Given the huge popularity of football, it might come as a surprise to learn that Celtic (LSE:CCP) is the FTSE’s only club. In fact, in Europe as a whole, there are less than 25 listed on a recognised stock exchange.
Unlike no other
In many respects, the industry is unique. Its customers are fiercely loyal and, in their eyes, this gives them the right to have a say in how their club is run. For example, it’s common to see fans protesting about rising season ticket prices. In contrast, if Tesco’s customers were upset about the price of baked beans, they would go and shop elsewhere.
And football’s business model doesn’t always make sense. On-field success requires huge amounts to be spent on players and their wages. This means there’s often little left over to return to shareholders.
Under these circumstances, conventional financial metrics are largely meaningless. Celtic warns that its earnings are “materially impacted” by its football success but also by its own “assessment of playing registration carrying values”. Expenditure on new players is recorded on the club’s balance sheet and then periodically reviewed for impairment depending on 10 factors. These include a player’s injury record as well as an assessment of the finances of the wider football industry.
The unusual nature of the industry probably explains why many of the world’s largest teams are privately owned. This ownership structure removes the pressure to deliver the ever-improving financial performance expected of a listed business.
Doing well
But a look at Celtic’s share price performance shows that it’s been steadily increasing. Since the end of the 2024/25 season in May – when it won the Scottish Premiership for a record-equalling 55th time — it’s up nearly 20%. And since September 2020, it’s risen over 50%.
Domestically, the club’s started this season well. After four games, the men’s team is top of the league and yet to concede a goal. It’s women are also unbeaten.
However, in August its men were knocked out of the Champions League. Losing on penalties to Kazhakstan’s Kairat Almaty was a major blow. It now means they must play in the UEFA Europa League, the continent’s second-tier competition.
Limited earnings growth
And in my opinion, how Celtic performs in Europe is going to have the single biggest influence on its share price. That’s because you don’t have to be much of a football pundit to know that the team will probably finish either first or second in the league this year. It’s topped the table during 13 of the past 14 seasons (including the last four). And you have to go back to 1984/1985 to find a club other than Celtic or Rangers that has won the league.
| Source of 2024 revenue | £m | % |
|---|---|---|
| Football and stadium | 50.0 | 40.1 |
| Merchandising | 30.1 | 24.2 |
| Multimedia and other commercial activities | 44.5 | 35.7 |
| Total | 124.6 | 100.0 |
But this success is a double-edged sword for potential investors. The loyalty of fans means its home matches are nearly always sold out. The scope for earning more prize money in Scotland and for generating additional gate receipts is limited. And with two teams dominating the country’s domestic competitions, the opportunity to secure better TV deals seems remote.
In my opinion, it’s Europe that really matters. But according to the bookies, Celtic are 14th favourites to win the Europa League. Therefore, success seems unlikely. And for this reason, I don’t want to invest.
