Have you always longed to own a part of your favourite football club? Well, some of the world’s biggest clubs list their shares on major stock exchanges, meaning you can invest in your team.
Share ownership can help fans feel closer to their club, and you may earn a bit of income from it, too. In this article, we’ll be discussing whether investing in football shares is worth considering and how you can start today.
How football clubs differ from normal businesses
While the football business involves investment and return, it is unique in comparison to normal commercial businesses. The fundamentals of the business model have never changed, despite the emergence of new ideas and technology within the corporate landscape.
The success of a football club relies on the growth and improvement of the quality of its squad and stadium. Clubs have to risk money by purchasing players who need to excel, but those teams who are unsuccessful may experience financial failure.
In football, clubs get what they pay for. With such an active transfer market with thousands of transactions made yearly worldwide, clubs must compete with one another to secure the best of the best.
Liverpool FC bought Virgil van Dijk for £75 million, and Manchester City paid £100 million for Jack Grealish, showing just how much money is in football. However, external factors beyond control may impact return on investment – player injuries, poor performance, etc.
Teams that face relegation often lose a large number of fans, which is why revenue is so closely related to league position. If clubs aren’t playing up to scratch, this can result in fewer tickets sold, reduced sponsorships, and less merchandising and broadcast income. So, good performance and loyal support are key contributors to the success of a football club business.
What to know before buying football shares
It’s worth noting that it’s not possible to buy shares in every football club. The club must be publicly traded – or listed on a stock exchange – before investors can buy in.
Holding shares in a football club allows you the same rights as any holding shares in a public company. Such shareholders receive several perks and can claim dividends if the company pays out.
As with any investment, there are risks. The value of a football club can increase and decrease, making its shares particularly volatile. Clubs must invest large amounts of cash to be able to compete at the highest level, which means running a club is incredibly expensive.
Plus, club share prices are often heavily influenced by the amount of wins and losses on the pitch, which can be difficult to predict and may cause fluctuations in the share price.
How do I do it?
A general rule of thumb is to build a cash emergency fund of at least three months of living expenses before you consider investing. Once you’ve decided which club you’d like to buy into, you’ll need to open a trading account and choose an investment strategy.
Once you’ve added the relevant funds to your account, you can begin browsing the investment catalogue to find the share you want to order. Once secured, it’s a good idea to monitor the performance of your investments, which can help you decide whether to buy, sell, or hold your shares.
