[ad_1]
The Glazer family’s controversial 17-year reign at the helm of Manchester United has taken a significant step towards reaching a conclusion the supporters have been pining for.
They announced on Tuesday that United were up for sale and Raine Group has been instructed to find new investment, in the form of a complete sale or by selling a minority stake.
Any sale of a multibillion-pound business, however, is unlikely to be a quick process and there are many bridges to cross before a different name is above the door at Old Trafford.
Why have they chosen this moment to put the club up for sale?
The timing should not be viewed as a surprise — and there are myriad reasons for that.
For starters, 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. Arsenal, Chelsea, Liverpool, Manchester City and Tottenham had also signed up.
United fans reacting to the Super League proposals (Photo: Oli Scarff/AFP via Getty Images)
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.
Although Tuesday night’s statement appeared to be sudden, Premier League executives at rival clubs were made aware of the Glazer family’s intention to sell in the summer.
How much are Manchester United worth?
When the New York Stock Exchange — where they are listed — closed on Tuesday, 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 Glazer family can command.
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, says the market cap price will be ignored.
“If you take a look at the value of the business, it is a bit like a house — it is what you owe on the mortgage, plus whatever equity is in the house,” Maguire told The Athletic. “If you want to persuade at least 50 per cent of the shareholders, and by that, I mean the Glazers as they have 95 per cent of the votes, then you have got to get the whole family to agree to a sale.
“Are they going to accept the $15 (this was the share price before the NYSE opened on Wednesday)? Certainly not. Manchester United’s shares were previously trading at more than $20, and I think the highest price was close to $27.
“If they could get $24 or $25… and we normally call this a controlled premium, where to persuade at least half the owners of at least half the shares, you have got to at least offer them extra money, otherwise they can say they are happy. You need to make it worthwhile.
“Why sell when they are picking up £22million in dividends every year? They can sell off small tranches of shares, as we saw with Kevin and Edward.”
Kevin and Edward Glazer sold 9.5 million shares in the club in October 2021. They were worth around £137million.
“Manchester United is a cash cow, and if you want them to give that up, you have to persuade the Glazers to do so,” Maguire added.
Maguire points to Todd Boehly and Clearlake Capital buying Chelsea for £2.5billion this year as a good starting point when valuing United.
It is worth noting that Roman Abramovich, the Russian oligarch, had his UK assets frozen and was forced to sell the club following his country’s invasion of Ukraine.
“If we use Chelsea as a benchmark, and adjust 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 wee 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, 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.
“Chelsea were also a distressed asset, which would drive down the price because they had to be sold. Manchester United is one of those things if you are applying for a job: it is desirable, but not essential.
“You factor in those and add a few little premiums and that is how I got to my figure.”
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, 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.”
Ratcliffe, Britain’s richest man, is a United fan (Photo: Valery Hache/AFP via Getty Images)
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 emerge as would-be buyers.
(Top photo: Oli Scarff/AFP via Getty Images)
[ad_2]
