Exclusive: Financial expert Dr Rob Wilson on Celtic share price, fan ownership and the market
Last week, we saw Celtic’s share price grow rapidly, to yearly highs.
Normally, it’d be pretty cut and dry as to why that was happening: trophy wins, a new manager, new sponsorship deals. However, in a week that saw immense speculation and panic about the future of the sport in general, it was curious to see the Bhoys’ value rocket.
If we’re being entirely honest, none of us in the 67 Hail Hail staff are investment bankers or financial experts. One man who is, however, is Dr Rob Wilson of Sheffield Hallam University. An expert on finances in football, Dr Wilson has most recently contributed the Sports Governance Handbook [Wildly & Sons] as well as several academic journals, discussions on the BBC, and is host of InSport Education.
We caught up with Dr Wilson to talk about Celtic’s share price drama, as well as fan ownership and the ‘Super League’.
The meaning of share price fluctuation
What does it tend to mean if a club’s share price rapidly? What are the key drivers of that happening?
“Normally, revenue growth, or revenue generation over a sustained period. So in the context of football, if a club signs a shirt sponsorship deal or new licensing partner to reproduce the match shirts, or has a bumpy year on season ticket sales, a new broadcast deal, something like that. Anything that protects future revenues will always see a spike in share price.
“If we’re expecting a club to make a profit as well, that’ll normally see a sharpened rise. The third thing is if there was any potential new owner investment, or new takeover, that might propel a football club onto a new level.”
There’s been speculation over a ‘British Super League’, after the Super League itself fell apart. Does that kind of speculation, has that had an impact on clubs who were involved in the Super League? Are share prices fluctuating in general?
“We saw big share price fluctuation at Manchester United and Juventus, on the back of the Super League news, Monday morning last week. Both shares went up around 10% in a day. Not totally uncommon, but you would certainly put that down to the news of a Super League – to go back to my previous answer, the fact they were looking at guaranteeing larger revenues.
“Any discussion over a British League that might involve Rangers and Celtic playing with English Premier League teams would naturally expose them to higher revenues and therefore benefit their share price.”
The truth in the rumours: how does speculation affect Celtic?
How much are share price fluctuations based on concrete announcements, and how much on speculation, in your view?
“Probably 50/50, if I was being really general about it. A share price analyst would track regular announcements: quarterly updates, whenever a set of financial reports were signed off, or whenever they knew a major sponsorship deal needed to be renegotiated. You would always expect to see movement in and around those events.
“Also, you get your speculation. Don’t discount big institutional investors dumping loads of shares to try and bounce the price a little bit as well, which spooks private investors.”
Celtic hired a new CEO, who’s come in early for a gradual handover. Because he came to the job earlier than planned, even in a diminished role, will that have inspired confidence in shareholders?
“It absolutely would. If a new CEO is coming in and they have proven pedigree or their reputation is strong in the market, that will always help support a share price improvement. Or, conversely, if the CEO is not fancied by the market that lead to a reduction. Any handover period is normally received positively. It allows you to maintain some of the current trajectory, look at the strategic plan and keep things moving in the right direction.
“It gives that person the opportunity to understand the business whilst not having full control. That change-over period can be quite beneficial sometimes.”
Celtic fan ownership, shares and revenue
In your view, have you seen many examples of fan groups buying increased shares in a club? What effect does that have on share prices? Does it give investors confidence or is there a deal of cynicism?
“We’ve seen a gentle but marginal increase in the volume of fan interest in ownership, right the way through the football pyramid. Both in the UK and overseas, as well.
“You’ve obviously got models like the 50+1 rule in Germany, where fans have quite a significant stakeholder relationship within the context of the way organisations work. Actually, that can reduce share price values. In the Bundesliga for instance, if you’re capping ticket prices, that means you’re limiting your revenue potential. That actually has a depressing effect on a share price, if Bayern Munich were floated.
“In the UK we’ve seen, in the lower leagues, some hefty supporter ownership, which seems to be working. Although the investment potential tends to be reduced. We know that football runs on high value; big money going in.
“It’s very difficult for fans to get a proper shareholding or stakeholder relationship in any of these clubs. Because naturally, fans will want things for them, as a stakeholder they want reduced ticket prices, more of a say in the direction of travel, that can have a negative effect on the overall share price. The business becomes slightly less valuable, albeit much more connected to the fans.
“Unfortunately we need to use the term customer, when we talk about fans. They are a significant source of revenue for those clubs. Or any club, for that matter.”