I put together an in-depth analysis last September into the controversial ownership of Manchester United, a football club I have hated for as long as I can remember.
But partisan divides apart, I wrote about how their fans had every right to be upset at the owners. As someone who has followed Newcastle my entire life, I could certainly empathise with the plight of being run by a bad man (Newcastle are now run by a different kind of bad, but that’s a story for another day).
Things have changed since. Not with my hate – that will always be there (perhaps even more so if my dreams of a first major trophy in 67 years are thwarted in Wembley this Sunday). But soon after I wrote that report, Man United were finally put up for sale, the green and gold brigade getting their wish granted.
But is it actually for sale? The Glazers announced that November afternoon that they were “commencing a process to explore strategic alternatives” for Manchester United. As I wrote at the time, that’s some extreme corporate speak for “we kind of want to sell, but only if we get a good price”.
And again, this is a hard lesson that I learned from following Newcastle under the barren reign of Mike Ashley, who repeatedly tried to appease fans by insisting the club was up for sale. Although, it never really was. It’s the hope that kills you, is an unfortunate truth I learned long ago.
For Man United, there are concerns that something similar may be happening. Two bids have reportedly been received – one from Britain’s richest man, Jim Radcliffe, and the other from a Qatari-backed consortium (you’ve got to love modern football, right?).
I have no insight into the dealings behind closed doors, but in looking at the market, there appears to be real cause for concern that the Glazers are playing some fun and games here.
With the soft deadline for bids arriving last Friday, Manchester United’s share price closed at $26.33. Today, it’s trading at $22.99, a 12% plunge wiping off half a billion of value. Make no mistake: this is investors concerned that a sale will not go through.
The share price had jumped up in November when the potential sale was announced, spiking from $13 to $22. News of Qatari involvement in recent times had kicked it up even further to $27.
But the wipeout Tuesday of this week came amid reports that the Glazers had been offered financial backing by the US hedgefund Elliot Management….and an offer to remain as owners. For Man United fans, that’s as sickening a blow since Casemiro decided to pick up the most unnecessary yellow card in the history of football before one of their biggest games of the season.
Club icon Gary Neville also made an interesting point on Twitter, pointing out how odd it is to increase ticket prices as you are potentially going out the door, a few million pounds of extra revenue being a drop in the ocean compared to the multi-billion valuation stamped on the club.
“I think what scares Man United fans most is the feeling this Man United ownership are running this process to drive a massive price up,” Neville added on Sky Sports.
“To try to somehow establish a level which means two of them can stay in and the rest of the family that want out can be bought out by an American fund who wouldn’t mind owning a minority or significant share but not the entirety of the share. That’s the biggest concern.”
In truth, the share price shouldn’t matter too much to the valuation. Only 10% of the club is floated on the exchange, since 2012 when the Glazers refinanced the club’s debt (half a billion of bonds were also issued).
With Man United languishing, the stock has actually been a pretty terrible investment, especially during a time when the stock market printed outrageous gains during one of the most explosive bull runs in history. But I digress.
I looked in depth at what a potential valuation could be last year, but what makes it so tough with football clubs is that these are incredibly illiquid and bespoke assets. Vanity and love for the game come into it – and that’s without even mentioning the fact that certain buyers may not even have financial considerations at all, i.e. nation states.
This could also be the Glazers playing hard ball over price. In my analysis last year, I wrote about how talk of a £7 billion valuation was fantasy talk, but £6 billion could potentially be achievable when benchmarking to the recent sale of Chelsea (a £2.5 billion distressed sale) and reports of a PSG target valuation of £3.5 billion – if all goes well.
Reports have since indicated that the £6 billion number is what the Glazers are targeting, but the market has been a little cooler than anticipated. The Qatari bid is said to come in at £4 billion, with Radcliffe’s just shy of that (although he has indicated he can match the Qataris by floating 25% for the public to buy).
£4 billion is certainly lower than I thought would be fetched, and it’s hard to see a sale going through at these levels. But these numbers are far from confirmed, and at the end of the day, a football club is a standalone asset that just needs one seller and one buyer, which is why it is so hard to put a number on them.
So, is it just hard ball by the Glazers? Or is a sale genuinely looking less likely? Nobody really knows. Time will tell, I suppose, but for Man United fans, I’d warn against counting your chickens before they’ve hatched; I’ve seen this movie before.
For now, it’s time to play the waiting game. Wembley awaits. And on a side note, anyone know a decent keeper who would be able to get to Wembley for a couple hours at 4:30PM this Sunday?
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