Bongani Siqoko
Rugby may have appeared to unite the country when South Africa won the World Cup, but soccer could be the catalyst for real integration of blacks into financial markets.
Soccer team Kaizer Chiefs is expected shortly to announce plans to list on the Johannesburg Stock Exchange (JSE). Representative Louis “Sprinter” Tshakoane said discussions were at an advanced stage. He declined to give further details, saying the club was still pursuing the matter. “We don’t want to mislead the public and say we are going to list and we don’t,” he said.
But analysts say it’s simply a matter of time before the flotation goes ahead and the team’s caution is an attempt to dampen speculation. The listing is likely to provide many soccer fans with their first foray
into the financial markets and another means of demonstrating their support for the popular team.
Chiefs is arguably the wealthiest club in the Premier Soccer League. Last December they won the richest club competition in Africa, the inaugural R1-million Rothmans Cup. The club generates a profit of more than R5-million a year on an estimated turnover of R46-million from gate takings, technical sponsors, club membership fees and assorted other sources.
Assets include a new clubhouse, the first for a soccer team in South Africa, in Nautrena worth more than R10-million. Also known as the “Phefeni Glamour Boys” after the area in Soweto where they originated, Chiefs consistently attract close to 30 000 spectators per game. They also have more than 50 000 registered club members nationwide.
The “Amakhosi” ( Zulu for “chiefs”) are not only popular domestically. They were the first South African team to compete in the rest of Africa, and have a huge following in Lesotho, Zambia and Ghana. A listing on the JSE would help market the club internationally.
Oflaherty Sundelson Company stockbroker Wayne Edwards says international experience has shown soccer clubs could do well by listing. More than 20 British soccer clubs are listed, including Manchester United, Aston Villa and Newcastle. The trend is spreading with teams in Italy, Germany, France and Spain quoted on stock exchanges. This week saw the first announced flotation of a Swedish team.
Senior Chiefs executives have reportedly said they would sell some of their shares to faithful supporters. “If I were a Kaizer Chiefs director I would certainly sell some of my shares to my supporters,” said Edwards.
One major reason for listing Chiefs would be to raise capital. Tshakoane refused to discuss possible future development plans for the club, but it is likely that at least some of the money raised by a listing would be used to buy players.
This could encourage talented African players to remain on the continent, and lure European players to South Africa. Chiefs have already shown interest in Ivory Coast captain and striker Joel Teihi, who is one of the top goal scorers in the African Nations Cup in Burkina Faso.
The Chiefs squad is already valued at millions of rands, boosted by the addition of internationals and former Bafana Bafana kingpins Sizwe Motaung, now playing in Spain, Donald Ace Khuse in Turkey and Doctor Khumalo in the United States.
The unpredictability which provides the game with its popularity adds uncertainty to football as a business, however. “If some of the big names get injured, profit could be affected. Injuries, loss of sponsorship, games lost could hurt the share price,” Edwards said.
English outfit Sunderland lost a fortune when they were relegated from the Premier League in 1996. When Manchester United’s French captain Eric Cantona hung up his boots, the club’s share price dropped, reducing its value on the London Stock Exchange by 4-million. The loss of Khumalo, undoubtedly Chiefs most expensive player, could have a similar effect.
A stabilising force is likely to be the supporters’ sentiment towards the club. Enthusiastic fans are more likely to hang on to their shares than big institutional investors who would regard their stake in the same light as any other investment.