Tottenham Hotspur to switch from public to private limited company

If you’re interested in different types of legal structure for business organisations – or football – you might be intrigued by the decision by football club Tottenham Hotspur to “de-list” its shares from the stock market and “go private”.

Companies usually find that ‘going public’ helps them to raise finance. By inviting the public (in practice this usually means banks and other financial institutions like pension funds) to buy shares, it allows those companies to access an enormous pool of capital. Many, if not most, large business organisations in the private sector go down this road.

But there are hassles that go with the huge advantages of being able to draw on the giant cash holdings of potential investors. Accounts have to be detailed, and in the public domain. With no control over who buys shares, ownership of the company can fall into unfriendly hands. Investors, who are remote from the day-to-day concerns of the business, may pester for dividends and rapid payback, rather than seek to nurture and support the long term well-being of the company.

So news reports suggest that Spurs are fed up with the demands of the stock market. The club thinks they will find it easier to raise the finance they need for a new stadium (or to renovate their existing ground) from private investors. Perhaps they have even identified individuals who would be willing to stump up the cash, and hang in for a long term investment.

Most football clubs are – in financial terms – an awful investment, and investors rarely see handsome dividends. Tottenham are currently back in profit, but despite being one of Europe’s top teams and a relatively glamorous London Premier League side, losses are entirely normal.