The Debate: Should football clubs go plc?

Relegate plc status to the bench

Gary Wilson

As administrator to Leeds United plc, I am now left to explain to 24,000 shareholders, most of them fans, why they have lost their money and why the football club they have supported has escaped in injury time from the burden of the plc.

The love-match between football clubs and the stock market has soured. The returns have been awful.

The match is not just postponed, the pitch is so waterlogged that the surface is unlikely to become playable for a very long time.

There’s nothing in football plcs for shareholders, so what about the fans? The administrative cost of a listing alone is towards £1m a year – might as well have a good-quality Premiership player on the books.

Football clubs are community assets, not investment vehicles. The fans make their investment at the turnstiles on a Saturday, not in the stock market – only the initial placings mattered to clubs (and they never raised much).

Many fans investing in Leeds shares over the past year to help the club out have been sadly unaware that their purchase made no difference at all to the club.

Manchester United fans will be concerned to hear their CEO saying a few days ago that he was not unduly concerned about the team’s slump in form as ‘it does not have an impact on profits’. That’s ok then … if you are a shareholder and you are in it for the money. Fans might feel differently.

Supporters sing when their club is winning, but if you are a listed plc, you have got to sing whether you are winning, drawing or losing heavily: £100m in debt, losing £50m per year, standstill with creditors expired, administration looming … sing please, there are shareholders to inform (and rightly so).

Even bidding for a player can be an announcable event, so forget about negotiating tactics in getting the football club the best deal. AFC not PLC is the lesson.

  • Garry Wilson is a partner at Ernst & Young in Leeds and administrator to Leeds United plc.

Own goals ruin good match
By David Jones

For listed football clubs, there’s definitely been a loss of appetite from the stock market, the City and institutional shareholders. Personally I think it’s a temporary thing. There have been a number of high-profile clubs that have shown they can’t control their costs.

But that’s not necessarily the fault of the listing.

It does mean, however, that clubs run properly are finding their share prices depressed. There’s a danger you can be tarred with the brush of the sector in which you’re in.

Southampton FC originally listed on the stock exchange in 1997, following a reverse takeover by an existing listed company. Plc status gave the club access to funding to enable it to build its new stadium. We had been at our existing site for 103 years and the club needed to move to a larger, more modern home.

Another benefit of going public is that it allows supporters to invest in the club. Our shareholder base is around 3,000, at least 2,000 of whom are local supporters. Since listing we have raised £3m from shareholders and a £25m loan via a 25-year ticket securitisation issue – I’m sure the plc status helped in terms of negotiating that loan with the bondholders.

While a number of clubs are blatantly spending more than they can earn, as a plc we run our business properly and try to look after our shareholders.

We regularly pay dividends based on both the financial results and the club’s results.

We’ve since decided to sideways list to AIM, because we were finding the burden of being a fully listed company with a market cap of only £11m quite onerous. This way we can save ourselves some administrative and professional expenses. There are also tax advantages for shareholders.

The stock exchange listing is a perfectly sensible vehicle for football clubs, particularly those looking to raise finance for stadium development.

Clubs are starting to live within their means and run themselves in a financially prudent manner. As this trend continues, we will see more confidence returning to the sector together with more investment from the city.

  • David Jones is finance director of Southampton football club.

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