The record sale of Chelsea last year has proved to the Glazer family that now is the right time to sell Manchester United, industry experts told Reuters, with any deal for the Premier League club likely to be the biggest in sporting history .
British billionaire and long-time United fan Jim Ratcliffe’s company INEOS has entered the bidding process to buy the record 20-time English champions after failing to acquire Chelsea, who were sold for $5.2bn in May Was.
According to Neil Joyce, CEO and co-founder of the CLV Group, United have not won the league in a decade, making the unpopular Glazers the target of protests from many fans, but they are still an attractive prospect.
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The club is one of the biggest sports brands in the world and has set a revenue of 689 million euros ($750.94 million) in 2021-22.
“Chelsea being sold in 2022 means a rate has been set on the value of a Premier League club,” Joyce said.
“If you use the traditional way of valuing a club, which can be anywhere between eight and 10 times revenue, that kind of $5 billion number is probably on the low end of it.”
The Glazers bought United in 2005 for £790 million in a highly-leveraged deal that was criticized for loading the club with debt.
Not ‘rational market’
United’s net debt rose nearly 23% in September to £515 million, but that won’t deter potential investors, according to Joyce and Spencer Harris, associate professors of sports management at the University of Colorado.
“In a rational market, these types of loans would directly affect the bid and price,” Harris said. “But the Premier League in general and Manchester United in particular do not represent a rational market.”
The club’s valuation as a public company reached $4.3 billion in 2018, but Joyce said the new owners capitalized on the global fanbase to boost commercial revenue to $200 million and add $1–2 billion to the actual valuation. Can
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“If you’re looking at United as a medium-term investment, I don’t think there’s that much risk against today’s valuations,” he said.
“If anything, you could argue that they are potentially undervalued if you look at the $5 billion mark.”
old trafford investment
The Chelsea deal involved the new owners paying £2.5 billion ($3.10 billion) to buy shares, while a further £1.75 billion was to be invested in the club, particularly the stadium.
Tim Bridges, Principal Partner at Deloitte Play Business The group said United are an important asset but much more investment is needed to return to the top of the pyramid, starting with their Old Trafford stadium.
The largest club stadium in England seats approximately 75,000 fans but is considered a relic compared to modern European arenas. According to media reports, its renovation will cost one to two billion pounds.
“Investment in capital projects such as the stadium, the training ground at Carrington and continued investment in the playing squad has been very significant, compared to other major clubs,” said Bridge.
“Any new investors may need to consider these at United in the future. So it may well be that the Glazers feel this is the right time (to sell).”
United have returned to the top four under new manager Erik ten Haag, giving fans renewed hope of competing in the title race for the first time in years.
But Bridge said his resurgence would not help the Glazers raise the price.
“Any credible investor will look at the long-term picture rather than the short-term optics,” he added.
“Should they go ahead and qualify for the Champions League then that creates a significant increase in revenue and will be something investors keep a close eye on.”
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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)