Football stocks: You have to be football crazy to invest in your team

Want to make money from the beautiful game? You'll need more than a passing interest, says James Daley

A few weeks ago, the Chelsea and England midfielder Frank Lampard signed a deal that will make him the highest paid football player in British history. The £150,000 salary that he will command every week is more than the average UK citizen will earn in five years – an indication of how much money now swills around in the world of football.

According to accountants Deloitte, the total wage bill for Premiership clubs hit almost £1bn last year, while total revenues raised from TV rights, ticket sales and club merchandise were only around £1.5bn. As a result, all but the biggest clubs now struggle to break even each year, and many pin their hopes for financial success on making progress in a European tournament, or winning a domestic trophy.

With the road to profit so challenging, it's perhaps no surprise that there are now only a handful of clubs left that are quoted on the stock exchange. Back in the 1990s, as broadcasting deals helped clubs to boost their revenues year on year, clubs looked like a much more attractive investment – and several capitalised on this by listing on the market.

But as wage inflation accelerated and the growth in broadcasting revenues began to slow, the shine started to come off the sector. What followed was a handful of takeovers, as football clubs became the must-have toy for billionaires. Other clubs which were not lucky enough to be rescued by a rich benefactor, quietly delisted. But a few remained.

Today, there are 10 clubs left in which you can buy shares – Arsenal, Birmingham City, Celtic, Millwall, Preston North End, Rangers, Sheffield United, Southampton, Tottenham Hotspur and Watford – each of which have seen mixed fortunes over the past few years.

Of these, the only clubs that look to have any long-term stability to their profits are Arsenal and Tottenham – both of which are tightly held, and hard stocks for private investors to get their hands on.

Around 45 per cent of Arsenal's shares are held by members of the board, who have an agreement not to sell their stakes to any outsiders before April next year. And even then, the directors have first call on each other's stakes until October 2012. Furthermore, one Arsenal share will set you back £845, putting them out of reach of most small-time investors.

Tottenham is 68 per cent owned by ENIC, an investment company controlled by the English billionaire Joe Lewis. Like Arsenal, its share price has made great gains, rising almost 500 per cent over the past five years, as the business has been streamlined and the team performed better in the Premier League. Part of the success of these clubs' share prices has also been down to takeover speculation. But the likelihood of such returns being repeated in the near future are small.

For now, it is hard for top-level clubs to get their wage bills under control. If private club owners such as Chelsea's Roman Abramovich agree to pay their players £150,000 a week, this quickly becomes a benchmark, which other clubs have to compete with if they want to attract the best players and contend for a place in the lucrative European tournaments.

David Glenn, a partner at Pricewaterhouse Coopers, says wage inflation has become a particular problem for the Scottish clubs, which now receive next to nothing for their broadcasting rights, and so rely on making progress in Europe to boost their revenues.

"The lowest clubs in the English Premier League are getting around £15m a year in TV revenue," says Glenn, "whereas Rangers and Celtic are only getting about £1.5m each. Championship clubs now get more money for broadcasting rights than the Scottish Premier League."

Earlier this month, Rangers crashed out of the Champions League in the qualifying stages. Glenn says that financially this is a heavy blow for the club. "They had a fantastic run last year, going all the way to the Uefa cup final, which would have made them an extra £20m," he says.

Sadly, the economics of football are such that the chances of making money as an investor in the long-run are not strong. The best hope for investors is that their club gets bought out by the next Abramovich. But it's a gamble, and with the smaller clubs, there's as much chance that you'll lose everything.

If you want to invest in your club as a sign of solidarity, www.framedshare.co.uk will frame a share certificate for you to pin up on a wall at home. If you want to get involved any more seriously than that, make sure you're playing with money you can afford to lose.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Arts and Entertainment
Attenborough with the primates
tvWhy BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
News
people
News
Campbell: ‘Sometimes you have to be economical with the truth’
newsFormer spin doctor says MPs should study tactics of leading sports figures like José Mourinho
Sport
football
Life and Style
Alexander McQueen's AW 2009/10 collection during Paris Fashion Week
fashionMeet the collaborators who helped create the late designer’s notorious spectacles
News
i100
News
Perry says: 'Psychiatrists give help because they need help. You would not be working in mental health if you didn't have a curiosity about how the mind works.'
people
Life and Style
Stepping back in time: The Robshaws endured the privations of the 1950s
food + drinkNew BBC series savours half a century of food in Britain
News
Google celebrates St David's Day 2015
newsWales' patron saint is believed to have lived in the 6th century
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: HR Benefits Manager

    £40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

    Recruitment Genius: Office Manager / Financial Services

    £30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

    Jemma Gent: Year End Accountant

    £250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

    Jemma Gent: Management Accountant

    £230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

    Day In a Page

    War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

    The battle for Mosul will unleash 'a million refugees'

    Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
    Yvette Cooper: We can't lose the election. There's too much on the line

    Yvette Cooper: We can't lose the election. There's too much on the line

    The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
    A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

    It's not easy being Green

    After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
    Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

    Gorillas nearly missed

    BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
    Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

    The Downton Abbey effect

    Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
    China's wild panda numbers have increased by 17% since 2003, new census reveals

    China's wild panda numbers on the up

    New census reveals 17% since 2003
    Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

    Our woman in Beijing builds a new relationship

    Britain's first female ambassador to China intends to forge strong links with growing economic power
    Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

    Courage is rare. True humility is even rarer

    Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
    Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

    Alexander McQueen's astonishing vision

    Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
    New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

    Dinner through the decades

    A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
    Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

    Philippa Perry interview

    The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
    Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

    Bill Granger's Indonesian stir-fry recipes

    Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
    Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

    Harry Kane interview

    The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
    The Last Word: For the good of the game: why on earth don’t we leave Fifa?

    Michael Calvin's Last Word

    For the good of the game: why on earth don’t we leave Fifa?
    HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

    Scientists hail daily pill that protects against HIV infection

    Breakthrough in battle against global scourge – but will the NHS pay for it?