Football Club share trading: fruitful or fantasy?

View from the dealing floor.

Richard Stephens works on IG’s dealing floor in London. To find out more about CFDs, spread betting and shares visit: www.ig.com/uk/shares-trading

Saturday 17 August marks the beginning of the 22nd Barclays Premier League season. As many of us put the finishing touches to our Fantasy Football teams and various bets for the season ahead, how many of us have ever contemplated trading CFDs or spread betting on football club shares?

The most recent edition of the Deloitte’s annual ‘Football Money League’, published in January 2013, reveals Real Madrid became the first club to exceed the €500 million revenue threshold in a single year. Moreover, the cumulative revenue of Europe’s top 20 earning football clubs is now set to top €5 billion annually. It is now abundantly clear Football has evolved dramatically from its roots and is fast becoming a titanic industry.

Whilst the majority of the top clubs remain privately owned, several of Europe’s 20 elite clubs are publically listed: Manchester United (MANU:US) listed on NYSE, AS Roma SpA (ASR:IM) and Juventus Football Club SpA (JUVE:IM) listed on Borsa Italiana, and Germany’s Borussia Dortmund GmbH & Co KGaA (BVB:GR) on Xetra.

So, looking back at the 2012/3 season, were there any opportunities or news flow relating to these clubs the savvy CFD Trader or spread bettor could have traded profitably? The answer of course is yes.

On 22 February, reports surfaced in Rome that American investors with a controlling stake in AS Roma SpA (ASR:IM) were considering selling a portion of their shares to a Sheikh. This prompted AS Roma SpA (ASR:IM) shares to rally as much as 10% on the day, eventually closing at €0.538 – a virtual six-month high.

Fast forward a few months to the last fortnight of the Barclays Premier League and the shock announcement of Sir Alex Ferguson’s retirement on 8 May. This led to a fall in Manchester United’s (MANU:US) share price of almost 6%, from the previous days close of $18.77 to a day low of $17.73, reducing the club’s value by almost £100 million. The downward trend continued for the ensuing month, reaching a low of $14.87 on 12 June, but has since reversed. Meanwhile Borussia Dortmund GmbH & Co KGaA (BVB:GR) saw their share price steadily advance from a low of €2.433 on 23 October 2012 to a high of €3.439 on the 15 May 2013 on the back of their remarkable Champions League run – an impressive 40% increase.

These represent just a few of the many share trading opportunities from last season and this season promises many more. How will Manchester United’s (MANU:US) share price react to a poor start to the season under David Moyes? Having missed out on European football altogether in the 2012/13 season, how will AS Roma SpA (ASR:IM) share price react should they qualify for the UEFA Champions League or UEFA Europa League?

These scenarios are an exciting prospect for the share trader. So this season, why not consider combining sporting and investment strategies and implement a spread betting or CFD strategy on the economics underpinning the beautiful game.

Spread betting and CFD trading can result in losses that exceed deposits.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Trading involves substantial risk of loss and is not suitable for all individuals. Past Performance is not indicative of future results.