Is It Worth Investing In Soccer Teams?
June 1, 2021 (Investorideas.com Newswire) There are many ways you can choose to support your favourite football (or soccer, for our American readers) team. You can buy tickets to go and watch them on match days. You might be interested in purchasing replica jerseys or other club merchandise. If you have a little more money to spend than that, though, you might even consider investing in your club if it's an option. Several of the biggest football clubs in the world are also publicly traded companies, and so you're free to invest your cash in them if you're comfortable with taking the associated risks.
There's always a risk with investments, but is the potential reward that might come from investing in your preferred team worth the risk? Should you add a team or two to your share portfolio? Do the world's biggest and most famous clubs offer better performance than more traditional investments? Let's run the rule over a few of them and see what their performance tells us.
For more than a decade, English Premier League club Manchester United was the wealthiest football team in the world and also one of the most successful. Their on-field fortunes have dipped a little in the past ten years, and so has their financial status. They're no longer one of the top three richest clubs in the world - but they do still have the highest market capitalization figure at $2.4bn. The club is currently listed in New York, although its enormous following in the Far East means it might one day make more sense to list it in Singapore. In terms of merchandising, no other club in the world does as well as Manchester United. The club also has the benefit of receiving English Premier League broadcasting money, which is the highest-value TV package in all of sport. Even taking all of this into account, though, United's stock has gained only five per cent over the past eight years. You'd get a better return than that from some high-interest savings accounts.
German giants Borussia Dortmund are, unsurprisingly, listed in the Frankfurt Stock Exchange. Market capitalization for the black and yellow team stands at $525m, with most of the club's profits in recent years having come from selling high profile players. For nine out of the past ten years, the club has been in profit. That's unusual in the world of football and suggests that whoever is in charge of Dortmund's finances is doing an excellent job. Those profits haven't been reflected by strong share performance, though. Bayern Munich has begun to dominate Dortmund and the rest of the German league in recent years, and Dortmund's share price mirrors their disappearance from the league championship picture. After almost twenty years on the market, the club's shares are worth over 45% less than they were when they floated.
Scottish football isn't as big a deal as English, Spanish, German, or Italian football. It's probably not even on par with French football. Nevertheless, Glasgow Celtic is a huge, successful club. They're involved in the UEFA Champions League more often than they're not and would have won ten league titles in a row this season had their Glasgow neighbours Rangers not stopped them by going the whole season unbeaten. You'll find them listed on the AIM stock market in London, with market cap of $112m. The club has been listed for twenty-five years and has been profitable for almost all of them. Even with that taken into account, its stock is now worth 43% less than it was when it started. Given the fact that most of its revenue comes from matchday ticket sales and fans haven't been able to attend for the past year, Celtic's next set of accounts is likely to show a large loss. That will make things even worse for investors.
You can argue all day about who the biggest club in Italy is, but in monetary terms, it's Juventus. Inter Milan and AC Milan might appeal more to football purists, but they can't compete with "the Old Lady" when it comes to financial muscle. That's why Cristiano Ronaldo players for Juve and not either of the Milan teams. Market capitalization for Juventus shares is $1.2bn. The club has enjoyed an increase in revenue of more than ten per cent each year for the past decade and yet has still managed to incur losses - mostly due to player wages and transfer business. After being listed on the Borsa Italiana in December 2001 - just in time for Christmas - the club's share price has declined by 26% in the years since then. If any Juve fans were bought shares in their beloved club for Christmas that year, it would have turned out to be a tainted gift.
We could continue, but there's no need to. The pattern is the same across the board. There isn't one single football team in the world that has a higher share price now than they did at their IPO. Frankly, we're surprised that the media hasn't made a bigger deal about what a disaster it's been for these clubs to become publicly listed in the first place. It's no wonder that other big clubs like Real Madrid, Barcelona, and Liverpool have looked at the stock situation of their rivals and decided not to get involved.
There is and always will be a large element of risk with any investment, but investing in football teams appears to be a risk that doesn't come with any prospect of a reward. You're about as likely to make money from investing it in Manchester United as you are from playing online slots, and we all know how volatile and unpredictable online slots can be! Perhaps that's why Liverpool has the right idea. Their club isn't listed on the stock exchange, but they do have an officially branded and licensed online slots game available at Rose Slots for New Zealand Players. That demonstrates their ability to make money around the world without needing to offer up shares to the public.
Only you can decide what is and isn't a good investment idea for your money, but the current values and trading histories of shares in football clubs suggest that they don't make for good investments. Proceed if you wish - but proceed with extreme caution!
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