How to score on soccer shares

Like most football fans, I spend rather a lot of cash every year following my favourite team. A single trip to watch Arsenal at the Emirates Stadium in London usually sets me back US$2,700 a weekend, and I do it around five times a year.

Yes, it's a crazy addiction I know, and I don't really think I can give it up.

But being a football fan is not all one way traffic. There is a chance to make some fast cash by snapping up football shares.

Let's face it, soccer in the UK is in a pretty healthy financial state. Two years ago the Glazer family took over Manchester United. At Liverpool, David Moores, the club chairman, sold his controlling stake - and with it his family's historic association with Anfield - to George Gillett Jr and Tom Hicks, both of whom own North American sports clubs, for US$440m, at the start of this year (Hicks is a co-founder of Hicks, Muse, Tate & Furst, the investment firm).

London's Arsenal has also caught the interest of a US investor: Stan Kroenke, the billionaire owner of the St Louis Rams, has snapped up an 11.3% stake and speculation is now rife that he will go for full control, in a deal likely to value the Ofex-listed club at US$1.3bn. Arsenal's tightly-held stock has soared on the speculation, up from around US$10,000 a share to near US$15,000.

In late May, billionaire Mike Ashley bid 100 pence/share for Newcastle United. It means that, despite a pretty dismal season on the pitch, shareholders are in line for a 19% premium against the price of the shares just a month ago - far better than the interest rate on any savings account anywhere in the world.

But it is not just the biggest clubs that are attracting suitors. West Ham - as one football insider put it, "the poor relation of London clubs" - was snapped up late last year for US$160m by a consortium led by Eggert Magnusson, the Icelandic businessman, who took over as chairman of the lower table club (a football fanatic, he is also chairman of the Icelandic Football Association); the consortium was backed by Björgólfur Gudmundsson, the billionaire chairman of Landsbanki.

Which leads to the big question, where next? Where can I make some serious money? I'm afraid Arsenal is probably a bad idea. At US$15,000 a go, it will cost you a fortune just to buy one share. And you probably wouldn't get it anyway.

Newcastle United was a good option but now that a takeover is underway, again it looks like you have missed the boat.

My two recommendations are Birmingham City and Millwall Holdings.

Shares in Birmingam hit 42 pence each last year and are now just 25 pence. Seeing as the club has just been promoted back to the Premier League, I would think they can only go up. And the club's US$40m valuation looks cheap, making it a potential takeover target.

As for Millwall, well these shares are just 0.03 pence each. The smallest rumour (and there have been a few) will send the price soaring. It's a huge risk, but if you are feeling lucky, you could score with these.

It's no secret that getting into a club's shares before a takeover is the best way to make fast cash. And by that I mean before the takeover rumours start, not after.

Then it's too late. So most of all, keep an eye out for the valuation of a soccer club. Given the huge amount of television money that flows into clubs, anything below a US$35m market value makes a club a takeover candidate. And well worth a punt.

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