With the decision of Millwall to quit the stock market after 22 years as a public company there are now just four publicly listed clubs left. Tottenham and Celtic are both on the second tier Alternative Investment Market (AIM) and Arsenal and Rangers are on the small cap PLUS market. Spurs was one of the first clubs to list.
With the decision of Millwall to quit the stock market after 22 years as a public company there are now just four publicly listed clubs left. Tottenham and Celtic are both on the second tier Alternative Investment Market (AIM) and Arsenal and Rangers are on the small cap PLUS market. Spurs was one of the first clubs to list.
At one time a stock market listing was the place to be. It was seen as a way of raising money, of course, but it was seen as adding prestige to a club. There were those in the financial services industry who made money out of a listing, of course. At one time there was even a unit trust dealing in football shares, although it didn’t last long.
Analysts say that football clubs have proved to be volatile, unappealing investments. Clubs have a tendency to live beyond their means in the pursuit of success with scant regard for the bottom line. Investment these days more typically comes from a rich indivdual interested in a trophy asset. In some cases it is not even clear who really owns a club.
More than 20 clubs floated in total. But it soon became apparent that (in economics jargon) the transaction costs were high, or to put it more simply, it was all more trouble than it was worth. Maintaining a listing, particularly with large numbers of shareholders with small holdings, involves time, trouble and expense.
Millwall reckons that it can save £100,000 a year by delisting from AIM. This is a non-trivial sum for a club that made a loss of £605,000 in the year to June. At one time Millwall had 37 billion shares in issue, more than BP, as thousands of fans had tiny holdings. A 100,000-to-one consolidation last year largely dealt with this issue.
The club did try to raise £7.8m through a rights issue last year to pay off its debts. However apart from directors who stumped up several millions, just 612 investors provided £139,130. Millwall’s finances have improved since their promotion to the Championship. The club’s turnover leapt 58 per cent to £11.8m, largely through television money. After debt interest, their per-tax loss fell from £3m to £1.96m.
The broader question here is whether football clubs need some form of mutual ownership structure. Indeed, a number of new legal frameworks are available, although some are more suitable for football clubs than others.