Claims that Manchester United could be worth $7bn have been greeted with scepticism by analysts. United's shares rose sharply last week and were trading at around $21.50, valuing its equity at $3.5bn or over $4bn including debt.
However, a valuation of $4bn to $5bn for a business that is losing money and in need of capital investment looks hard to justify. Modernising Old Trafford might cost as much as $1.5bn. Competition has got fiercer in the Premier League with Saudi backing for Newcastle United and the rise of Manchester City.
Nevertheless, competition could drive up the price. The Saudi government has given the green light to its investors to bid. There will be plenty of interest from the United States.
The Ineos owner, Sir Jim Ratcliffe, has repeatedly stated
his interest in buying the club and has already explored the possibility of a
takeover with two of the Glazer family, describing them last month as the
“nicest people” and “proper gentlemen”, before adding that “they don’t want to
sell it”.
Ratcliffe is expected to explore a takeover once more,
though those familiar with his ownership of Nice suggest that the challenging
experience of running the Ligue 1 side will make him cautious of overpaying for
the club he supports. “There is so much to do to fix United,” a source told the
Sunday Times. “You could get every
decision right and still take years to catch up with Man City. If you’re
someone like Jim you have to factor in not just the cost, but the risk of
failure and the reputational damage that would bring. Owning Manchester United
is not easy.”
Bidders would have opportunities to monetise United's global fan base through merchandising, bespoke advertising and sponsorship as well as newer channels such as non-fungible tokens and other crypto assets, although fan scepticism about them is growing.
Before the pandemic United's revenue peaked at a club record of £627m in 2018/19 but slipped back to £583m and a net loss of £115m in 2021/22.
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