How You Can Make Money From The Global Football Powerhouse Of The Premier League

9th May '16 by Edmund Shing

5 comments 7057 reads

Leicester City's surprising Premier League win certainly seemed outlandish back at the beginning of the 2015/16 football season, when bookmakers were quoting odds of 5000-to-1 on Leicester City finishing top. But this fairy tale is sure to inspire even more interest in Premier League football next season, when everyone will want to know: can the seemingly impossible feat be repeated?

A Great Time to be Promoted to the EPL

1. A massive increase in UK TV Income for Premier League ClubsPremier League

Burnley has just secured promotion back to the Premier League, repeating their feat of 2014. Their timing couldn't be better.

Why? Because next season promises to be a bumper year for the 20 league teams, as they will be dividing up a TV deal which is now worth a total of £5.1bn ($7.4bn, €6.5bn) over the next three seasons, up 70% from the existing TV deal struck by £SKY and £BT.A (see chart 1).

This does not even include the estimated £3bn+ that the English Premier League will also collect from selling international TV rights all over the world.

Four ways for an investor to surf the UK football frenzy

I see four ways in which investors can get exposure to the seemingly inexorable increase in the global popularity of the English Premier League.

1) Invest directly in a football club

2. Manchester United has rebounded 20% of lateBloomberg

In the English Premier League, the obvious candidate is Manchester United, which is actually listed on the New York Stock Exchange (code: MANU) as the controlling Glazer family are from the US. Through most of this year, Manchester United's share price has languished along with the team's performance, but latterly it has picked up over 20% (chart 2).

Other European football clubs that are listed include Celtic (UK Code: CCP), Borussia Dortmund in Germany and Lazio in Italy.

2) Buy kit suppliers

3. Adidas has been…

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vik2001

9th May '16

you forgot to mention betting companies and how relevant they are to the sport in general. so many teams are now sponsored by them also, there ads are on literally in between any tv sports game these days....

TraderTim

10th May '16

Agreed - betting has big exposure to football.

Another company is Goals Soccer Centres (LON:GOAL) - the 5-a-side football operator (which I think Mike Ashley has a stake in?). Not directly involved with the Premier League as such, but the interest in football and fairytale of Vardy, Mehrez and co, could certainly inspire the younger (and older) generation to get out on to the pitch themselves and tangibly impact the company's bottom line. That said, Goals Soccer Centres (LON:GOAL) has had a torrid 12 months, so it may need a little more than a bunch of enthused Leicester fans to turn its fortunes around.

Disco Ball

Strange game football - most people watch and bet on the outcome with very few actually playing the game. For that reason I’m not keen on Goals Soccer Centre (who actually calls it soccer in the UK anyway?!)

Most punters are more likely to bet which team will have the next throw in and which player is going to score next rather than buy shares in Manchester United if they look to secure Champions League football. In that respect I think the betting companies are best placed to capitalise on the football craze. Although I wouldn’t buy Bet365 just because of that dreadful Ray Winston advert.

With the Euros coming up I think a long on ITV will be a good play for all the advertising revenue. As for Sky, there has to be a point when customers refuse to pay any more for televised football – it’s easy to spend over £100 a month on a subscription! Who wants to pay a ton a month for the privilege of watching Burnley vs Bournemouth play out a 0-0?

Agree - ITV (LON:ITV) is a good shout! It also has a fair bit going for it as a stock beyond football as well, so is a bit more diversified than some of the other stocks such Sky (LON:SKY), which is so sport-centred even if they are trying to move away from this. I also think Sky's offering online - Box Sets, Sports and Sky Go - is really poor versus the competition. The have Now TV, which is good - but for paying Sky TV customers the online offering is poor in my opinion.

Also, longer term as online competition increases from offerings outside of the UK, which are much cheaper and show more games (because they are not inhibited by the 3PM kickoff ruling) could potentially suffocate Sky's market share, though there is a legal complication around this. However, services within the EU are allowed I believe - assuming we stay in of course!

Flackwell

11th May '16

After last night's behaviour by those dressed in claret and blue - I would have thought that investing in a coach repair business should pay dividends

How you can make money from the global football powerhouse of the Premier League

A Great Time to be Promoted to the EPL

Four ways for an investor to surf the UK football frenzy

1) Invest directly in a football club

2) Buy kit suppliers

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About the Author

Edmund Shing

5 comments

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