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 | | Monday, 1 October, 2001, 12:51 GMT 13:51 UK Newcastle 'to go private again'  Shares in Newcastle United jumped 5% following reports that the club's directors are considering taking it back into private hands. Newcastle's main shareholders Douglas Hall and Freddie Shepherd, who together own more than 50% of the club, are understood to be frustrated by the poor performance of its shares. According to the Financial Times, the pair have sounded out bankers about the possibility of taking the company private. The FT says other clubs are likely to follow suit, heralding the end of football's flirtation with the stock market. Bucking the trend The news came as Manchester United unveiled a 30% jump in profits, to �21.8m. The club, which has consistently bucked the sector trend, saw its shares price 5p to 135p on Monday, valuing it at around �337m. Other clubs have had a rougher ride, with soaring player wages outstripping additional income from media rights. The financial penalties of not qualifying for European competition and the risk of relegation have also led investors to question the value of soccer stocks. In the 1990s, football share prices soared as investors sought to cash in on the game's growing popularity.
But depressed share prices have meant the advantage of being a listed company has largely evaporated. Some clubs, such as Leeds, are now turning to the debt markets to finance new developments. The problem listed clubs have is that the value of their assets - their players, essentially - is not reflected in their share price. Young players might be worth millions on the transfer market but - unless they were bought by the club - their value is not represented on the balance sheet. The benefit of going back into private hands is that the club's finances are less subject to outside influence. It also means the club is easier to sell. However, clubs still face the problem of raising the cash to buy shares back from disgruntled investors. Poor outlook Nigel Hawkins, analyst at Williams De Broe, said the outlook for quoted football clubs remained poor. "With a handful of exceptions, Manchester United is a league apart on the pitch and it is definitely a league apart off the pitch," he said. But, he added, Newcastle had not been an "ideal" company to float in the first place. He said the club had a "rather unusual" structure for a PLC, with more than half of the company still owned by one man, Douglas Hall. From a corporate governance point of view, it was probably more suited to "some kind of private ownership". Newcastle's market value Newcastle's market value is currently �40m - compared to �190m when it floated in 1997. This is despite a squad that includes former England captain Alan Shearer, French international Laurent Robert, who was signed for �10m from Paris St Germain, and England international Kieron Dyer, who has been valued at more than �15m. The club's wage bill for the 1999/2000 season was �28.9m. Meanwhile, a private consortium is understood to be putting together a bid for Leicester City, to take it off the market. The club fired its manager Peter Taylor on Monday, after a disastrous run of form left it at the bottom of the Premiership table. | | See also:  Internet links: The BBC is not responsible for the content of external internet sites Top Business stories now:  Links to more Business stories are at the foot of the page. | ||||||||||||||||||||||
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