How to trade football club shares
The high stakes involved in managing a football team can affect more than just the players – it can also have an impact on the club’s share price. Find out how you can trade football club shares with IG Bank.
Football club shares: what you need to know
Before you start trading football club shares, it’s important to know what drives share prices. While supply and demand will always be the primary drivers of price, player transfers, team financials, sponsorships and game results all have an impact on the club’s share price.
Just like any other stock, you need to study the football club that you’re interested in. You can do this by means of fundamental analysis and technical analysis, to get a rounded view of the share price potential. You also need to follow your trading plan and the risk-management strategy you have in place. Note that not all football clubs are listed on an exchange, so you can only trade publicly listed football club shares.
What are the best football club shares to watch?
- Manchester United ($3.8 billion market cap)
- Arsenal ($2.2 billion market cap)
- Celtic ($1.9 billion market cap)
- Juventus ($1.5 billion market cap)
- Borussia Dortmund ($896 million market cap)
- AS Roma ($622 million market cap)
- Rangers ($356 million market cap)1
Please note: These shares are not listed from best to worst; they are simply some of the more popular choices among those who buy and trade football club shares. The list was last updated on 21 October 2019. For more up-to-date figures, use the IG market screener.
Manchester United ($3.8 billion market cap)
Manchester United shares listed on the New York Stock Exchange (NYSE) in 2012, under the ticker MANU. The positive outcome of matches, combined with Manchester United’s commercial, brand and broadcasting deals, have mostly had a positive effect on its share price.
The club reported £627 million in revenue in 2019, thanks to an increase in broadcasting returns. The 18.1% increase in revenue from television rights can be attributed to its new UEFA Champions League agreement. Manchester United has paid a dividend to shareholders since 2015, which is another reason why investors are so interested in the stock.
Arsenal ($2.2 billion market cap)
Arsenal shares are slightly different to other listed football club shares. Arsenal Football Club is not listed on a public exchange, but its parent company Arsenal Holdings is traded on the specialist market NEX Exchange. Arsenal Holdings owns the Arsenal Football Club and 11 other subsidiary companies that deal with stadium management, retail operations and property development.
The club reported £388 million in revenue in 2018 (down from £422 million in 2017), attributed to its involvement in the less lucrative Europa League. Profit, however, increased from £35.3 million (2017) to £56.5 million (2018). Arsenal does not pay a dividend to shareholders.
Celtic ($1.9 billion market cap)
Celtic has three different classes of shares listed on the AIM market of the London Stock Exchange (LSE), under the ticker CCP. The club started trading in 1994 after it was bought by a Canadian entrepreneur, following bankruptcy rumours. In 2018, it reported revenue of more than $101 million, thanks to its wide range of activities and historic second successive treble-winning season.
Why watch Celtic shares? Since 2018, Celtic’s earnings per share (EPS) has increased by more than 78% and the share price has more than doubled since 2017. However, Celtic does not pay a dividend to its shareholders.
Juventus ($1.5 billion market cap)
Juventus listed on the Milan Stock Exchange (MTA), under the ticker JUVE, in 2001. It is one of three Italian teams listed on the stock market. The share price has delighted investors over the past five years, growing by more than 570%. Many say this happened because the club signed Cristiano Ronaldo, and it has been dubbed ‘the Ronaldo effect’.
On the downside, Juventus football club has a lot of debt. The figure increased from €280 million in 2017 to €384 million in 2018, which some say is due to the high wages it pays.
Borussia Dortmund ($896 million market cap)
Borussia Dortmund listed its shares on the Frankfurt Stock Exchange in 2000 using the ticker BVB. It is the only German football club that is publicly traded. When it listed, it floated 15 million shares at a price of €11 a share. Unfortunately, the shares didn’t perform well for the first ten years, but it became a popular share to watch among short-sellers during this time.
Borussia Dortmund makes money from various channels, including sports equipment manufacturing and its investment in a travel agency. In its 2018/2019 financial year, it reported more than €488 million in revenue. The club announced in September 2019 that it intends to pay a dividend of €0.06 to its shareholders.
AS Roma ($622 million market cap)
AS Roma shares are listed on the Italian Stock Exchange Borsa Italiana, under the ticker ASR. In its first year on the stock market, Roma shares performed well but lost near 92% of their value over the next 16 years of trading. Many attributed the poor stock market performance to the club’s ownership.
Its 2018 financial report stated a record revenue of €250 million, mostly thanks to performance in the Serie A league. Another reason for the increase in revenue was the higher television rights income, which accounted for more than 50% of the club’s income. As Roma’s shares continue their slow climb, investors will be keeping an eye on the stock to see if it will ever reach the high it started on.
Rangers ($352 million market cap)
Rangers shares (RFC) are traded on the London Stock Exchange. The club was admitted to the AIM market in 2012, a few months after it entered liquidation due to a £9 million tax non-payment issue. After its first year of trading, it reported operating losses of £14.4 million and, though the figure decreased over the years, it reported debts of £13 million in 2018.
Nevertheless, it had strong growth in other areas. Many traders and investors watch Rangers shares because of its positive revenue results. Revenue for the six months to December 2018 increased by 82% compared to the previous period.
What to bear in mind before trading football club shares
With IG Bank, you can trade football club shares via CFDs, a derivative product. Trading is an excellent way to get exposure to shares, but they are completely different ways of aiming to profit from financial markets.
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Buying shares means that you will own the physical assets until you decide to sell them. If they are worth more when you sell them than when you bought them, you will make a profit. But, if the price has declined, you will have to carry the loss. Another thing to keep in mind when investing in football club shares is that you need the full value of the investment upfront.
Trading, on the other hand, enables you to predict share price movements without owning the underlying asset – and you can go long or short. This means that you can speculate on rising as well as falling prices. You also don’t need all the capital upfront, as you’ll trade using leverage. All you need to open a position is a small deposit called margin. Keep in mind that leverage could magnify potential profits, but it will do the same for any losses.
Read more about the benefits of CFD trading
Trading football shares summed up
To trade football club shares, follow these easy steps:
- Open and fund an IG Bank account or practise your trades using a demo account
- Log into the platform and search the football club shares that you want to trade
- Open the deal ticket and speculate on the share prices
Sources:
1 Forbes, 2019.
The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.
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