Stock traders bank on the overall success of a company – among other factors – to drive its price on the stock market. But what affects the share price of football clubs?
To investigate, Eurotrader looked at stock charts of all 10 publicly listed clubs to determine what influences change in their share price. Now, the results are in…
Which are the 10 listed football clubs?
The main factors we found were success, form, player and manager transfers.
But first... how will the Super League affect share price?
The football topic on everyone’s lips right now is the European Super League, which 12 clubs agreed to join on 18 April.
Among these clubs are Juventus and Manchester United, which both saw a significant increase in share price over that weekend (19% and 11% respectively). After pulling out on 20 April, their share price has since dropped again: MANU by 10%, and JUVE by 17%.
Not among the 12 clubs is FC Porto, who opted out of joining the league– and, sure enough, their share price dipped 3% over the weekend, before rising 9% after the collapse of the Super League deal.
The money each club would have made from the league is enormous – they had been promised $400 million just to sign up. This is before we even talk about prize money!
Our analysis showed a similar trend for teams having success/failure in the Champions League (see later in this post). With so much money coming in from a European Super League, we could see the share price of these clubs soar if it is revived in future (so if it does, be sure to keep an eager eye on the stock markets!).
Short-term form – where the real money is?
Should football fans put their money where their mouth is by backing in-form clubs in the stock market?
The form appeared to have the biggest short-term impact on share price across all clubs. On average, a 26% change occurred either way when a team was in good (or poor) form on the pitch. On-field results can cause huge upswings in share price, which might be tempting for shareholders to gamble on.
The two biggest price changes were for Roma and Borussia Dortmund. In Roma’s case, their best-ever start to a season (back in 2013) saw a 243% increase in their stock. For Dortmund, they won 11 from 13 games on their way to their first Bundesliga title under Jürgen Klopp, resulting in a 180% increase in late 2010.
Poor form is just as likely to have the same negative impact, so traders will be playing a risky game by backing a club in the short term. For instance, the dreadful form that led to José Mourinho’s sacking at Manchester United caused a 30% decrease between August and November 2018.
Manager merry-go-rounds and star signings
Generally speaking, player and manager ins and outs are less reliable in terms of price changes. We found, for the most part, manager changes at a club resulted in no obvious pattern in terms of increasing/decreasing share price. The same went for player transfers. It’s clear that share price is not always affected every time a player joins/leaves a club.
The one pattern we are confident of is this: player sales = share price increase. You might think when a team sells a star player, their share price would drop – and sometimes, this is the case – but generally, we found it to be the opposite. The logic is simple: player sales mean increased revenue, which is ultimately what drives any companies share price.
Revenue raised from player sales seems to be a consistent factor. This is especially true of so-called ‘feeder’ clubs who don’t have the financial strength of giants like Juventus and Manchester United.
The best example of this was Benfica’s €104m sale of João Félix. Thanks to the transfer, Benfica announced record revenue that year which saw a 71% increase to their share price. Sporting Lisbon shareholders seemingly benefitted from the club selling Bruno Fernandes to United in January 2020 (21% increase from December to January).
However, high-profile figures can cause big waves. JUVE stock rose 125% in the same period superstar Cristiano Ronaldo joined from Real Madrid. On the other hand, legendary manager Sir Alex Ferguson’s retirement saw a 12% decrease in United’s previously unwavering stock.
Success – Champions League is worth its weight in gold
Ronaldo also caused a surge in JUVE stock when he scored a second-leg hat-trick against Atletico Madrid, sending Juventus to the Champions League quarter-finals. This resulted in more than a 20% rise in their share price – the biggest change since October 2013.
It seems this is fairly typical of clubs who do well in the Champions League – the most prestigious tournament in world football. Other notable examples include Roma and Ajax on their stunning runs to the semi-finals in 2018 and 2019, respectively. Ajax stock rose by as much as 45% in April 2019 on their way past Real Madrid and Juventus to the semis.
Similar can be said for Celtic. They twice qualified for the Champions League group stages and both times their share price increased by more than 25%, once in 2017 (+28%) and again in 2018 (+26%).
Other one-off factors include COVID-19, which affected all clubs negatively – an average decrease of 54%. This included two significant drops in price – one in March, after football was halted and one after the start of the 2020-21 season, presumably due to the loss of revenue from empty stadiums.
Another significant one-off came due to the Calciopoli match-fixing scandal in May 2006, which caused drops to both Juventus and Lazio share prices (-56% and -35% respectively). Roma appeared to benefit from their rivals’ demise with a 93% increase at the same time.