Football clubs are not generally seen as good investments. They don’t usually pay dividends and the chances of making gains through capital appreciation are not good with a few rare exceptions. The Glazers might bring it off with Manchester United, given that the money for the purchase was largely borrowed.
The main motivation for investment, usually involving foreign buyers, is for a trophy investment which brings with it prestige, an enhanced profile or political insurance.
Football clubs are not generally seen as good investments. They don’t usually pay dividends and the chances of making gains through capital appreciation are not good with a few rare exceptions. The Glazers might bring it off with Manchester United, given that the money for the purchase was largely borrowed.
The main motivation for investment, usually involving foreign buyers, is for a trophy investment which brings with it prestige, an enhanced profile or political insurance.
So why did institutional investors back the flotation of Rangers with £17m when it emerged from administration? This is a question that Private Eye poses in its latest issue.
Such well-known investors as Artemis Investment Management, Cazenove Capital Management, Legal & General Investment Management and Insight Investment Management all took stakes of 3-7 per cent, buying 1.9m-4.3m shares at 70p each. Unit trust clients of Marlborough Fund Managers found that just under five million shares had been acquired on their behalf. Institutions acquired 42 per cent of the club, but the shares fell as low as 41p and are now 48.5p. Not much capital appreciation there.
Some shareholders would like to see a new slate of directors elected, given that just two are left. Private Eye suggests that it is time that L & G, usually a champion of intervention, and the other institutions pressurised the AIM authorities to step in and enforce a better standard of governance for the company.