Thousands of Spanish football fans would be willing to go to practically any lengths to make some money with their favourite team, and even to the point of investing their life savings on the stock market in support of their footballing idols. But you fans out there: don�t hold your breath. If in the past this financial option was unlikely, now it looks to be out of the question.

 

The path leading football clubs to the stock market trading floors is strewn with pitfalls due to the teams� lack of financial transparency, as well as the stock market�s current bearish mood and the impossibility for some clubs like Real Madrid and Barcelona to consider this option for legal reasons, since they first need to become Sporting Limited Companies.

On top of this, the encouraging examples of clubs which went public some years ago are now suffering a radical change of fortune. This is the case of Manchester United, the richest club in the world, whose shares have plunged and are now performing below the FTSE index; or Lazio, whose shares have fallen to half their initial value. In Germany, Borussia Dortmund watched helplessly as their share price slid by 8.77% after they were knocked out of the Champions League, wiping 8.25 million euros off their value. Their shares are now trading at around five euros, whereas just less than a year ago they stood at 11 euros.

 

Only a fan guided more by his blind passion for his club than by any analysis of earnings potential would put his money into stock which is at the mercy of random factors like a wrong decision by a referee or a missed penalty in the last minute of a cup final. If a club gets knocked out of a European competition in the first round it could ruin the share price for years, and that is simply too great a risk to take in these times we live in.

Paradoxically the interests of a team�s club members and fans do not always coincide with those of the shareholder. According to KPMG, a consulting firm with specialists in the football business, when a club comes first in its league the market penalises it, while if it comes second it isn�t so aggressive. This paradox occurs because, being league champions, the club has to pay out a considerable amount of money in bonuses to its players, while if they come second there is no payout, but the club still benefits from qualifying for the Champions League, for example.

Neither Real Madrid nor Barcelona are willing to hand the control of the club over to external investors. And the experts say that it is precisely these two clubs -who are not legally eligible for stock market listing as they are not sporting limited companies, as is the case with Osasuna and Athletic de Bilbao- which are the only clubs able to compete on the stock markets with any chance of making some money. For the rest of the Spanish clubs (which some years ago became sporting limited companies) listing on the stock market would not be a viable option.

According to a decree passed in July 1999, Spanish clubs could not list on the stock exchange until January 2002. The same legislation limits the maximum shareholding of one person in any club to 25% and also puts restrictions on shareholders wishing to buy into more than one club. It is thus prohibited for one person to hold, directly or indirectly, a shareholding of more than 5% in two or more clubs playing in the same competition.

The clubs must also report every six months to the National Sports Council (CSD) on changes in the shareholder structure. In the case of football clubs, the rules of transparency and disclosure by which listed companies are governed represent one of the greatest barriers for future candidates. Early last year, however, in neighbouring Portugal, Benfica de Lisboa�s general assembly agreed to modify their sporting limited company�s statutes in order to list on the stock exchange.