Football stocks: Which clubs can you trade on the markets?

For City Index, in August 2021, I looked at the clubs that retail traders can take an interest in

Football: A playground for the mega-rich

The elite professional football clubs across Europe have shown a propensity to achieve consistently impressive revenue figures, and as such have become attractive propositions for mega-wealthy owners.

Through the continued expansion of global broadcast deals and ever more imaginative methods to commercialise the game, the top clubs in England, Spain, Italy and Germany have found a way to translate trophies into profits.

All the while, the enthusiasm of fans has provided natural leverage — and even when stadia have been locked down through the Covid-19 pandemic, there remain powerful opportunities for clubs to continue to keep the cash tills ringing.

Can fans buy shares in the clubs they support?

But as good as football clubs are at taking money off their fans — partly, of course, to support the eye-watering salaries that the players (and their agents) demand — is there an avenue for the fans to recoup some of that expenditure by investing in their favourite clubs through buying stock?

In most cases, the short answer is no. The largest football club trading on the stock market is Manchester United. Judged on 2019–20 revenue as collated by Deloitte in its annual Football Money League report, United is the fourth biggest club in the world.

The signing of iconic star Cristiano Ronaldo in the summer of 2021 gave the Red Devils’ share price a shot in the arm. And the price was sustained when the Portuguese superstar scored three goals in his first two games.

Only three other clubs in the Deloitte top 20 — Juventus, Borussia Dortmund and Arsenal — have shares that exchange hands on the stock market. But Arsenal’s shares have long been snaffled up in full by Stan Kroenke, so you can quickly strike them off your list.

In addition, there are four other football clubs with a much lower market cap who provide shares that can be publicly traded. They are the two Glasgow clubs, Celtic and Rangers, and two from Rome, AS Roma and Lazio. Those clubs’ shares are not of great interest to retail traders, who tend to look for better liquidity and tighter margins when choosing stocks to get involved in.

How do news events affect football stocks?

On April 18, 2021, dramatic proposals threatened to shake up the status quo at the top table in Europe as 12 clubs announced they would be joining a so-called breakaway “Super League”. Players, managers and in particular fans reacted with fury and dismay — and the whole plan was embarrassingly shelved a few days later.

Shares in Juventus, Borussia Dortmund and Manchester United all showed impressive rises on April 19, 2021, the first full day of trading after the Super League announcement.

At the time of the announcement, traders bought into football stocks — not only Manchester United and Juventus, who were part of the proposed Super League, but also Borussia Dortmund, who were not.

Predictably, shares quickly returned to “normal” levels when it was revealed the Super League was not a realistic proposition. But football stocks are traditionally highly news-sensitive.

Manchester United shares performed well over summer 2021 as early rumours grew over the Ronaldo signing, so much so that by the time the news was official the announcement had already been priced in.

What factors affect the price of football stocks?

Here are a few things traders should look at when going long or short in football stocks.

1. Team financials. Some teams have a lot of debt to pay, often caused when wage bills spiral out of control. Ever seen how much footballers earn? It all has to be paid for and when debt mounts up without an apparent obvious remedy that can be a turn-off for traders.
2. Game results. A team that performs significantly better or worse than expected can see its shares react as a consequence. Achievement and qualification for the Europe-wide Champions League is particularly critical as this competition provides additional TV revenue.
3. Transfer market activity. Buzz around a potential new signing can help to boost investor sentiment, whereas the sale of players often has an adverse effect, even if sales of valuable players can provide an in-flow of funds.
4. Scandals. Controversial events that involve players, managers or owners acts tend to exert downward pressure on share prices.
5. Sponsorships. New partnerships with big brands, especially when they come with enhanced terms, are a positive for share prices.

Now let’s take a look at the publicly traded clubs in a little more detail.

Manchester United: The biggest player in the football stock market

Founded in 1878 as Newton Heath Lancashire & Yorkshire Railway Football Club, the red half of Manchester faced bankruptcy on two occasions in the 20th century before listing on the stock market in the UK in 1991.

The timing was propitious as United excelled in England’s new Premier League under the inspirational manager Sir Alex Ferguson and early investors were rewarded.

Malcolm Glazer launched a successful bid to take control of this storied club in 2005, despite strenuous objections from fans. He acquired 28.7% of Manchester United shares and pushed the market cap of the company to £800 million.

Manchester United left the London Stock Exchange in 2005 and listed on the NYSE (New York Stock Exchange) in 2012 for $14 a share. As of April 2021, Manchester United’s share price gave it a market cap close to $3 billion, making it the biggest plc among football clubs.

It is also the only team to have secured a top-five spot in all editions of the annual report.

Another thing not to be sniffed at is the club’s acumen when it comes to commercial expansion. United’s successful investments in digital marketing, such as its global mobile application, alongside ecommerce and MUTV, are building a robust future growth. The Red Devils remain the top commercial revenue generating Premier League club.

Juventus: Future far from healthy for ‘Old Lady’

The biggest of the three Italian clubs publicly traded on Milan’s Borsa Italiana, Juventus won its ninth consecutive domestic championship, and 36th overall, in 2020.

Widely expected to easily repeat that success, and with ease, the following season it finished only fourth, qualifying for the Champions League by the barest of margins.

Juventus is the best supported football club in Italy. On its own shores it can count in excess of 12 million fans. This is partially attributable to Italian football fans having no clear regional affinity, with plenty of tifosi stretched out all the way down the south and even in Sicily.

Numbers sourced by the club internally suggest a global fanbase in the region of 350 million fans globally. However, its 36% decline in matchday revenue in 2019–20 was the largest percentage decline on that particular metric of all the Deloitte Money League clubs.

With a lack of cut-and-thrust within the squad, it’s clear why the “closed shop” Super League had been seen as a beneficial avenue for Juventus, who have issues managing a large debt.

A situation in which revenue is controlled by the clubs themselves rather than a third-party administrator makes economic sense for clubs with big fan bases. As things stand, with no Super League to fall back, these could be precarious times for Juve.

Borussia Dortmund: Could youth policy bear fruit?

After suffering financial problems and poor form in the 1980s, Borussia Dortmund enjoyed a fine renaissance in the 1990s, winning two Bundesliga titles, and the highly coveted UEFA Champions League title, pitting all of Europe’s top football teams together.

In 2000 it listed its shares on the Frankfurt Stock Exchange, and it remains the only German football club to have done so.

Dortmund won two Bundesliga titles under Jurgen Klopp before his high-profile move to England — but since then has played second fiddle to Bayern Munich, Germany’s pre-eminent footballing force.

There is still some scope for Dortmund to grow its fan base. The big positive is a huge stadium with a capacity in excess of 80,000. (It is thought around 1,000 fans from the UK watch each home match because of the competitive price structure).

Interestingly, despite the impact of the COVID-19 pandemic, BVB’s revenue fell by just €6m (2%) to €365.7m in 2019–20, the smallest revenue decrease across the Deloitte Money League.

That has probably accounted for a reasonably stable share price despite a desperately disappointing 2020–21 season in the Bundesliga. Dortmund has developed a clutch of young players with massive potential — but it’s never easy to hang onto such assets and Jadon Sancho’s departure for Manchester United in July 20201 was easy to foresee.