Millions of people love football. Or, what North Americans call football. But in April football headlines in Europe weren't about the standings, match results, player transfers, memorable goals or the upcoming Euro2020 (which was postponed for a year due to the pandemic).
Instead, fans woke up one morning to a proposed European Super League that would be partially funded by US banking giant JPMorgan Chase (NYSE :). The bank is said to provide a cash injection of $ 6 billion (£ 4.3 billion). On April 19, it was announced that six English clubs would join six others from Europe to form the new league.
JPMorgan Chase Weekly Chart.
JPMorgan had hoped that the designated men's football clubs, which were among the largest teams, would join the ESL. They are said to have come from the & # 39; Big-Five & # 39; competitions in Europe, namely England, Spain, Italy, Germany and France. However, German and French teams deteriorated early on. Fans and politicians alike made it loud and clear that they would not want (or possibly legally allow) English teams to participate in the new competition.
Within days the project died – at least for now – as headlines made the move a & # 39; own purpose & # 39; called. The Guardian reported that a JPMorgan spokesperson said the banks would learn from their mistake by misjudging the response from various stakeholders.
Given the publicity European football has received in recent weeks, it is time to discuss how interested individuals could invest in English and Scottish clubs.
Football suffered from the pandemic
For the 2020/21 season, the English Premier League (EPL) turnover is expected to be around 6.2 billion euros (or £ 5.4 billion and US $ 7.5 billion). In other words, football is big business.
Operations include match logistics, ticket sales, stadium operations, apparel merchandising, and multimedia events. Clubs typically generate revenues from three main segments: commercial (sponsorship contracts), media (broadcasts and streaming) and also the actual revenues from matches.
Stephen Morrow from the University of Stirling, UK, and Brian Howieson from the University of Dundee, UK, point out:
"Professional football (soccer) in Europe has changed dramatically over the past two decades, largely as a result of the escalation of media rights agreements. Many professional football clubs are now complex companies intrinsically concerned with financial matters. Moreover, changes in ownership structure. of clubs, including a trend towards foreign ownership in some countries, such as England. "
Over the past year we have all seen how different segments of the economy have been affected by the pandemic. Professional sports, especially football, were not spared either.
Recent research led by Daniel Parnell of the University of Liverpool, UK, shows that COVID-19 "opened the box of Pandora's financial vulnerability … with club owners, investors, broadcasters and advertisers who forced to reconcile the downstream impact of event cancellations and operational changes. "
With that information, let's take a look at two teams.
1. Celtic FC
With the growth of the football business in England and Scotland, several teams have become public entities. Aston Villa, Birmingham City, Glasgow Rangers and Tottenham Hotspur can be counted among the clubs that have been publicly traded at any given time in recent years. However, they are all privately owned at the moment.
Currently Celtic (LON 🙂 in Glasgow is the only team listed on the London Stock Exchange. Readers may be interested to know that the club won the Scottish FA Cup (season 19/20) for the fourth consecutive season.
On April 29, CCP shares closed at 125p. So far, shares are up about 23% in 2021. Market capitalization is £ 122.7 million (or US $ 171.2 million).
In mid-February, Celtic released interim for the six months to December 31. Sales fell 23.7% year-over-year (year-on-year) to £ 40.7 million (or $ 56.8 million). The pre-tax loss was £ 5.9 million (or $ 8.2 million). In 2019 it had a profit of £ 24.4 million.
Management said:
“The two key factors that negatively impacted our financial results for the period under review were: first, reduced player trading profits as we wanted to keep our team intact this season; and, second, the unforeseen and long-term value-destructive impact of COVID-19. "
The P / S and P / B ratios of the CCP share are 2.05 and 2.07, respectively. Given the rapid year-to-date rise in the share price, profit-taking is likely in the near term. Interested investors would find a better value at around $ 120p or less.
2. Manchester United
Millions Manchester United (NYSE 🙂 fans have telltale signs that make them real "Reds", such as having United wallpaper and bedding as a child. On match day, "they sing loud, sing proudly, win, lose or tie".
In August 2012, MANU shares were traded on the New York Stock Exchange at an opening price of $ 14.05. In 2018 they hit a record high of $ 27.70. YTD, MANU stock is up about 6%, hovering around $ 17.8. Market capitalization is $ 2.9 billion.
Manchester United announced in early March. Sales were £ 172.8 million ($ 240.9 million), a 2.6% year-over-year increase. Operating profit was £ 48.5 million (or $ 67.6 million), up 32.9% year on year.
Management stressed the "significant shortage of matchday earnings compared to last year", but noted:
“However, the shortage of match-day earnings was more than offset by broadcast earnings, given teams' first entry into the UEFA Champions League competition. Much of the UEFA Champions League broadcast revenues are attributable to the group stage of the competition, which was played entirely during the second quarter. "
Manchester United are currently second in the Premier League. It has been eliminated from this year's UEFA Champions League tournament and is now competing in the Europa League.
As we write on Thursday, Manchester United and AS Roma (MI 🙂 are preparing to play the first leg of the semi-final. Villareal and Arsenal are the two other teams to race for the final match taking place on May 26 in Gdansk, Poland. The results of these games are likely to affect Manchester United's earnings.
The P / S and P / B ratios of MANU shares are 4.97 and 4.16 respectively. The current price increase may also continue for the foreseeable future.
Bottom Line
Scottish footballer and manager William "Bill" Shankly would say:
"Some people think that football is a matter of life and death. I assure you it is much more serious than that."
Millions of loyal fans would agree that they may have enjoyed football for as long as they can remember. Some of these fans might want to consider buying shares of their teams, such as Celtic or Manchester United.
Those investors who are not ready to invest capital in CCP or MANU shares might consider investigating an exchange-traded fund (ETF) that began trading in March 2021. It's called The Roundhill MVP ETF (NYSE: MVP), which exposes you to the world of professional sports.
Among his holdings are several European football clubs. They include MANU as well as the Italian Juventus (OTCPK: JVTSF) and AS Roma; Germany & # 39; s Borussia Dortmund (OTC: BORUF); AFC Ajax (OTC: AFCJF) from the Netherlands; and the Fenerbahce Futbol (IS 🙂 and Galatasaray Sportif (IS 🙂 of Turkey.
