Football: Resignation rocks flotation

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. Analysts expect Newcastle to be valued at up to pounds 200m, with the money from the flotation helping to pay for a new stadium.

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.

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

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.

Neal Ostrer, of Marathon Asset Management, a leading institutional investor in football clubs, said: "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."