Lawyers are predicting all Premiership and many first division clubs will go public on the stock market as City interest in the business of football intensifies.
Last week Southampton Football Club was admitted to the Stock Exchange's Official List. Its shares had been suspended at 47p and went to 170p on the opening of trading last Tuesday. At the same time, shares in West Bromwich Albion, admitted to AIM at the beginning of January at 100p, were trading at over 400p.
West Brom, advised by Wragge & Co and nominated adviser Albert E Sharp, is the seventh football club to float and the fifth on AIM, joining Celtic, Chelsea, Preston North End and Queens Park Rangers (listed as Loftus Road).
Wragges' corporate finance partner Stephen Kenny, a confirmed West Brom fan who advised the team on the float, said: “It shows the intense City interest in football clubs.”
There has been criticism of the flotation of some clubs, with analysts stressing that only a handful of clubs in the Premiership are profitable and that revenue from BSkyB's digital pay-per-view TV may not be as high as some had predicted.
But Kenny is optimistic, at least for his team West Brom, which is currently mid-table in the first division. “To float, clubs probably need to be in the Premiership or in the top half of the first division,” he said. “They need to be either a large club or one in a centre of population where you can have a reasonable-sized crowd. West Brom is in the heart of the West Midlands; they have a great history and a strong following.”
Anthony Harris, of Pritchard Englefield, who advised Secure Retirement in its reverse takeover and £10.1m London Stock Exchange listing of Southampton, agreed.
He said that there were “parachuting” clauses in the BSkyB TV rights contracts under which premiership clubs would still get 50 per cent of their fees if they were relegated.
He predicted: “Pretty soon every club will want to float – all the Premiership and many of the larger first division clubs. It gives the fans a chance to gain a financial interest in their club and turns an illiquid investment into a liquid one.” The move would help Southampton raise money to relocate to a new £30m stadium, he added.
Pinsent Curtis advised sponsor to the float Henry Ansbacher and the club itself received advice from Fleet Street firm Gold Mann & Co.
West Brom has been preparing for its float for two years, since around the time new chairman Tony Hale was appointed in 1994. The vote among the club's 2,000 shareholders for flotation had been 99.5 per cent in favour.
Kenny said the club made a pre-flotation £4m rights issue in April 1996 and it had changed its constitution, scrapping a maximum five-vote-per-shareholder clause, to make it more attractive to City investors.