Change of guard likely at Manchester United



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Manchester United up for sale Image: Coliseum GSVA

It is the news that has rocked the football and financial world: After 17 years, the Premier League club Manchester United F.C. (UK) could be changing ownership.

‘sky sports’ stated that it was announced on November 22nd that the Man United owners – the Glazer family – are willing to listen to offers for one of the biggest football clubs in the world, which is believed to be valued at £5bn.

The Manchester United Football Club, commonly referred to as Man United, or simply United, is a professional football club based in Old Trafford, Greater Manchester, England (UK). The club competes in the Premier League, the top division in the English football league system.

The Old Trafford is a football stadium in Old Trafford, Greater Manchester, England (UK), and the home of Manchester United F.C. With a capacity of 74,310 it is the largest club football stadium in the United Kingdom, and the 11th-largest in Europe.

‘sky sports’ further stated that a Manchester United statement confirmed the American owners’ plan to identify “strategic alternatives” and said the process will consider a number of options “including new investment into the club, a sale, or other transactions involving the company”.

A sale of Manchester United is now far likelier than at any other time during the Glazer family’s ownership.

The Board confirmation that the club would evaluate “strategic alternatives” – financial jargon for a sale or other form of corporate activity – means that exiting United altogether is now a serious consideration for the owners who have benefited financially from the last 17 years but have also been rocked by incessant criticism of their stewardship.

That does not mean a sale is certain to take place: Depending upon the level of interest and the price they are offered, the Glazers could yet decide to continue their tenure at Old Trafford.

The Premier League club Chelsea F.C. was sold for £2.5bn in May and the Glazers will be looking for at least twice as much. It is worth noting the world record for a sporting franchise is the £3.9bn the National Football League (NFL) team Denver Broncos (US) was sold for in August.

There has been talk of the club changing hands for as much as £10bn but it remains to be seen whether any interested parties are prepared to spend anywhere near that figure.

The new owners are likely to have to guarantee they will invest significant funds in infrastructure, for example, a figure of £1.75bn was set in the Chelsea sale – and they will not be able to use a leveraged buyout to purchase United.

The Glazers family might conclude that the financial challenges of enabling United to compete again for the Premier League title and of rejuvenating a tired Old Trafford stadium may be better met by others.

The global financial crisis means cheap credit is no longer as freely available to finance this themselves.
 

Leisurely Affair

A sale of United is likely to be a more leisurely affair, and will presumably involve a delisting of their New York-quoted shares as well as the sifting by bankers at The Raine Group of what are likely to be the numerous offers.

It is expected the club’s strategic review will run for at least a couple of months, and detailed talks with buyers will get underway sometime in the New Year.

If a full sale does take place, completion of a deal by the end of the current season is a more realistic timetable – and that would be without any financing or regulatory obstacles.
 

Price Tag

Chelsea was sold for £2.5bn in May and the Glazers will be looking for at least twice as much. It is worth noting the world record for a sporting franchise is the £3.9bn the Denver Broncos were sold for in August.

There has been talk of the club changing hands for as much as £10bn but it remains to be seen whether any interested parties are prepared to spend anywhere near that figure.

The new owners are likely to have to guarantee they will invest significant funds in infrastructure – for example, a figure of £1.75bn was set in the Chelsea sale – and they will not be able to use a leveraged buyout to purchase United.
 

The ‘Ronaldo Factor’

Many of the issues raised by soccer giant Cristiano Ronaldo (Portuguese professional footballer) – who has since left Manchester United – in an explosive interview with British broadcaster Piers Morgan – United’s waning performance and the owners’ alleged disinterest in the club – reflect the malaise felt by many fans about the Glazers’ ownership.

To that extent, United supporters may well feel that Ronaldo’s intervention was helpful in crystallizing the shareholders’ decision to explore an exit.

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