Anyone can buy stocks in Manchester United or Juventus

Soccer is the most popular team game in the world. 3,5 billion people support footballers in the world (according to FIFA data, 265 million play soccer). It is estimated that the European football market is worth around EUR 29 billion. Large European clubs such as Manchester United or Juventus Turin.

The football leagues are the most commercialized and most profitable. The top five leagues that bring you the most money are: Bundesliga (Germany), La Liga (Spain), Ligue 1 (France), Premier League (England) i Serie A (Italy). TV broadcasting fees remain the most important revenue for football clubs. It is money distributed among all the clubs playing in a given league, according to their place in the competition. This is an important, steady income for the club that ensures its financial stability.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.

Football business worth billions

The most famous clubs have recognizable brands that are used commercially. It is mainly about selling club gadgets, but not only, because the logo of Manchester United or Real Madrid can be found on many products, for which the club's cash register goes to a lot of money. Interestingly, an increasing percentage of the revenues of the largest European clubs comes from China and India, where fans are willing to spend more on products with the logo of their favorite club.

In the case of Manchester United, the clubs' income before the pandemic (2019) was 44%. from the sale of products with the club's logo (t-shirts, gadgets), 38 percent. from income from television rights and 18 percent. from ticket revenues and sales on the day of the game. For comparison, currently, in connection with the coronavus, the individual shares are 47%, 52%. and 1,4 percent

However, the progressive commercialization of sport means that the differences between the richest and average clubs are growing. A year ago, a group of the richest clubs in Europe presented an idea for Super league - games in which only the richest clubs would play. It was criticized by fans and UEFA due to the purely commercial and incompatible sense of such a solution (no team was to be released from the league, regardless of sports results). The idea was rejected as presented, but the clubs are still working on modifying it.

Be sure to read: How to invest in football clubs [Guide]

There is not such a great contradiction between commercial and sports success, because actually both are necessary for the club to achieve profits. Of course, in practice there are many problems at the interface between sport and commercial activities. One of them is the growing earnings of footballers, driven by the growing demand for sports successes as well as faster and more spectacular game. It is the high earnings of players in the form of transfer fees, and later salaries for the season and bonuses for winning matches - that can be the source of problems for many clubs.

What to look for when investing in a football club? First and foremost, the potential of his fans, whether it is global or limited to one league. Ideally, the club should be able to benefit from the huge crowd of new fans from Asia, whose spending on club gadgets is constantly growing. The second element is sports achievements, without them even the largest global brand will wither after a few seasons. Big clubs play at least every year in the Champions League, because it generates significant additional income for them. It is also worth monitoring contracts with players, sometimes clubs can gain a lot of money by selling one of the players. Conversely, a large investment in one player can be a ball and chain for the club.

There are also clubs that train young footballers. In this way, they earn money by raising young footballers, being able to acquire talents for their own team more cheaply or sell already formed footballers for a profit to another club. It is also necessary to monitor the relationship between the players and the club's management in order to detect possible problems affecting the sports results. In any case, you also need to keep an eye on the club's debt levels, as many of them have high debt levels. This is usually due to the desire to achieve short-term sports success at the cost of a significant deterioration in the balance sheet, which may have a negative impact on the club's results in the future.

The coronavirus affects club finances

Recently, as the variant is spreading around the world Omikron coronavirus, it has become necessary to monitor the restrictions related to the virus again. They can quickly bring big losses to football clubs. Clubs are among the group of companies that should benefit from the economic opening up after the pandemic. On the other hand, the continued risk of the emergence of further waves of infection will continue to weigh on the profits of football clubs.

Popular sports teams such as Manchester United, Juventus Turin and Borussia Dortmund are listed on the stock exchange. Buying their stocks can be a way to discount their commercial and sporting success. However, if we are fans of any of these clubs, we should especially stick to the rules outlined above. Investing should always be information-based, not sentiment-based. These clubs have the advantage that if a European Superliga emerges in any form, it is almost certain that they will play in it.

It is also worth going beyond the football clubs themselves and diversifying their portfolio in the sports sector more widely. You can pay attention to Madison Square Garden Sports (New York Rangers teams in the NHL league and New York Knicks in the NBA) or Nike and Adidas (manufacturers of shoes and sportswear). You can also get interested in the increasingly popular e-sport (game producers).