Footballers' agent hit by collapse in transfers

Shares in Proactive Sports Group crashed by more than one-third yesterday after the football players' agent representing stars such as Everton's Wayne Rooney warned it would "significantly" miss its full-year targets.

The stark profits warning came amid a collapse in the number of transfers being made by football clubs seeking to pare their costs after the bottom fell out of the market for lucrative TV rights deals. Proactive's shares fell 35 per cent to 3.25p, valuing the company at about £3.4m. A year ago, the shares traded at 27.5p.

Neil Rodford, the chief operating officer, blamed Fifa's decision to limit player transfers to twice-yearly slots for the fall in the overall number. "There is no logic whatsoever [to the change]. It seems to go against every other European law where there is freedom of movement. I don't understand the benefit," he said.

Proactive Sports, which also handles Arsenal's Francis Jeffers and Blackburn Rovers' Andrew Cole, said that given "uncertainties" in the football sector and the fall in transfer activity, it expected the trading performance of its football division to "materially" lag its previous expectations. Pre-tax profit for the year to end August would be "significantly below" current market expectations, it said.

Peter Ashworth, an analyst at Charles Stanley, cut his full-year forecasts from £3.1m to £1.7m. "[The warning] is not a surprise. All the other companies in the sector have highlighted the dearth of transfer activity," he said.

In the January window, 478 player transfers were completed worldwide, of which 57 were in the Premier League, research from Soccer Investor 2003 has found. This compared with 127 transfers made from November 2001 to January 2002, according to Deloitte & Touche. Proactive handled 27 of this year's transfers, or 5.6 per cent of the total activity.

Mr Rodford said the fall in activity showed football clubs recognised the need to balance their income with their cost base. But he added: "The correction is going too far." Neither Manchester United nor Arsenal, two of the best-known names in football and among the sector's most profitable clubs, chose to make any transfers, he said.

The Norwegian football federation is among footballing bodies leading a campaign to abandon the new transfer system, Mr Rodford said, but acknowledged that "it would be a considerable period of time" before the new scheme was changed.

Unlike rivals such as First Artist, which issued a profit warning last week, Proactive has other streams of revenue from its sports marketing and events arms. Both divisions traded ahead of expectations in the first half, the company said.

Mr Ashworth said that with more than half its market capitalisation in net cash, Proactive was in a better position than its peers. "I don't see it as all bad news. They are good at what they do; they could be one of the agents of change in this sector," he added.