Manchester United’s owners see lucrative escape hatch in soccer club deal boom

Manchester United fans protest against the Glazer family ownership during the Premier League match between Manchester United and Arsenal FC at Old Trafford on September 4, 2022 in Manchester, United Kingdom. (Photo: Robbie Jay Barratt - AMA / Getty Images)

By Pamela Barbaglia and Echo Wang

24 Nov 2022

The timing of a possible sale of Man United Football Club appears to have been carefully considered.

A sale of Manchester United Plc MANU.N could provide the soccer club’s controlling shareholders, the Glazer family, a lucrative exit from an investment that has languished over the past decade and drawn the ire of millions of soccer fans.

Deals for European football clubs this year, beginning with the sanctions-driven sale of Chelsea Football Club by Russian oligarch Roman Abramovich in May, have fetched top dollar.

It’s these rich valuations that have motivated the Glazers to formally put Manchester United up for sale, according to two people familiar with the matter.

The family, which made its fortune in real estate, retail and healthcare and also owns the Tampa Bay Buccaneers, bought the team for £790-million ($939.07-million) in 2005. A sale at valuations commensurate with deals like Chelsea would yield a profit of several billion dollars, the sources said.

The sources, however, warned that the Glazers, who own two-thirds of Manchester United through dual-class shares, may ultimately choose to sell only a minority stake or decide against any transaction.

A Manchester United spokesperson declined to comment.

The Glazers’ decision to launch a formal sale process now ends years of the family's resistance to pressure from fans to divest.

Many of the club’s supporters have complained that the Glazers’ debt-laden buyout of the team starved it of funds and that the owners needed to spend more to attract and retain talent and win trophies.

Those complaints were aired again this month by superstar player Cristiano Ronaldo, who parted ways with Manchester United for the second time.

Cristiano Ronaldo of Portugal looks on during the Portugal Training Session at Grand Hamad Stadium on November 23, 2022 in Doha, Qatar. (Photo: Mohamed Farag/Getty Images)

“The Glazers, they don’t care about the club or professional sport,” Ronaldo said in an interview with Piers Morgan on TalkTV on 14 November.

Spokespeople for the six members of the Glazer family that are major Manchester United shareholders could not be reached for comment.

Before the announcement of the sale process on Tuesday, Manchester United’s shares were hovering around $13, below the team’s initial public offer price of $14 in 2012.

Meanwhile, deals for football clubs are attracting lofty valuations.

In May, Chelsea was acquired by investment group led by Todd Boehly and Clearlake Capital for a purchase price of $3.1-billion and an additional $2.6-billion in future investments.

That deal valued Chelsea at 5.7 times its revenue for the last financial year, investment bankers said.

In August, investment firm RedBird Capital acquired Italian soccer team AC Milan for €1.2-billion ($1.2-billion), a record for a European club outside of the English Premier League.

More deals are in the works, with Manchester United arch rival Liverpool Football Club also exploring a sale.

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The value of acquisitions and major stakebuilding in the sports industry has risen to £9.6-billion this year, up from £1.8-billion last year, according to a report by law firm RPC last month.

At a 5.7 revenue multiple, Manchester United would fetch about $3.4-billion, a 41% premium to where the club’s shares were trading in New York on Tuesday before news of the sale process hit.

Analysts say the team is likely to fetch a higher multiple than that. Chelsea only has a fraction of Manchester United’s followers.

Manchester United has a bigger stadium and is more profitable. Despite going five years without having won a trophy, it consistently produces annual cash flow of about $100-million, making it a safe investment.

“We continue to believe that Manchester United’s fundamentals justify a premium to clubs sold earlier this year,” Jefferies analysts wrote in a research note.

Fans want a say

Manchester United needs new owners and fresh investment to halt years of decline and fans should be given a real say in how the club is run in future, the Supporters Trust Must said on Wednesday.

“Our club needs new investment more than ever. That requires new ownership,” Must, the leading fan group, said in a statement responding to news that some said would feel like winning a title if the owners left.

“Any new ownership structure must embed supporters, including a degree of fan share ownership, in their operating model.”

Supporters have sought a change of ownership for more than a decade and the clamour has grown louder with a lack of success on the field.

Thousands protested outside Old Trafford in April, lighting flares and singing songs demanding the Glazers “get out of the club”.

United have won nothing since they lifted the Europa League and League Cup trophies in 2017 and their world-renowned Old Trafford home and training facilities are also in need of an update.

Duncan Drasdo, the Must chief executive, told Sky Sports television “the real way to unlock the value of Manchester United is to work in partnership with the fans, not exploit them as customers.

“We want the opportunity to be partners with new investors,” he added.

Drasdo said fans were not looking at who might be the richest bidders, with plenty of speculation focusing on potential Middle Eastern investors as well as British billionaire Jim Ratcliffe.

“We want people who want to own the club and have the same ideals and goals as fans rather than looking to extract value for themselves,” he added.

Buyers line up

Many well-heeled buyers are fueling deals for football clubs. Private equity firms are attracted to the clubs’ cash flow and brand value. And sports teams are viewed by many billionaires as the ultimate status symbol.

In August, Elon Musk tweeted: “I’m buying Manchester United ur welcome” only to then clarify he meant it as a joke. A spokesperson for Musk did not respond to a request for comment.

Even before the announcement of a sale process, Manchester United had received overtures from at least one potential acquirer: British billionaire and a long-standing fan of the club, Jim Ratcliffe, Reuters previously reported.

A spokesperson for Ratcliffe declined to comment.

The Daily Telegraph reported on Wednesday that he had a serious interest in buying the club and would bid. The Financial Times said David Beckham, who spent over a decade at the club, was also open to holding talks with potential bidders.

Ratcliffe’s name was widely mentioned among fans as someone many would welcome, although there were fears he might be priced out with some estimates putting the club’s worth at more than $4.5 -billion. Reuters/DM

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