Shareholders delighted as tycoon puts club in a league of its own (Financial Times 14 May)

Stefan Szymanski of the Tanaka Business School says the correlation between what teams spend, typically on players or stadiums, their position in their league and their income is higher in the Premiership.

The fans in the stands might not like it but there must be plenty of Manchester United shareholders who are secretly feeling as though Malcolm Glazer has delivered them the premiership title.

Since the US businessman first bought a stake in the club early in 2003, shareholders have seen the value of their investment almost triple.

Mr Glazer's steady increase in his holding, culminating in his successful bid to seize control this week, has helped Manchester United deliver a stock market performance that the team has not quite managed to match on the field in the past couple of seasons.

In 2002, the stock was languishing near 90p; yesterday, it was trading at 300p.

Compared with its quoted premiership peers, Manchester United's recent performance is at the top of the league.

Since the beginning of 2003, shares in Newcastle United have risen from just less than 30p to 44p now. Aston Villa's shares have climbed from almost 150p in 2003 to 363p now.

Manchester United's performance is even more striking considering that investors who got in at the beginning of the stock market careers of either club are still sitting on significant losses. Aston Villa floated at £11 in 1997, and Newcastle hit the markets at 135p in 1996.

Other listed clubs have fared even worse. Leeds United has been a high-profile departure from the London Stock Exchange. Chelsea, this season's champions, left investors from its float in 1996 with hefty losses when it was taken private by Roman Abramovich, the Russian billionaire, in 2003.

The number of teams listed has halved from a peak of 20 in the 1990s to 10 today. Analysts say there have been good reasons why United has stuck it out as others fell by the wayside.

David Hope, leisure analyst with Brewin Dolphin, says: "The strong performance of Man U since 2002 has been on the back of contracted revenues, strong cash generation and bid rumours." But analysts say that Manchester is in a league of its own because of its strict management of costs. It has been particularly attractive as an investment because it was cash-rich and debt-free.

According to Stefan Szymanski, of the Tanaka Business School in London, the correlation between what teams spend, typically on players or stadiums, their position in their league and their income is higher in the Premiership than for many other sports leagues around the world.

"The issue for Premiership clubs such as Man United and Arsenal is managed expansion," he says. "These two are as big if not bigger than the Barcelonas or Real Madrids, but their stadiums are up to 40 per cent smaller."

The lessons of badly managed expansion and cost overruns can be seen in teams such as Leeds, which punted everything on winning the Champions league, borrowed way beyond its means and almost collapsed last year with debts of £100m.

Other potential investors who may want to buy into clubs need to realise that financially, the sector is just not performing.

"The cost structure of some clubs went out of control and a lot of financial gains achieved by clubs were then struck out on players wages," says Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers.

"Clubs like Leeds got into difficulty. Most of the clubs, apart from Man U, do have debt and high players' wages, and don't have the ability to raise income like Man U has over the years. And this makes them less of a compelling argument for an investment."

He adds: "If you [took] Manchester United out of the equation, you [would] have to ask whether there is anything worth investing in."

As Mr Hunter puts it: "This is not an investment for widows or orphans."

For many private investors in football clubs, however, from millionaire chairmen to dedicated fans with a single share in their team, the financial returns are secondary.

Shareholders United, representing Manchester United's smaller shareholders, has been lobbying to keep the club independent.

The body, formed in May 1999, argues that while its investors have benefited from the recent rally in United's shares, the capital gains are not their priority.

"The primary aim of Shareholders United is to maintain the independence of Manchester United through ownership of shares by supporters of the football club," explains Sean Bones, vice-chairman of Shareholders United.

"Supporters bought shares in the club as an emotion investment and not for any other reason."