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A poisonous legacy of poverty and deca... Aid lobby is hoping for a roa... |
Invest in a winning club, or see your cash relegated
FOOTBALL SHARES
NEWS of the early retirement of Manchester United star Eric Cantona was greeted with dismay by his fans and with a £4-million reduction in the club's value on the London Stock Exchange. Sunderland's share suffered a similar fate after the club lost the relegation battle and was dropped to the first division. And both events show the fortunes of the soccer stocks on the market are directly related to the teams' experiences on the pitch. Britain's Sunday Times said football sector shares rushed up to high levels before dropping significantly "as the City took a more sober look at the game". It said a broadly spread portfolio of football club shares is showing a healthy profit of about 15%, not as good as the FTSE index but significantly better than some forecasts that the new sector was "in free fall". And if investors were selective, "there were spectacular gains to be made". Manchester United had risen 40% to 619.5p since August, the start of the 1996-97 season, and Chelsea rose 37% in the same time. Tottenham Hotspur was 21% up.
But the relegated Sunderland has lost almost 40% since it was listed in December, Sheffield United lost 37% since January and Southampton 37%. Newcastle, Aston Villa and Charlton Athletic, all listed in the last few months, are trading at a discount to their issue price. "The bumpy ride illustrates the difficulty of valuing football clubs as a business, and helps explain the City's changeable attitude to the game as an investment." Despite the short-term setback, Manchester United's listing could be considered a huge success. It listed in the middle of 1991 at just 62p and reached a high of £7.32 to its current level of around £6. The football industry had done much to improve itself over the years, but some investors and advertisers stood back and decided maybe there had been too much hype surrounding the game. "Many in the City are unconvinced that football will ever be a sound commercial prospect because even though they have far wider sources of revenue than in the past, clubs are essentially dependent on how well they play." After Sunderland was relegated and its shares fell, directors tried to assure shareholders the club was financially sound despite the expected £7-million revenue loss.
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