commercial realities of modern business, some have bucked the trend.

Merchandising worth millions

Big clubs like Manchester United can generate a small fortune in merchandising, and it has even set up its own TV station.

Celtic has brought in a strong management team, Chelsea is developing a property portfolio which includes a hotel, and Leeds United is at the centre of a growing leisure empire.


[ image: Chelsea's £26m wage bill has concerned some analysts]
Chelsea's £26m wage bill has concerned some analysts
But as has always been the case in football, it is the big clubs which get the lion's share of the spoils. The new European Super League will give half a dozen teams the chance to earn more millions in gate receipts and TV revenue.

That will certainly help their profits, as long as they are sensible about their wage bills, the size of which has been causing some concern among analysts.

So for those thinking of investing, use your head rather than your heart and examine the future prospects of a club.

The same rules apply to investment as to watching your side in action. Teams can go down as well as up, and be prepared for a rollercoaster ride that will stretch your emotions.





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