Wednesday, July 20, 2016 5:29pm /NASD OTC
It is with a sense of excitement today that I announce that the NASD OTC Securities Exchange has reached an understanding with the major promoters of football in Nigeria – the League Management Company [LMC].
Our Memorandum of Understanding marks the beginning of a merging of financial and sporting interests in an unprecedented manner in Nigeria. It is not often that securities markets and football are discussed in the same conversation but interesting things can happen when an imaginative manager decides to improve the fortunes of a sport and he decides to encourage teams to be publicly traded on a Securities Exchange.
Like any other commodity, football clubs have rising and falling fortunes and can live or die based on foresight of their managers. Soccer may be a passion but it is a business like any other.
At a time that State and federal government are seeking to reorder their expenditure patterns it is appropriate for the LMC to look at allowing private and public investment play a bigger role in the financing of the most popular sport in Nigeria and indeed, the rest of the world.
We at NASD share the belief that Nigerian football clubs can harness the power of the capital market and the passion of sports-loving Nigerians to develop reliable funding channels.
NASD OTC Securities Exchange is a platform registered by the Securities and Exchange Commission that supports growth in all forms of economic endeavour of which, sports is certainly not the least.
Management of LMC in coming up with this great initiative have drawn from many models worldwide.
· Società Sportiva Lazio and Juventus are two of three Italian clubs whose shares are traded on the Borsa Italiana.
· Borussia Dortmund, one of the most successful clubs in German history is the only German football club to have its shares traded on the Xetra exchange.
· Celtic FC in Scotland was close to bankruptcy in 1994 when it was bought by Fergus McCann for £9 million. When he sold his 51% stake in 1999 on the London Stock Exchange, he made a healthy £31 million profit.
· Arsenal FC sells fanshares valued at £15,000 each on the ISDX market, was valued at around $1.3billion in 2014, the 5th most valuable football club in the world, behind Real Madrid, Barcelona, Manchester United and Bayern Munich.
· Manchester United is reputed to be the wealthiest Football clubs in the world. It however had to go through numerous changes and close scrapes before it got to where it is today. From a weak initial outing which brought the club only £6.7million, great management led the club to a valuation of $2.8billion by June 2014! It is traded on the NYSE
Of course I do not imply that listing a football club on NASD OTC Securities Exchange is an instant recipe for success – after all Tottenham Hotspur, one of the biggest clubs in England, were publicly traded from 2001 to 2011, but decided to a private ownership structure.
Again, of the 27 clubs that listed in early 1990s Britain, only a handful remains successful and listed today. Significant restructuring is required to get the football clubs in shape before they can efficiently utilize investors funds and indeed attract such funds. The journey will be long and the hurdles numerous. But as they say, “the journey of a thousand miles begins with a step in the right direction” – such as the step the LMC is taking today.
We also do not anticipate that all clubs in the LMC will immediately be qualified to approach the NASD OTC or attract public funding. All clubs will be required to meet our stringent corporate governance and financial reporting standards before they even apply. We do expect however that the leading or the better managed football clubs will quickly restructure and start working towards positioning to attract both private and public equity investors.
NASD will draw up guidelines, requirements and standards which, if met will increase the possibility of success of privatised Nigerian football clubs in the capital market.
We bring to the table our constituency of over 100 Issuing Houses, financial advisers and stockbrokers who are willing to work with the LMC and individual clubs to achieve their dream of a commercially viable and self-funded industry. Some are willing to advise on the most plausible structure to follow – be it a joint stock structure as exists in the Italian model, the English pure public company structure or indeed a truly Nigerian solution.
Our community of financial advisers will also be able to advise on whether to float many cheap shares or a few high value ones We will challenge the clubs to, both ethically and in the eyes of the law, act in the best interest of the shareholders at all times.
NASD shall firmly encourage among others:
• Management education - that success on the field is different from good management of a business. What is required is good and sound business management.
• Transparency - which is one of our major watch words in the NASD OTC market
• Autonomy - in decision making which should allow for business interest, rather than other inefficiencies to determine the affairs of each entity
• Investor education - that winning a match does not translate to an uptick (and vice versa)
• Appropriate regulation - such as Financial Fair Play” (FFP) which will monitor the level of loss that a club can absorb on its balance sheet.
It certainly shall be interesting to discover the level of correlation between performance of the club on a Sunday afternoon and the performance of the club’s stock on the following trading day (if any).
Investors can tap into a wider investment base in the economy; clubs will have more access to long term funding and securitisation of their core assets. Clubs will also be able to raise new capital for building higher standard arenas thereby attracting more interest both from supporters of the club and commercial interest from the use the facility at other times.
Just as the English Premier League football matches are broadcast to 720 million homes across the world, the LMC intends to bring “the beautiful game” of Nigeria to 180 million Nigerians and beyond. NASD OTC is excited to be a part of this novel development and we wish the management of LMC, the fans, the players and merchandisers in general the very best of fortune in this challenge.