It has been roughly a decade since Manchester United were the kings of English football, much to the consternation of its fans and schadenfreude of rivals. Yet the lack of recent success may be of little matter to a buyer.
The American Glazer family who own what is arguably still England’s biggest club is looking for an investor and may be prepared to sell out. They are in the market for a deal that values United at about £5 billion (S$8.3 billion), Bloomberg News reported in August.
While the owners of fellow English Premier League giants Liverpool are also weighing a sale, and rivals Chelsea were sold in a £4.25 billion deal just earlier this year, neither brand can compare with United, according to people involved in football investment.
The side from the north-west of England forged their reputation over decades of triumphs in domestic and European competitions – including glory years under legendary Scottish coaches Matt Busby and Alex Ferguson – ensuring their status as a premier brand for buyers.
“This deal has to be at a landmark valuation,” said Adam Sommerfeld, sports investment specialist at London-based Certus Capital Partners.
“Clearly this is the leading light of football, probably sport overall in terms of M&A at the moment. Everyone who is anyone is going to be looking at this very seriously.”
Among the names coming up as potential suitors for United is British billionaire Jim Ratcliffe, a fan of the club who earlier this year offered to buy Chelsea.
Meanwhile, Saudi Arabia’s sports minister, Prince Abdulaziz bin Turki Al-Faisal, told the BBC that there was a lot of “interest and appetite” in both United and Liverpool in the kingdom and his government would support a private sector bid. A group led by Saudi Arabia’s wealth fund bought Premier League club Newcastle United last year.
Competition for United could be intense, if recent deals involving European football clubs are any guide. Chelsea, previously owned by Russian tycoon Roman Abramovich, was eventually sold to a consortium led by US billionaire Todd Boehly after a fierce bidding process run by the US investment bank Raine Group that initially drew more than 250 interested parties.
United’s fundamentals “justify a premium to clubs sold earlier this year”, analysts at US investment bank Jefferies Financial Group wrote in a research note. Compared with Chelsea, United have a bigger stadium, wider global reach and generate more revenue.
“We expect a competitive process, as MAN U is a truly unique asset with significant global reach and plays in the strongest realm within the current media landscape – live sports,” the Jefferies analysts wrote.
Deloitte’s annual Football Money League 2022 shows United generate annual revenue of €558 million (S$799.4 million), compared with Chelsea’s €493 million. Overall, 20-time English champions United placed fifth in the latest ranking, which they topped in 2017. The biggest revenue generator in European football is now Abu Dhabi-backed cross-town rival Manchester City.
Raine is advising United on their sale process, with Rothschild & Co acting as financial adviser to the Glazer family. United’s US-listed shares jumped 68 per cent this week.
While there is no shortage of money from the Middle East and American private equity that could come in to battle for United, not everyone is convinced the club will fetch a high price.
Former Goldman Sachs Group economist Jim O’Neill, a United fan who once bid to buy the club, told Bloomberg TV that the valuations being talked about already looked “out of reach”.
Buying any top football club is a gamble because the business model requires teams to succeed on the field to qualify for the lucrative Champions League, Europe’s elite club competition. Unlike Chelsea and Liverpool, United failed to make the cut last season. They last lifted the trophy in 2008, and won the Premier League most recently in 2013.
The late Malcolm Glazer bought United in a 2005 leveraged buyout that saddled them with debt and the family have incurred the wrath of fans ever since.
While this was mitigated in the early years of their ownership as the team continued to win trophies under Ferguson, resentment has grown steadily after his retirement in 2013.
“They don’t really need to sell,” Certus’ Sommerfeld said of the Glazers.
“Looking at adding the brand value, I get to around £4.7 billion, but I think the Glazers would want to surpass that.” BLOOMBERG
