This is how football transfers impact the stock market

If you are as much of a football fan as I am, you’ll agree that last summer’s transfer window had it all. A last-minute call by Sir Alex Furguson proved enough to bring Cristiano Ronaldo back to the red side of Manchester. Meanwhile, the Sky Blues had to contend with Jack Grealish’s record-breaking move from Villa Park.

We also witnessed the end of an era, with Leo Messi’s shock exit from Barcelona. And even though all bets were on a reunion with Pep Guardiola at Man City, the Argentina star decided to go to PSG. And if that was not enough for Les Parisiens, the club also welcomed newly crowned European champion Gigi Donaruma and Liverpool ace Georginio Wijnaldum.

Let’s face it: drama sells

Otherwise, why would Amazon bother filming the ‘All or Nothing’ docu-series?

In the sporting world, athletes are also assets for their respective teams. And while the majority of clubs are privately owned, there are some that are publicly listed. So, have you ever wondered about what happens to a club’s share price after a big transfer? And can you, as an investor, use that to make a profit? Thanks to a report from XTB.com, we can certainly find out how big signings have contributed to stock price rallies for their clubs. 

XTB analysts compiled data on the 10 biggest publicly traded clubs to measure the impact of their transfer activity. The top five most expensive arrivals and departures were analysed to provide us with an insight into the greatest positive and negative impact on stock value.

But what impact do these high-profile moves have on the share prices of the clubs involved? Let’s take a look.

The winners…

Undoubtedly, Cristiano Ronaldo is one of, if not, the greatest to have ever graced the pitch. However, the Portuguese megastar is also a brand in his own right. So it’s no surprise that his last two transfers were in the top 3. His most recent move to Manchester increased the Red Devil’s share price by 5.7%, while his move to the Old Lady resulted in a whopping 30% increase for the Torino-based club. 

Other big-money signings like Jadon Sancho (5.3%) and Paul Pogba (3.6%) have also significantly impacted their new club’s share price.

…and the losers 

While signing a superstar could have a positive impact, losing one could be detrimental. Not the most expensive transfer on the list, but Gelson Martins’ move to Atletico Madrid resulted in a 14% drop in Sporting Lisbon’s share price. In contrast, AS Roma cashed in on Alison, which also resulted in a 7% drop in their share price. 

Can you buy shares in your favourite club? 

The short answer is yes. Like any other publicly listed company, you can trade shares on some share dealing accounts. But before jumping on the bandwagon regarding the next transfer rumour, be sure to hear me out. 

As great as it might sound, buying shares in your favourite club is no novelty at all. You are becoming a shareholder in a real business, and this carries risks.

As seen above, transfers could be the catalyst for some share price volatility. However, Nick Train, a fund manager at Lindsell Train Limited, thinks that “short-term performance on the field is not a major concern”  for investors. Rather, what they focus on is the loyal fanbase that captures the attention of advertisers. 

So whatever your decision is in the end, the bottom line is it must fit with your goals and risk tolerance. If you need any tips or you’re not sure where to start, why not visit the Motley Fool’s investing guide for beginners? 

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