Are you a fan wanting to invest in your favorite soccer team? Or are you someone simply looking for an investment opportunity out of the ordinary? Investing in sports teams is possible, and this article will go through the practicalities of trading in Arsenal F.C.
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The Club – Arsenal F.C
Arsenal F.C. is a soccer club with its roots in London where the club also operates. The club competes in the Premier League, the highest division for soccer in England. The Premier League has followers all around the world, and is quite heavily followed by fans and sports media globally.
Now as a fan you might already know this, and of course we will not bore you further with any more details regarding the club’s history (though as an anecdote it would be good to at least point to the fact that the club has been in existence for 117 years!).
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Buying Shares in Arsenal F.C
Arsenal F.C is structured a bit differently than most clubs in England or generally. The club is owned by a holding company, Arsenal Holding plc where available shares are few and the company is not listed, e.g. the shares are not available on an exchange. The few shares available of Arsenal Holding plc are trading on a niche market place called ISDX with the ticker AFC.
The holding company in turn owns several companies with specialized operations connected to Arsenal F.C, e.g. the soccer team itself, stadium management, property development and other activities connected to the club’s operations. Quite an intricate ownership structure, but fairly common in business in general; such a structure allows a firm to focus on certain business units structured around a single company, which in turn is controlled by a holding company that sets the overall strategy and decides on key business issues.
The club is financially a sound and successful one, being ranked one of the most successful sport club second to Manchester United and Real Madrid. As a fan, you may already now of the club’s success, and these successes have in turn been transformed into quite positive returns possibly thanks to the chosen organizational structure and specialized nature of the different subsidiaries.
Let us get back to the actual share buying aspect. Since a decade or so back, a group of fans created a so called trust enabling them to collectively put in money and buy single shares of the stock. The Arsenal Supporters’ Trust (AST) was created in 2003 allowing fans and small private investors to get into investing in the team. In 2010 the AST created a scheme called Arsenal Fanshare allowing easier access to smaller investors and supporters to invest in the Arsenal stock. Roughly 2,000 supporters collected £2,000,000 allowing them to buy 125 shares. The scheme was however closed in 2015, due to low liquidity. The AST still exists and works towards supporter influence and transparency in the club. Hope is not lost in regards to investing in the club however, and we delve deeper into how below.
You cannot buy shares directly as it looks like today, but you can do so indirectly. Arsenal has gone into a co-operation with a CFD dealer called Markets.com. CFD trading is done in markets that are not exchanges. CFD stands for Contract For Difference and is a derivative, that gains its value from another, underlying asset.
Another interesting aspect that differentiates CFDs from other types of investment is the leverage aspect of it; with leverage we mean that you can borrow money based on your invested money in a trade. If you invest $100 in say Arsenal Holdings plc via a broker, you can also choose to borrow $900 from the broker at the same time you execute the trade. Different brokers offer different types of leverage possibilities and interest rates. As always when trading with leverage, make sure to have a stop loss in place, as you could otherwise face the risk of owing the broker a lot of money.
The Binary Options broker TopOption, owned by the same firm owning Markets.com, has also stricken a deal with Arsenal which means that the it is also possible to trade the club’s stock via Binary Options (see our previous article on the subject of trading Binary Options).
Co-operations such as these follow a trend in the industry where large football clubs co-operate with marketplaces to open the way for their fans to invest in the clubs without actually offering direct ownership via shares and being listed on an exchange with all the costs and regulatory expectations that come with it.
Of course you will find other marketplaces for CFDs and Binary Options connected to Arsenal F.C., and as always, research your choices well prior to choosing a broker you feel comfortable with. There are quite a few brokers out there, and it would be good to choose one that has a good reputation and does not fix the spread (i.e. the difference between buy and sell prices) to your disadvantage.
Unfortunately, it is a difficult if not impossible task to buy equity in Arsenal F.C. unless you are quite a riche investor (seeing to the market value of the sports team, currently at £1 billion). Hope is not lost however! You can of course try to invest in the club via the following ways, directly or indirectly:
- The stock of the holding company Arsenal Holding plc is traded on the ISDX, should you actually have the means to buy a share.
- Buy or sell CDFs based on the performance of Arsenal F.C. via Arsenal Holding plc
- Buy or sell Binary Options based on the performance of Arsenal F.C. via Arsenal Holding plc
As with all trading independent of the asset or asset class, you need a trading strategy that is written down and contains your own “rules” regarding how you want to trade: how, when, how much to invest per trade and when to exit. Such a document will help you keep the biggest risk facing you at bay: your feelings. And especially when investing in something where your feelings are quite heavily invested – your favorite team! A trading strategy document becomes crucial in containing irrationality.