Skip to main content

£3 billion price tag would deter United buyers

Would anyone want to buy Manchester United?   Football finance guru Kieran Maguire provides the answers and they are largely negative.

If somebody wanted to buy the club as a trophy asset, then yes. It is one of the biggest sporting brands in the world and the reflective benefits of that would be huge. We are talking ultra-high-net-worth individuals, of whom there aren’t many. There is nothing to stop anybody buying the club.

Realistically, I can’t see somebody who wants to maximise profits coming in to buy the club: i.e. the Glazers Mark II. Simply because the rejection of both Project Big Picture and the Super League has constrained their ability to take control and power. Most importantly from United’s point of view, and this has been underplayed, they were hoping to sell the rights directly to fans. I can’t see that happening for a while yet, at the very least. That could have been a significant income booster for the club. So you take that out of the equation.

Manchester United shares have underperformed at the New York Stock Exchange since they were initially listed in 2012. So where is the upside from an investor’s point of view?

The equivalent of an Abramovich or Mansour would be interested, though. There are people whose wealth we cannot countenance. Manchester United are still a ridiculously sexy brand.

It is more likely to come from the Middle East: Saudi Arabia, Jordan. There are some very rich people in Africa as well.

Jim Ratcliffe of Ineos could afford the club but his view is that the prices being asked were too much. He has bought a French team (Nice) and is focusing on other sports.

Today’s value according to share price is £2.1 billion. The Glazers would want a premium, however. You have to persuade at least 50 per cent to sell up. So that’s the family. They would want a mark-up by at least 40 per cent, somewhere close to £3 billion.

In addition, the banks will have “change of control” clauses in the lending arrangements they have with Manchester United. Those loans could be rolled over but factoring in forced payments could be another £700 million.

It is an awful lot for a club that pays relatively small dividends per year and has limited scope to boost the money coming in.

On the club's debt burden Maguire states: 'At present, I don’t see the debt as being a detriment to the club.

When they were paying the PIK loans at 14.25 per cent interest rate, there were quite a few years when the interest costs exceeded £100 million per year. Now the two outstanding loans are 2.25 and 3.75 per cent, so the interest costs are £20 million or so. For a club that generates £600 million per year in revenue, it’s not a problem.

In terms of repaying the debt, they renegotiate when the terms come close to ending and kick it down the road. The banks are more than happy because they get guaranteed interest coming in from Manchester United. Manchester United are happy because they never actually repay the capital. It is the equivalent of an interest-only mortgage.'

Labels:

Comments

Post a Comment

Popular posts from this blog

Fulham requires big funding from owner

After lengthy delays, Fulham’s shiny, new Riverside Stand has finally opened, creating “a unique Thameside destination with first class facilities for supporters and partners on match days, as well as for the wider community year-round”. This ambitious project has increased Craven Cottage’s capacity by around 4,000 to 29,600, while it has also taken advantage of the club’s fantastic location and wealthy catchment area by including two Michelin star restaurants, a rooftop swimming pool, corporate hospitality and event space, all benefiting from views of the Thames. Chief executive Alistair Mackintosh observed, “Fulham is the sort of club that can have a business class or first class and have fans that turn left on a plane.” Indeed, there is also an exclusive members club – with a football season ticket as an optional extra. It’s fair to say that “the times they are a-changing”, as this is a long way from the traditional pie and a pint. However, in a world where clubs face the tw...
Post a Comment
Read more

Threat of financial calamity removed from Baggies

West Bromwich Albion had effectively been in decline ever since the club was sold to a Chinese consortium in August 2016, paying a figure north of £200m to buy former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership was fairly disastrous for the club, but his unloved tenure finally came to an end after Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club. This change in ownership was urgently required, due to the numerous financial problems facing West Brom, including growing high-interest debt and serious cash flow concerns, following years of no investment from the former owner. Indeed, West Brom’s auditors had already rung the alarm bell in the 2021/22 accounts when they cast doubt on the club’s ability to continue as a going concern without making player s...
1 comment
Read more

A poor financial record, but new hope at Everton

I recently saw an amusing video online in which a group of Everton fans were rebuked in jest for being hopeful.  Football fans in general tend to swing between excessive optimism and excessive pessimism, but for many it seems that moaning is in their bloodstream (Spurs fans probably take the trophy).  However, Everton fans have had plenty to moan about on and off the pitch.   Let’s hope that a new era is about to begin for this grand old club. Everton’s 2023/24 financial results covered a fairly momentous season, when they ended up 15th in the Premier League, though they would finished three places higher if they had not received an 8-point deduction for breaching the Premier League’s Profitability and Sustainability Regulations (PSR). It was a worrying time for Everton fans, as the club faced a “perfect storm” of issues, including large financial losses, an ever increasing debt burden, a challenging stadium build and the tortuous sale of the club. There were eve...
Post a Comment
Read more