(Bloomberg) --

If following a soccer team can be frustrating, try investing in one. 

As British Premier League stalwart Manchester United Plc seeks a new owner, it is one of a handful of well-known publicly traded clubs whose share price moves would test the faith of even the most loyal supporters.

Soccer teams are unable to guarantee the type of earnings growth that shareholders usually demand, say analysts, citing volatile on-field performance that impacts revenue sources including television income, sponsorships, ticket sales and prize money. Player salaries and transfer fees add to high costs. 

“Football clubs are like investment banks,” said Russ Mould, investment director at AJ Bell Plc. “They can make a lot of cash when things go well, lose a packet when things go badly, and even when things go well the money ends up in the pockets of the talent, not the owners or shareholders.”

One of the bigger publicly traded clubs, Italy’s Juventus Football Club S.p.A. has won multiple domestic championships, but currently trades about 70% below its 2001 initial public offering price. AFC Ajax N.V -- known for its consistent superstar-factory of a youth team -- trades 17% below its 1998 IPO level. Belgium’s top professional club, Club Brugge SA, shelved its Brussels listing last year, citing market conditions.

While the average S&P 500 stock has more than 20 analysts providing coverage, just four cover Man United and six cover Juventus, according to data compiled by Bloomberg. 

Industry experts see few motives for further potential soccer club flotations. “I just don’t see it as a viable strategy, anymore, for football clubs,” Dan Plumley, a sports finance lecturer at Sheffield Hallam University. 

Defeats on the pitch can mean big share price declines. Juventus’ stock dropped as much as 7% after losing to rival AC Milan in October, while its shares fell 18% in a single day following a 2019 Champions League defeat to Ajax. 

Then there are other risks. Juventus is under investigation, with chairman Andrea Agnelli and the team’s entire board of directors having resigned amid a probe into alleged wrongdoing related to the company’s financial filings.

Emotional Attachment

The late Malcolm Glazer bought Manchester United in a 2005 leveraged buyout that saddled it with debts, and the family has faced distrust from hardcore supporters ever since. While the team continued to win trophies under storied manager Sir Alex Ferguson in the early years of Glazer ownership, resentment has grown after the legendary coach’s retirement in 2013 -- the last time the club won the Premier League. 

Having languished below its 2012 IPO price for much of this year, Manchester United shares -- which in July were down as much as 60% from a 2018 peak -- have soared since the club announced in late November that sale options were being explored. 

To be sure, surging footballer wage bills are likely to be less of a concern for teams that are under the ownership of billionaires or state backed entities, such as Paris Saint-Germain -- which is ultimately owned by Qatar Sports Investments -- and United’s local rival Manchester City FC, which is controlled by UAE deputy prime minister Sheikh Mansour Bin Zayed Al Nahyan. 

“Buy the shares for emotional reasons of attachment by all means,” said AJ Bell’s Mould. “But do so with eyes wide open. The economics just don’t seem to stack up.”

--With assistance from David Hellier.

©2022 Bloomberg L.P.