Manchester United are for sale.
After years of conflict between supporters and owners, the Glazer Family,
who have held majority control of the club since 2005, are searching for a buyer.
But why now, and what will happen next?
The timing should not be viewed as a surprise.
The Glazers, who are based in the United States, have observed the Chelsea sale
and then witnessed Fenway Sports Group outline its plans to sell Liverpool.
Liverpool being on the market led to a possibility United’s owners could miss
out on a potential sale of their own, while there would have been
concerns about the possibility of being forgotten about by would-be investors.
Perhaps a more significant factor as to why the Glazers have decided now is the time to seek a
sale is the failure of Project Big Picture in 2020 and the European Super League in 2021.
Project Big Picture, which had been approved by the Football League,
was a proposal created by Liverpool and United which would have seen the Premier
League’s biggest clubs gaining control over the running of the top flight.
The cost of this would have been increasing funding down the football pyramid. Rick Parry,
the EFL chairman, labelled it a “great idea”.
Project Big Picture, however, was unanimously rejected by
the Premier League. After that failed,
the Glazer family became heavily involved in plans for a European Super League.
Had either proposal gone ahead, it would have boosted the Glazers’ finances,
so they were left wondering where that growth was going to come from — and this
leads to redeveloping Old Trafford, which in turn is another factor for selling up.
The cost of a season ticket at Old Trafford hasn’t changed for years,
and it would have been almost impossible for the Glazers to raise prices without a huge backlash,
so the obvious solution is to get more supporters inside the stadium.
United are in the early stages of planning a redevelopment and it has been noted that the
cost — while strengthening the first team and investing in the training
ground at Carrington — is a significant reason to seek significant investment.
It is a challenge that requires additional capital, which,
in their model, the club does not have access to.
How much are Manchester United worth?
When the New York Stock Exchange closed on the day of the sale announcement, in late November,
Manchester United’s market cap (how much it would cost to buy all of the shares associated with the
club) was just shy of $2.5billion (£2.1bn). After the markets opened on Wednesday morning,
the market cap had climbed to $3.03bn (£2.5bn) by 8pm (GMT) (3pm EST).
This, however, will not dictate a sale price. The initial suggestion is that United could be
sold for £5billion — and it is Raine Group’s job to attract the highest bidder. Some believe that
figure will be a stretch, while other reports indicate they are targeting around £8bn.
Kieran Maguire, the University of Liverpool’s football finance expert,
points to Todd Boehly and Clearlake Capital buying
Chelsea for £2.5billion this year as a good starting point when valuing United.
“Using Chelsea as a benchmark, and adjusting for the fact it was a distressed asset and it lost
£900,000 a week for 19 years under Roman Abramovich, I am getting a
figure in the region of £4-4.5billion for Manchester United,” said Maguire.
“You could argue it’s Manchester United, the footballing equivalent of the Mona Lisa,
and therefore you add on a bit more. £4billion is achievable. £5bn would
be a stretch but not impossible if there are plenty of buyers.”
A common metric when working out a club’s value is multiplying its revenue by four
or five. Based on United’s financial accounts for the year ended June 2022,
where they generated £583.2million in revenue, they would be worth, at most, £2.9bn.
So, how did Maguire get to a total of more than £4billion?
“If you take a look at the Chelsea deal”, he says,
“they were sold on a revenue multiple of 5.7. I used the 2019 figures, and the reason for
that is because it was the last season that was completely independent of COVID-19.” he said.
“There are still some COVID ripples in Manchester United’s 2022 accounts. For example,
they didn’t have a pre-season tour, which is worth up to £15million a year,
and there is still a hangover from the rebate given to Premier League broadcasters.
Who could afford to buy United?
Sir Jim Ratcliffe, the owner of Ineos and Britain’s richest person,
is a Mancunian and has discussed the idea of owning the club he supported as a boy.
Speaking at an event in October 2022, Ratcliffe said: “If it had been for sale in the summer,
yes, we would probably have had a go following on from the Chelsea thing.
But we can’t sit around hoping one day Manchester United will become available.”
The situation has developed since those remarks, and the owner of Ligue 1 side
Nice is being viewed as someone with the financial means and motive to buy United.
Jim O’Neill, who led the Red Knights group in a takeover bid in 2010, would consider putting
together a consortium but he first wants to examine the detail of the Glazers’ intentions.
O’Neill, a member of the House of Lords and former Goldman Sachs chairman,
is a lifelong United fan and served as a non-executive director from 2004 to 2005.
When Chelsea were on the market,
the majority of interest emanated from consortiums in the United States.
Given the influx of American owners into English football over recent years, there is a
good chance — as long as the price is right — the Glazers keep the ownership of the club in the U.S.
Aside from a consortium or an individual with billions of pounds to spare, it is
difficult to overlook a bidder emerging from a nation state.
Saudi Arabia are tied up with Newcastle United,
Qatar opted for Paris Saint-Germain and Abu Dhabi bought Manchester City.
There has been talk of Dubai getting involved in a bidding process, while Bahrain and Kuwait,
two other oil-rich states, could yet emerge as would-be buyers.