The last few weeks have given English football fans – and probably non-football fans alike – a much-needed boost of energy and excitement after 18 months of on-and-off staying at home.
After Wednesday’s Euro 2020 semi-final against Denmark, which saw England win 2-1 and make history by reaching its first major men’s final since 1966, due to take place this Sunday (11thJuly), fans are daring to dream that football might actually ‘come home’.
Add to that, the fact pubs have finally reopened for good and Wembley stadium is now hosting games at almost full capacity, the feeling of togetherness is sweeping through the nation and viewers are connecting with each other, and their beloved football team, more than ever.
So how can you get even closer to the action, and maybe even make some money from it? Make like Nick Train, manager of Finsbury Growth and Income (FGT) and buy a football team, of course.
Many clubs — including Manchester City, Liverpool and Chelsea — are owned by private investors or consortiums but there are some exceptions.
Train bought Manchester United (MANU) in 2017, five years after it joined the New York Stock Exchange in 2012 valued at $14 per share. Just one year later, the stock soared to more than $26 per share although it has slipped to $14.91, up just 6.5% today. But the manager remains confident that there is no loss of underlying fascination for the game – as the atmosphere of late can attest to.
In his November 2020 portfolio update, Train said that some of FGT’s holdings, including the Premier League club, would be “more exposed to an economic downturn and have some, but not excessive, debt”.
“Manchester United told us that they had tracked 1.1 billion engagements with their franchise on social media platforms, up 24% year-on-year,” he said at the time.
“Perhaps contemplate the comparison between equity in Manchester United and gold. Both are rare and beautiful in the eyes of some. Both have eternal characteristics. New gold cannot be created and no one can recreate Manchester United. Both have been fine preservers of real value over time (Manchester United more than that).
“Yet neither are susceptible to standard financial analysis and both of them impose holding costs for their owners – as a result of the absence of reliable free cash flows for Manchester United and the storage/insurance costs for gold. Trophy assets are hard to quantify, but we all know they exist and hold tremendous allure and value.”
MANU, now valued at $1.8bn, has declared a dividend of 18¢ (14p) per share over the past four financial years, and paid out £23.3m to shareholders in 2019. The shares have averaged a dividend yield of 0.9% over the past five years. As at 31 March, the club represents 1.3% of FGT.
The trust also has a 0.2% position in Celtic FC, and somewhat ironically considering England are due their biggest face-off in decades against Italy on Sunday, Train also holds Juventus (JUVE) in his open-ended UK Equity Income fund, with a holding of 1.18%.
So do football teams make good investments? It’s worth noting that a team’s share price is not necessarily driven by what happens on the pitch and that TV deals, broadcasting and commercial deals usually have more influence on a club’s share price.
Shares in MANU surged by 10% when the club announced plans to join a proposed European Super League earlier this year. Yet fans’ outrage led to a quick backtrack and hit its share price in response.
Meanwhile, until this year, Juventus won Italy’s Serie A every season since 2011-12, yet its share price has languished for most of the past decade, before the signing of Cristiano Ronaldo in 2018. Since it listed in 2001, JUVE is down almost 40%.
Perhaps an easier way for investors to get exposure to their favourite football team(s) would be through other sectors such as technology and media – think new TV deals and the likes of Amazon which is up 390% over the past five years and is a favourite among growth and technology trusts such as Scottish Mortgage, JPMorgan Global Growth & Income and Polar Capital Technology.
Retail with an onus on football is also an option, with JD sports, a regular portfolio darling, whose shares jumped 4.7% just two weeks ago after Nike reported upbeat forecasts and better-than-expected quarterly revenue. Holders include JPMorgan Mid Cap (JD Sports Fashion) and Pacific Horizon (JD.com).
Meanwhile, gambling names have also delivered strong returns with Paddy Power owner Flutter Entertainment having risen by 60% over five years and 888 Holdings by 80%.
But just like gambling, nobody knows for sure how investing can turn out. And just like investing, nobody knows whether football’s coming home. We will have to wait and see. In the mean time, try your hand at our Euro 2020 quiz below: