The NYSE, NASDAQ, S&P 500, and…FIFA? What does the Fédération Internationale de Football Association (FIFA) have in common with the New York Stock Exchange (NYSE), the National Association of Securities Dealers Automated Quotations (NASDAQ), and the Standard & Poor’s 500 (S&P 500)? For the most part, essentially nothing. The only time the world of securities markets meets the action on the field of a soccer stadium is when a team decides to be publicly traded on the stock exchange. Although it may not occur to most fans that the teams they live and die with can be traded like any other commodity, at the end of the day soccer is a business like any other.
To understand the implications of this kind of ownership, an understanding of what it means to be a publically traded organization is in order. When a company goes ‘public’ they issue shares of the company through an underwriter. The shares represent pieces of ownership in the company (e.g. 1 share of a company that issues 100 shares is worth 1% of the entire organization). This process is called an initial public offering, or IPO for short. Once the shares have been issued, they can be bought and sold on a secondary market between any individuals or organizations that want to own them. The share price fluctuates in value constantly, depending on the expected outlook of the firm and the expected return on investment.
When a company goes public, it has a profound effect on its leadership and direction. Instead of ownership and accountability being assigned to the same group of people, ownership is spread out amongst the masses and accountability is isolated in the hands of the board of directors. The board has to, both ethically speaking and in the eyes of the law, act in the best interest of the shareholders at all times. Having a sports business that is publically traded presents its own unique risks and challenges. Failure on the field means the stock price can take a hit, which can wipe out millions of dollars in value overnight. On the other hand, success can drive the price up and make owning a slice of the team a valuable asset. Most clubs in the world have traditional ownership schemes, but some of them have made an IPO and are now listed on stock exchanges around the world. These are a few of the major teams to make that leap.
5. A.S. Roma
We begin in Italy with AS Roma, who have their shares publicly traded on the Borsa Italiana (the Italian stock exchange). They’re organized as a joint-stock company, which means that although they have shares that are publicly traded, the majority of the shares are owned by one group – in this case a holding company named NEEP Roma Holdings S.p.A. which owns about 78% of all outstanding shares in AS Roma. NEEP itself is a joint venture between Unicredit, an Italian financial services company, and AS Roma SPV. Although the majority stake of the club is controlled through this maze of holding companies, the other 22% can be purchased by anyone with an account to trade on the Borsa Italiana. As of writing, each share in the club is worth €1.18, and is up an astounding 140.67% in the last year, partially thanks to the phenomenal season Roma has been having in Serie A.
Like Roma, Italian club Juventus is listed on the Borsa Italiana, and is organized as a joint-stock company. The club’s primary shareholders are the Agnelli family, who own 60% of the club through their holding company Exor S.p.A. The Agnelli’s are a wealthy Italian family descended form Giovanni Agnelli, who founded the well-known Italian car brand FIAT over 100 years ago, and his great-grandson Andrea Angelli is the current president of Juventus. As of 2010, 7.5% of the company is owned by Lybian Arab Foreign Investments, the sovereign wealth fund of the North African nation of Libya. That leaves 32.5% of the shares to be traded publicly. Right now the price is at €0.2282 per share, which might seem surprising considering Juventus is the bigger, more successful club compared to Roma, but it’s important to keep in mind that share price is also affected by scarcity. Juventus has issued a total of 1,016,729 shares compared to Roma’s 136,198, so although Juventus is overall the more valuable club, Roma’s individual shares are more valuable because of their scarcity. Juventus’ performance both and off the field has increased their share price 5.6% over the past year.
3. Borussia Dortmund
German powerhouse Borussia Dortmund first went public 14 years ago, in October 2000. They were the first sporting club to list their shares on the Frankfurt Stock Exchange – the biggest stock exchange in Germany and the 10th biggest in the world by market capitalization. Activities of the club are run by the parent company, Borussia Dortmund GmbH & Co. KgaA, who are in turn owned by another holding company, Borussia Dortmund e.V. which controls 7.24% of the total shares. Bernd Geske, CEO of Borussia Dortmund GmbH & Co. KgaA, personally owns 11.71% of the club. Unlike the previously mentioned clubs whose operators maintain majority shareholder status, the vast majority of Borussia Dortmund’s shares are spread out among the public. Institutions and individuals with no association to the club – besides maybe being fans – own 81.05% of all shares. Because of this, Dortmund is a truly publicly owned and traded sports club when compared to other entities like Juventus and Roma.
Società Sportiva Lazio – or just Lazio for short – are an Italian soccer club founded in 1900 and based in Rome. They were the first Italian club to become a joint stock company when they did so in 1998, beating both Juventus and Roma to the punch. Lazio is one of 3 clubs in the Italian Serie A to have publicly traded shares that are listed on the Borsa Italiana. The majority of Lazio’s shares, 66.692%, are controlled by Claudio Lotito, an Italian entrepreneur who became the majority shareholder in 2004. The other 33.308% of the shares are distributed amongst the public. Lazio’s shares are currently trading at €0.5035, with a total market capitalization of €34.11 million. Over the past year their share price is up 9.68%, which as a strong and respectable rate of return.
1. Manchester United
Manchester United have one of the most interesting relationships with the stock market in all of sports. At one point, taking soccer clubs public was considered to be the next big step in the evolution of the game in England. In the 90s and late 2000s many clubs initialized an IPO, believing that it was the most efficient way to raise capital and expend their team and facilities. Several high profile clubs experienced disappointment and became disillusioned with the experiment. Tottenham Hotspur, one of the biggest clubs in England, were publicly traded from 2001 to 2011, but decided to exercise their preferred share options to buy back the majority of the shares and return to a private ownership structure.
Interestingly, Manchester United have moved in the opposite direction. The club first went public in 1990, and had numerous reported takeover bids throughout the 1990s that never materialized. Starting in 2003, American businessmen Malcolm Glazer slowly began increasing his stake in the club. From September 2003 to May 2005, Glazer’s stock in the company went from 3.17% to 98%, until he acquired the last 2% through a compulsory buyout, as he was now the sole owner of the club. Once he hit the 75% threshold he also gained the right to delist the club from the stock exchange, which he did. The campaign to acquire Manchester United cost Glazer around $1.5 billion USD at the time, most of which was borrowed money. The Manchester United faithful reacted in disgust to their beloved club being acquired by an American with no previous association to the ‘Red Devils’, and many have actively campaigned to find other wealthy individuals to buy the club back from Glazer.
In 2012, Glazer decided to take Manchester United back on the stock exchange to raise capital. The club’s second IPO sold 16.7 million shares, but fell below expectations and only sold for approximately $14 each as opposed to the expected $16-$20 range. Currently the price sits at $14.56, with a total market capitalization of $2.38 billion.