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Sevilla And Espanyol May Sell Shares
09/05/2007 |
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Sevilla and Espanyol, who play in the first all-Spanish UEFA Cup final next week, joined Valencia in saying they want to sell shares to the public.
The clubs would be the first in Spain to offer stock to investors, seeking to raise cash to buy players and compete with teams in England's top league, the Premiership. For decades, Spanish teams have increased debt and racked up losses to hire top talent on the field, said Antonio Davila, a professor of accounting at Barcelona-based business school IESE.
``It would be good to make use of the world's financial institutions,'' Sevilla President Jose Maria del Nido said in an interview. ``Premiership clubs are a step ahead financially. We are on a second level.''
Since London's Tottenham Hotspur became the first football club to sell shares to the public in 1983, the trend has spread across Europe. Bloomberg's Eurokick Index includes 27 teams from Turkey's Galatasaray to Portugal's Sporting Lisbon. England's Manchester United held a public stock offering in 1991 and developed into the world's richest club until closely held Real Madrid took over the top slot in 2005.
Eight of the 20 biggest clubs by sales are English, while only two -- Madrid and Barcelona -- are Spanish, according to London-based accounting firm Deloitte & Touche LLP.
``If we listed, we'd be like any other company, we would be more professional,'' Sebastian Javier, vice president of Barcelona-based Espanyol, said in an interview. ``Spanish clubs are talking a lot about this at the moment. I would like it.''
Not Yet
While Spanish clubs have been permitted to pursue an initial public offering since 1999, their financial performances have prevented them from doing so. To comply with market regulations, companies must post two straight years of operating profit and have more assets than debt, said Eduardo Valpuesta, a professor of commercial law at the University of Navarra.
For now, that rules out Valencia, Spain's only Champions League quarterfinalist this season. It expects to lose 10 million euros ($13.6 million) in the year through June 30, President Juan Bautista Soler said. Sevilla isn't sure if it will have a profit or loss for the same period, Del Nido said. Espanyol's accounts weren't available.
Sevilla, Valencia and Espanyol said preparing for an IPO may take years.
``It won't be in the next one or two years, but yes in about five years,'' Espanyol's Javier said.
Before being sold for 790 million pounds ($1.6 billion) to U.S. billionaire Malcolm Glazer in 2005, United never reported a loss as a publicly traded company. From fiscal 1993 to 2004 it generated profit of 191 million pounds.
Real's Preference
By contrast, Barcelona posted a record 164 million-euro loss in the year through June 30, 2003, while chasing its first trophy since 1999. Barcelona and Madrid, which are owned by their members, have ruled out selling shares. Begona Sanz, Madrid's commercial director, says her club's social base is part of its ``glamour and personality.''
Football's unpredictability has hurt investors in other countries. Since Juventus raised $129 million in 2001 in the sport's biggest public offering of the past decade, the stock has lost half its value, partly because the team last year was ejected from Italy's top league for its part in a match-fixing scandal.
Money managers won't invest in clubs until they see a turnaround in their finances, said Pablo Garcia of Nordkapp Inversiones SV in Madrid.
``Spanish clubs' finances have a reputation of being a bit chaotic but we are seeing a change in attitude,'' he said. ``Once they have become profitable then they could think about listing.''
Champions League
To stay competitive, top-tier teams in Spain have no option but to improve their financial management, said Davila.
``If Spanish teams don't change, in five years U.K. clubs will dominate'' European tournaments, he said.
Three semifinalists in this season's Champions League were from England's Premiership, football's richest league. Six Premiership clubs were bought by foreign investors since oil billionaire Roman Abramovich acquired Chelsea in 2003.
Sevilla and Espanyol will play the final of the UEFA Cup, Europe's second-tier competition, in Glasgow, Scotland, on May 16.
(Source: Bloomberg.com)
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