Football: Resignation rocks planned flotation

THE FINANCIAL IMPLICATIONS

Newcastle United are pressing ahead with plans for a stock market flotation before Easter, despite Kevin Keegan's shock resignation and the damaging impact his departure is bound to have on sentiment among potential investors.

"This doesn't affect the flotation in the slightest," insisted a spokesman for the club, who added that further details of the share listing will be unveiled next week. Stockbroking analysts expect the club to be valued at up to pounds 200m with the money from the flotation helping to pay for a larger stadium on a greenfield site north of the club's current St James's Park home.

Newcastle want to join quoted clubs like Manchester United, Tottenham Hotspur and Celtic, whose shares have soared in recent months on the back of prospects for lucrative pay-per-view television deals. But the decision by Keegan to quit only highlights the risks of investing in football clubs. In particular, it illustrates how dependent even top teams are on one or two inspirational figures - be they strikers or managers.

"This won't do the flotation much good," said Keith Harris of investment bank HSBC James Capel. "If Alex Ferguson were to resign as manager of Manchester United in similar circumstances its share price would take a whacking great hit."

A football analyst, William Davies of stockbrokers Albert E Sharp, said Keegan's departure could hardly have come at a worse time. "It puts the value of Newcastle in doubt. He was a large part of it and they will have to get a very good replacement."

Indeed, the timing of Keegan's sudden departure may even be linked to Stock Exchange rules governing information that must be made available to prospective shareholders.

"It would be completely unacceptable to float a club when such a high- profile individual as Kevin Keegan had handed in his resignation and the prospectus failed to mention it," said Neal Ostrer of Marathon Asset Management, a leading institutional investor in football clubs.