Manchester United buyer will need love and money

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Soccer Football - Premier League - Fulham v Manchester United - Craven Cottage, London, Britain - November 13, 2022 Manchester United's Alejandro Garnacho celebrates scoring their second goal with Bruno Fernandes. Action Images via Reuters/Andrew Boyers

LONDON, Nov 23 (Reuters Breakingviews) - Anyone who wants to buy Manchester United (MANU.N) will need deep pockets and a big heart. The famous soccer club’s controlling shareholders, the Glazer family, said on Tuesday they’re considering selling after 17 years. Rich valuations mean it’s a good time to get out. A less certain outlook and trouble on the pitch means a new owner will have to be motivated by more than financial goals.

The Glazers kicked off the trend of American sport investors buying British clubs when they took control of Manchester United in 2005. Though the 790-million-pound price tag and highly leveraged structure looked risky at the time, the clan’s bet has paid off. Soccer clubs’ revenue has boomed due to increasing demand from broadcasters and richer sponsorship deals. Manchester United benefited not just from being one of global football’s strongest brands, but also by roping in local sponsors like Japanese noodle makers. The club’s commercial revenue has roughly quadrupled to 258 million pounds since 2009 and held up well when the pandemic forced stadiums to close. In the year to June 2022 it accounted for 44% of the top line.

A resilient financial performance, and continuing demand from financial and sovereign investors for high-profile soccer clubs, mean the Glazers can expect a decent payday. Chelsea FC, which is smaller and less profitable, recently fetched 2.5 billion pounds ($3 billion) – a multiple of 5.7 times trailing revenue. On the same metric Manchester United would be worth $4 billion including debt – a third more than its current value, and four times what the Glazers paid in local currency terms.

A new owner will need to put more money into the club, though. Its Old Trafford stadium and training ground have not been renovated in the Glazer era. And the Red Devils’ performances on the pitch have not matched the financial success. Manchester United has not won the English Premier League since legendary manager Alex Ferguson left in 2013, and it failed to qualify for this season’s lucrative UEFA Champions League. The departure of star player Cristiano Ronaldo less than 18 months after his return won’t help sales of replica shirts.

The broader question is how soccer revenue holds up when fans are facing an economic squeeze. Matchday revenue may suffer and broadcasters may struggle to keep charging big subscription fees.

The failure of top European clubs – including Manchester United – to set up a breakaway Super League also means that players will continue to keep a disproportionate share of the financial spoils. Any buyer will need deep pockets and patience.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

CONTEXT NEWS

Manchester United said on Nov. 22 that it was exploring strategic alternatives, including “new investment into the club, a sale, or other transactions”.

The British soccer club is controlled by the Glazer family, which acquired a majority of the club's shares in 2005 before listing it in New York in 2012.

Manchester United said its board will consider all initiatives to strengthen the club, including stadium and infrastructure redevelopment, and expansion of the club’s commercial operations.

Manchester United shares rose 15% to $14.94 on Nov. 22.

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

Editing by Peter Thal Larsen and Pranav Kiran

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