From Locker Room to Stock Market: What does going public mean for football clubs?

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Football clubs that have gone public have done so in the hopes of achieving financial security and boosting team performance, but the upsides have been limited, new research by global Fintech company IG, found.

Key Findings:

• Initial public offerings (IPOs) do not boost a club’s performance on the international stage such as the UEFA Champions League; only football clubs from lower local leagues seem to benefit from IPOs
• Funds raised through a share sale might not move the needle as much for top dog clubs, whose players already earn significant salaries
• Larger clubs might also be restricted in the long run by shareholder obligations in terms of spending and debt

There has been little match performance or financial improvement for football clubs that have gone public, IG research has shown. In fact, most football clubs seemingly fared worse in their respective divisions and leagues after an IPO than before, according to an International Journal of Sport Finance study.

It's not just domestic performance that takes a hit; an IPO also does not boost a club’s performance on the international stage, such as the UEFA Champions League for example.

One explanation is that the funds generated from IPOs are used more for clearing the balance sheets rather than adding players to the team or upgrading the club's infrastructure. The biggest clubs, with their high-salary players and substantial shareholder obligations, found that in terms of financial influence, an IPO doesn't significantly change the needle.

Only lower-tier clubs appear to enjoy a modest improvement in on-pitch performance post-IPO, according to the research.

Football Stocks vs. Broader Market

Football stocks are also consistently outperformed by the broader stock market. As a comparison, the 10-year return of Manchester United shares (listed on the New York Stock Exchange) as of May 2023 stands at 7.3%, versus the S&P 500 index’s 10-year return of 146%.

Despite the apparent disadvantages, some of the biggest names in football, such as Manchester United, Juventus, and Borussia Dortmund, have opted for share sales over the past quarter-century.

What's Driving Football Clubs to Go Public?

Axel Rudolph, Senior Market Analyst at IG, offers some insights. Football clubs, he suggests, may choose to go public to raise funds for new player acquisitions, stadium improvements, or debt reduction. However, he believes the primary motive often ends up being a defensive play – reducing debts rather than investing in growth.