With the football season under way, is it time to consider this FTSE stock?
Given the huge popularity of football, it might come as a surprise to learn that Celtic (LSE:CCP) is the FTSEâs 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, itâs common to see fans protesting about rising season ticket prices. In contrast, if Tescoâs customers were upset about the price of baked beans, they would go and shop elsewhere.
And footballâs business model doesnât always make sense. On-field success requires huge amounts to be spent on players and their wages. This means thereâs often little left over to return to shareholders.
Under these circumstances, conventional financial metrics are largely meaningless. Celtic warns that its earnings are âmaterially impactedâ by its football success but also by its own âassessment of playing registration carrying valuesâ. Expenditure on new players is recorded on the clubâs balance sheet and then periodically reviewed for impairment depending on 10 factors. These include a playerâs 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 worldâs 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 Celticâs share price performance shows that itâs been steadily increasing. Since the end of the 2024/25 season in May â when it won the Scottish Premiership for a record-equalling 55th time — itâs up nearly 20%. And since September 2020, itâs risen over 50%.
Domestically, the clubâs started this season well. After four games, the menâs team is top of the league and yet to concede a goal. Itâs 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 continentâs 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. Thatâs because you donât 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. Itâs 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 countryâs domestic competitions, the opportunity to secure better TV deals seems remote.
In my opinion, itâs 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 donât want to invest.
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James Beard has positions in Tesco Plc. The Motley Fool UK has recommended Tesco Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
