Investing in football club equities was once the domain of the staunch supporter, interested more in hanging a share certificate on the wall than making money.

But, of late, football shares have been attracting far more astute investors, as a string of wealthy businessmen have bought huge stakes in clubs.

Takeovers and speculation over potential takeovers have served to buoy the market, yielding rosy returns for those in the right stock at the right time.

In times past, buying footie shares has been an object lesson in how to turn lots of cash into a nice pretty share certificate and not much more thus, demonstrating your loyalty over common sense, says Simon Denham, managing director of spread betting firm Capital Spreads.

But, over the last few years, Premier League club shares have experienced something of a renaissance, as more hard-headed businessmen take over in the boardroom and foreign invaders have sniffed a global brand.

Chelsea and Manchester United are already in foreign hands: Russian billionaire Roman Abramovich and US sports tycoon Malcolm Glazer own majority stakes.

Alexandre Gaydamak son of another Russian billionaire is co owner of Portsmouth, while on Wednesday American billionaire Randy Lerner completed his takeover of Aston Villa after securing the required 90 percent of the Birmingham club's shares.

West Ham, Newcastle United and Arsenal are the latest trio at the centre of takeover talk.

Israeli businessman Eli Papouchado a property magnate with hotel interests in several countries is considering bankrolling a takeover of West Ham United.

He has been approached for money by Kia Joorabchian, an Iranian businessman who is fronting a consortium to buy the club for 80 million pounds, and the deal could be concluded in the next couple of weeks.

Meanwhile, a Jersey based firm said last week it was interested in buying fellow Premiership club Newcastle United. The news that the Belgravia Group is in early talks with the club pushed its share price higher, giving it a current market capitalisation of 88.5 million pounds.

And it appears that the opening shots might have been fired in a bid for Arsenal, after mystery investors bought 3.5 million pounds worth of the club's shares last week. More than 1 percent of the club's shares were sold at about 5,000 pounds each the largest weekly trade in 18 months.

The unprecedented interest in buying football clubs has been attributed to a new Premiership television deal worth nearly 700 million pounds per year from 2007 to 2010, as well as a greater financial realism among club bosses.

They are trying to control wage bills and boost revenues through ground investment as at Arsenal or more careful merchandising, as pioneered by Manchester United.

Britain's laid back attitude to foreign ownership has also served to attract overseas investors; markets in Italy and Spain are, in contrast, not nearly as open.

Since Malcolm Glazer pointed out, rather forcefully, that a worldwide brand name like Manchester United should be worth a bit more than the original 350 million pounds where he first started to buy the shares serious investors have taken a closer look at (football clubs') balance sheets, says Denham.

TV revenue is now an almost guaranteed income flow for the middle and top tier clubs, and the Premiership has a truly global following.

FAST RISERS

This flurry of takeover activity has helped those football clubs that are listed to outperform on the stock market if not on the field.

Shares in Aston Villa, Arsenal, Newcastle and Tottenham are among those that have rallied strongly in the past few years, comfortably beating many FTSE 100 stocks.

Aston Villa is up 170.6 percent over the past three years and 266 percent over five years, while Newcastle has risen 145 percent and 250 percent over those periods. That compares to returns of 59.6 percent and 64.7 percent respectively on the FTSE All Share index.

But football is a notoriously fickle business. So, what does the sector hold for retail investors?

In general, there are two key problems with investing in football clubs: a lack of liquidity and an unviable financial model.

Some larger clubs have successfully attracted multi millionaire backers, but they seem to get involved through a passion for football and to swell their ego, rather than because it's a sound business decision, says Justin Modray, head of communications at Bestinvest Brokers.

For example, Chelsea posted a 140 million pound loss in 2004/05, making a small dent in Abramovich's rather deep pockets.

Few football clubs, he says, have viable financial models. And, despite lucrative television deals and moves to reduce costs, the outlook is precarious.

While there have been a few success stories among clubs that have kept a sensible lid on costs, the ridiculous inflation in both players' wages and transfer fees over recent years means many clubs are struggling to survive, let alone post a profit, says Modray.

Even if a club is lucky enough to make an operating profit, chances are the manager will want to use the cash to sign new players in the never ending pursuit of building a winning squad.

He adds that the gulf between financial success and failure can also rest on a knife edge.

One poor performance, or bad luck, is all it takes for a club to be knocked out of a lucrative cup tournament, taking millions of pounds of TV, sponsorship and other revenues with it.

Besides this, would be buyers can have trouble getting hold of the shares, says Denham.

Liquidity has never been something of which Footie stocks could be accused, he added.

In some cases extreme wealth would probably help. Buying shares in Arsenal at around 5,000 for each and every one would certainly take a dent out of your season ticket budget.

WORTH A SPREAD BET?

For those who want to take the plunge, one way of getting involved without forking out several thousand pounds is to take a small punt via a spread bet.

An alternative to traditional share trading, this allows you to speculate on the movement of stocks and shares without using a stockbroker. UK residents do not incur capital gains and income tax on profits.

Capital Spreads is quoting Tottenham at 56 to 58p, Newcastle at 67 to 70p, Southampton at 43 to 44.5p and Sheffield United at 12 to 14p.

Football funds are another option. Singer & Friedlander launched one in 1997, but closed it five years later in the wake of poor performance and little interest from investors.

However, the Hero Football Fund, a closed ended Jersey domiciled unit trust, is currently trying to raise 100 million pounds.

The fund plans to invest up to 85 percent in football players, with the rest being invested in football related equities. It will act as a co investor when a club wants to sign a player, and hopes to notch up profits when the player is eventually sold.

But Bestinvest's Modray warns: This is high risk. What happens if the player suffers a career ending injury? Or their form takes a turn for the worse and they are sold at a loss?

Transfer fees might also drop to a more realistic level in future, as clubs strive to keep their heads above water even the mighty Chelsea can't lose money indefinitely.

Retail investors, it seems, might be well advised to steer clear of football club equities.

If you're a fan then I'd suggest remaining exactly that a fan of your club and not an investor, concludes Modray. Otherwise, when your team loses it could hit your pocket as well as your mood.

CREDIT CARDS

Those who still want to show their loyalty to their club with their hard earned cash could always consider football related financial products, such as credit cards and savings schemes.

Credit cards offered by the Premiership teams and a handful of Championship teams offer 0 percent interest for 12 months on balance transfers on a par with other market leaders: the only card which betters the offer is the GE Money Transformation Card, which gives interest free credit on both transfers and purchases for a year.

There are a range of savings schemes too.

In Scotland, 11 Premier and First Division teams have signed up to Dunfermline Building Society's Soccersaver account Aberdeen, Celtic, St Johnstone, St Mirren, Falkirk, Dunfermline, Hamilton, Kilmarnock, Dundee, Dundee United and Queen of the South.

Similar schemes are available south of the Border: West Bromwich Building Society's Super Saver account is affiliated to a number of clubs, including Aston Villa.

It pays up to 3.25 percent gross, while the Dunfermline Soccersaver account has a top interest rate of 3.55 percent. That compares to a best buy of 5.15 percent with ICICI Bank's HiSave account.

Stuart Glendinning, managing director of price comparison service Moneysupermarket.com, said: A football fan likes nothing more than showing loyalty to their club.

(But) while some products fare OK in comparison to products on the wider market, even the most committed of football fans should not be swayed by gimmicks, perks, or the love of their club.

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