Investors show football clubs the red card

By Brian Gorman - Analysis

LONDON (Reuters) - Birmingham City's delisting this week reduces the number of UK football clubs on the stock exchange to just seven and the dwindling sector may soon disappear entirely from most investors' sights.

Money continues to pour into the sport and its popularity has so far defied recession, but clubs' failure to control costs, especially players' wages, means shareholders are often the losers.

Over the past few years, many clubs have quit the exchange well below their flotation price. Aston Villa was bought out in 2006 for less than half the flotation price. Leeds United went into administration in 2004, making the shares worthless.

"Basically, football clubs are lousy investments," said Andy Lynch, fund manager at Schroders and a Liverpool fan.

"It's a fantastic sport. It's great to go and watch," he said. "But I would never ever put my money, or the money of anyone I cared for, into a football club."

Analysts say there may soon be no listed football clubs left, analysts said, compared with around 20 in 2004.

In 2007-08, revenue for England's Premier Clubs rose 26 percent to 1.93 billion pounds, according to consultant Deloitte.

But the wages bill soared to more than 1.2 billion pounds, and is being inflated by pay deals such those of Chelsea captain John Terry, estimated by British media at 160,000 pounds a week.