Sunderland shares go for knock-down price

[London Irish]

In December 1999, BSkyB paid £15.95 a share to buy a 5 per cent stake in Sunderland Football Club.

Now Sky has sold those shares for 31p.

That's a £6.5m investment that has shrivelled to about £120,000, even though Sunderland are once again a decent bet for the Premiership next season.

Sky has lost £90m in total in the last 5 years on its various investments in different football clubs.

As the FT commented today, there is virtually no other area of business that demonstrates a greater capacity to destroy shareholder value than professional football.

You really have to pity Dick Knight as he arrives in Queens Road every morning beating all those investors off with a big stick.

 

[dougdeep]

Why sell at that price? That's madness!

 

[El Presidente]

Just shows that all the dickheads who are shouting 'share issue, share issue' as a solution to the clubs problems know diddly squat about finance and the city

 

[Zeitgeist]

In December 1999, BSkyB paid £15.95 a share to buy a 5 per cent stake in Sunderland Football Club.

Now Sky has sold those shares for 31p.

You really can't imagine how that piece of news has ruined my evening. I think we should start an alive n kicking appeal for Rupert.......

 

[The Auditor]

Just shows that all the dickheads who are shouting 'share issue, share issue' as a solution to the clubs problems know diddly squat about finance and the city

Timing El Pres..timing
Share issue may be ok when Falmer get go ahead

As for the drop in share price of Sunderland...the market in general has dropped significantly since 1999 and they are no longer in the premiershite...any business suffering a downturn will see a fall in its share price

 

[The Clown of Pevensey Bay]

Here's an idea. Let's buy shares in Sunderland. When they get to the Prem the share price will ROCKET. The day after promotion day we can flog 'em and give the cash to A&K.

Or we can spend it on sweets.

Or something.

 

[perseus]

That values Sunderland at £2.4 million by my calculations. And they have a stadium plus a fan base that is higher than the Albion.

Originally it would have been £130 million.

I reckon that the shares are too cheap at the moment. I don' t expect that there will be any money dividends though.

Do Sunderland actually own their ground and the unused car parks?

 

[Beach Hut]

It is a question of timing and investment when fashionable.

If someone had for instance MUFC and Sky shares at the same time there fas some serious money to be made a while ago.

 

[Stumpy Tim]

That's a little misleading LI. My company (IT) used to be $180 a share, and now they're $2.5. It's not just Premiership football clubs that have dropped in share value

 

[London Irish]

That's a little misleading LI. My company (IT) used to be $180 a share, and now they're $2.5. It's not just Premiership football clubs that have dropped in share value

Yes, other companies have lost value in the stock market, and have done ever since stock markets were originally set up.

The point the FT was making was a little deeper than that. Even in those sectors such as new media and IT that have been devastated as bubbles have exploded in recent years, there are now many companies in those sectors whose share prices are recovering and are attracting investment and new shareholders.

This is not the case for football clubs, where many clubs have fled the stock market because investors now won't touch them with a barge pole.

 

[ditchy]

Re sunderland Shares ..i think you will find that the chairman has bought the stake i from bsky b in the attempt to take them private again.. he only bought a percentage to add to the significant amount he already had ..

 

[El Presidente]

Timing El Pres..timing
Share issue may be ok when Falmer get go ahead

As for the drop in share price of Sunderland...the market in general has dropped significantly since 1999 and they are no longer in the premiershite...any business suffering a downturn will see a fall in its share price

Four established clubs in our division have had share issues on the stock market, none of them have ever paid a dividend.

Millwall issed shares for 1p each, now worth 0.1p, Preston issued shares for 400p, now worth 115p, Sheffield United issued shares for 80p, now worth 8p, Watford issued shares for 125p, now worth 20p.

The share issues raised very little money (and would raise far less now as the stock market knows that football, with few exceptions, is not a profitable business) and the only winners are the professional advisors, who cream off plenty of cash from the top.

You are misguided if you think that this is a solution to the Albions financial problems.

It would make far more sense to have a supporters trust and representation on the board if you want greater accountability and transparency. But if that happened then no doubt you would accuse the supporters trust representative of being in the pocket of DK, as you never have a positive word to say about the club.

 

[The Auditor]

.

It would make far more sense to have a supporters trust and representation on the board if you want greater accountability and transparency. But if that happened then no doubt you would accuse the supporters trust representative of being in the pocket of DK, as you never have a positive word to say about the club.

Fully behind the Supporters Trust idea and have contacted Paul Whelch...El Pres I suggest you only look for the negative posts (700 negative posts I think not)....I've put plenty of positive comments on here, I'm very supportive of the manager the players and the club but I'm not a DK and MP lap dog like some....if the questions were asked in the 1990s we wouldnt have the problems we have today... I want falmer and the Club to be successful so stop the "as you never have a positive word to say about the club" stuff, its untrue and your slant on things. After all this is a message board for differing opinions and I dont always agree with the party line



A share issue as part of the funding package could work, it depends on the structure of what you are trying to achieve...Millwall I believe raised a fair bit of cash with theirs and give the fans a stake in the club if they want..but any footie fan would know its not a investment to make money on but one from the heart

 

[El Presidente]

I think there are more cash efficent ways of raising money for the club than paying a bunch of cockney barrow boys at least £300,000 for their 'advice' on a listing on the AIM. Looking at the fan base of the club, we are roughly similar to Millwall, but their share issue was underwritten by the chairman and the shares are now worthless.

The next article is from the football research centre


Millwall Holdings PLC
After the club went into administration in 1997, a share issue and listing generated the necessary cash to satisfy the creditors and avoid liquidation. Further issues have followed to raise working capital, the latest of which came at the end of 2002-03, a season of lower attendances and in the aftermath of the ITV-Digital collapse. The offer was partly underwritten by the chairman and involved a capital reconstruction. Prior to the summer share offer the (beneficial) holdings of the board were a little over 2 per cent of the share capital, although the effect of the share issue, including an exchange of debt for equity, means this figure is set to rise to 18 per cent or more.

Preston North End PLC
‘Proud Preston’, one of the founder members of the Football Lea gue and first ever ‘double-winners’, were also one of the first to be admitted to AIM when it was launched in 1995. The club, at the time controlled by the Baxi Partnership, were committed to ‘restoring the fortunes of PNE FC and re-establishing it as a major force in English Football’. 12 As a factor generating momentum behind the club’s fortunes the first share issue broadly met much of its wider purpose.13 Preston were promoted twice in a five year period, Deepdale was substantially re-built and the National Football Museum was opened in 2000. The principal shareholder in the company is now the Friends of Preston North End, a holding company for the interests of a small group of supporters, including the chairman. Around 25 per cent of the share capital is held by Chase Nominees Limited, a subsidiary of J.P. Morgan Chase Bank.

Sheffield United PLC
The PLC company moved back to AIM in the summer of 2003, following an Open Offer which set out to raise around £4.8m to fund the building of a youth academy, and to reduce the company’s gearing by replacing some of its borrowed capital with equity capital. Applications for around 80 per cent of the 49 million-plus shares were received. The directors of the company now hold in excess of 40 per cent of the enlarged share capital of the company, although not all of it is beneficially held.

Watford Leisure PLC
Listing in 2001 was prompted by a desire to ‘enhance the profile and prospects of the Group … allowing supporters to participate in shaping the f uture of the club’. 14 Positive, if qualified, comment was made in relation to the payments of dividends, ‘which will reflect the Group’s operating results, financial condition and other factors’. 15 The funds raised, around £5m, were used to secure the freehold of the stadium but an expensive gamble on returning to the Premiership failed, and a financial crisis followed in the summer-autumn of 2002. The freehold to the ground was sold six months after its purchase and a second share issue was needed to generate working capital. The net effect of the first issue was to dilute the board-holding from 94 per cent to around 82 per cent16; prior to the first share issue Penguin Overseas Associates Limited held just under 50 per cent of the company stock, afterwards it was just under 40 per cent. Following the second share issue, the board and five other holdings of significant size have been joined by a sixth: Watford Supporters’ Trust.

Comment
The experiences of these clubs following flotation on the stock market raises a number of serious questions for those running the business:

i. does flotation lead to more supporter-shareholders or external investor- shareholders?
ii. does listing the club disperse shareholdings so that no one individual is in control?
iii. Is it the most effective way of raising revenue?

None of these four listed clubs have a single majority shareholder. Other clubs which these listed four could be compared to – for example Derby County, Norwich City and Nottingham Forest - do have individual (joint in the case of Norwich) majority shareholdings; although there are also others without majority shareholdings - Ipswich Town, Leicester City and Sheffield Wednesday.

Beyond the immediate detail, the question of whether the stock market will be a significant source of further capital for those that are listed in the future remains an open question. Those who emphasize the fundamentals of the costly business of winning football matches and the competitive pressures between clubs that bid away anything like a profit margin would tend to be sceptical.

 

[London Irish]

Re sunderland Shares ..i think you will find that the chairman has bought the stake i from bsky b in the attempt to take them private again.. he only bought a percentage to add to the significant amount he already had ..

That's right - although Sunderland actually delisted five months ago. Sign of the times.

This article sums it up - football shares are for die-hard fans only, not for anyone who wants to make any money.

http://newswww.bbc.net.uk/1/hi/business/3912781.stm

 

[Wilts]

I shall not be purchasing any shares in multi-million £££ football clubs. With a shoddy regulatory board such as the FA (and UEFA, come to think of it!) having a large say on the running of each business, I shall be diversifying my portfolio elsewhere.

Football clubs listed in the stock market is almost financial and "heritage football" suicide. Why care about fans when the shareholder is the most important stakeholder of all that has the greatest say in the business? Why should I (as a fan) line the pockets of the rich and mighty and pay out dividends to them? Doesn't this go further against the traditional "working-class" values of football which are nearly all but gone anyway?

Don't like it. I propose regulation to ensure all league clubs (all 92) are given the same financial climate to work with in the division they are in. Such would prevent the likes of Abramovich taking over the world with his finances, and ruining the national game.

 

[El Presidente]

I shall not be purchasing any shares in multi-million £££ football clubs. With a shoddy regulatory board such as the FA (and UEFA, come to think of it!) having a large say on the running of each business, I shall be diversifying my portfolio elsewhere.

Football clubs listed in the stock market is almost financial and "heritage football" suicide. Why care about fans when the shareholder is the most important stakeholder of all that has the greatest say in the business? Why should I (as a fan) line the pockets of the rich and mighty and pay out dividends to them? Doesn't this go further against the traditional "working-class" values of football which are nearly all but gone anyway?

Don't like it. I propose regulation to ensure all league clubs (all 92) are given the same financial climate to work with in the division they are in. Such would prevent the likes of Abramovich taking over the world with his finances, and ruining the national game.

That will also mean that Majedski and his woeful wig will go too of course Wilts

 

[Lord Bracknell]

So what lessons do we learn from this?

Nobody in their right mind invests in football club shares to obtain an income from dividends.

Anybody who buys shares in a football club in the hope of eventually making money by selling them on at a profit is going to be disappointed.

It might be kind of nice to have a stake in a football club, but you can wave goodbye to any money you put in.

Money given to the Alive and Kicking fund is a gift (but at least you know its a gift).

Money "invested" in a share issue is also a gift (but it's dressed up as something that it isn't).

 

[Wilts]

That will also mean that Majedski and his woeful wig will go too of course Wilts

Of course - thankfully being run as a business we should be ok if John Mad left this afternoon. We would hardly be a force pushing the top 2 places in this division but should hold out fine in the midtable somewhere...

 

[ditchy]

So what lessons do we learn from this?

Nobody in their right mind invests in football club shares to obtain an income from dividends.

Anybody who buys shares in a football club in the hope of eventually making money by selling them on at a profit is going to be disappointed.

It might be kind of nice to have a stake in a football club, but you can wave goodbye to any money you put in.

Money given to the Alive and Kicking fund is a gift (but at least you know its a gift).

Money "invested" in a share issue is also a gift (but it's dressed up as something that it isn't).

great analogy lord B