Football Industry Not Yet Ready For Stock Exchange

Representatives of The Bucharest Stock Exchange (B.V.B.) and of The Romanian Association of Securities Dealers Automated Quotations (R.A.S.D.A.Q.) late last week sent presentation letters to all football club managers to brief them on the advantages of financing their clubs through a stock exchange. The joint project initiated by the two markets is intended to make football club owners aware of the financing potential of the capital market. Professional football needs capital and football fans can be regarded as the most suitable investors. B.V.B. director general Stere Farmache told us that, unlike other industries, professional football has great many fans, and therefore a high awareness rate. The idea of listing football club on a stock exchange is not new. R.A.S.D.A.Q. management, for instance, had a similar initiative last year. "We have not given up on this idea and the decision to promote it as a strategy of the consolidated bourse honors us," said R.A.S.D.A.Q. director general Anca Dumitru. The project has been embraced also by B.V.B. officials, considering that the two exchanges will soon merge, so it is less important whether a football club decides to be listed on one exchange or the other, as long as it decides to take this step. The first football club to have considered being listed on an exchange, over a year and a half ago, is "Universitatea" Craiova. The club became a shares company and sold shares to its fans. However, the fans, despite being the most numerous and passionate in the Romanian championship, showed little interest in becoming shareholders in their favorite team and so the subscription rate barely reached 3% of the total capital. Consequently, the capital increase was done through the capital injection made by the club's main investor, Dinel Staicu.

"Universitatea" Craiova therefore increased its capital from 20 billion ROL to 45.5 billion ROL. Last fall, The Craiova City Council also became a shareholder by contributing Universitatea's stadium to the company's patrimony.

"Universitatea" president Adrian Mititelu believes that listing the club on an exchange would be profitable only in four or five years, when the club is expected to start making a profit. Half-way through last year, "Universitatea" reported losses of 9 billion ROL. According to Mititelu, the club needs some 5 million USD worth of investments in infrastructure and young, competent players.

"Rapid" owner George Copos is not too enthusiastic about stock exchange listing either. He told us he was planning to take such step, but definitely not now. In his opinion, the first step should be to have the local community invest in infrastructure. Finding resources for under-18 teams is also a major concern in Copos' view as he fears that most of the competent, under-18 players may receive tempting offers from abroad and leave. Copos also believes that listing a football club on a securities market requires a mature market and, most importantly, it requires football fans who can afford to buy shares. "Some fans can not even afford a subscription that costs one euro per month" Copos exemplified.

"F.C. National" is another football club that last year announced intent to become listed on R.A.S.D.A.Q., but the management later postponed the decision saying there was not enough time to do so before the beginning of the next championship. According to this club's management, the club only had time to register as an association, and not as a shares company, before the beginning of the championship.