Club Brugge goes public: a good investment or not?
The Belgian football club Club Brugge wants to go public. If everything goes according to plan, the club will be listed on the Brussels stock exchange before the summer. It would be the first football club in Belgium to be listed on the stock exchange. In an interview with Belgian newspaper Het Laatste Nieuws, Thomas Peeters, Sports Economist at Erasmus School of Economics, says he is not surprised about the listing. ‘Certainly in these times, it is a good way to generate income.’
In other countries, football clubs have been going public before. A few examples are the famous clubs Manchester United, Juventus and Ajax. 'Not all clubs do it, of course, but it's not something we've never seen before,' says Peeters.
Because of the smaller scale of the Belgian team, it still remains to be seen how much the club's listing is going to yield. 'The question is what they are going to trade on the stock market,' Peeters says. ‘What you often see with football clubs is that they do list a part of their shares on the stock exchange, but the owners still keep a large part of the shares to remain control over the club.'
A risky investment?
And how risky is such an investment? Would it be a good choice to invest in Club Brugge? ‘In some cases, of course, it is the fans who buy shares,' Peeters explains. ‘As a supporter, you might just think it's nice to support your club in this way. In that case, you are also less concerned about how much return your shares will yield. In principle, the club could also decide to pay out a dividend to its shareholders. In this case, if the club makes a profit, you receive a small share of that profit.’
The problem with football clubs, however, is that they are generally not very profitable. The chance of them paying out dividends is therefore not very big. ‘Club Brugge is very successful, also financially, but it remains to be seen whether the supporters of the club will be happy if they pay out profits to shareholders, instead of using it for investments that could enhance the club’s performance’, Peeters explains. ‘In that respect, shareholders of football clubs have a different view than ordinary shareholders.’
An emotional investment
According to Peeters, the IPO is therefore not a bad idea at all. ‘It’s a way to get a large group of people to invest in the company and generate income. Especially in times of crisis, this can be useful in the short term. And besides, the shareholder of a football club is a different type of investor: for them it is more of an emotional investment than a way to make profits.’