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The Glazer family has effectively put its Premier League club Manchester United up for sale, according to several reports last week. The American owners have retained several financial firms to facilitate the process — The Raine Group, Latham & Watkins LLP, and Rothschild and Co — and the club released a statement saying they are “commencing a process to explore strategic alternatives for the club.”

“As part of this process, the Board will consider all strategic alternatives, including new investment into the club, a sale, or other transactions involving the Company. This will include an assessment of several initiatives to strengthen the club, including stadium and infrastructure redevelopment, and expansion of the club’s commercial operations on a global scale, each in the context of enhancing the long-term success of the club’s men’s, women’s and academy teams, and bringing benefits to fans and other stakeholders.” 

Manchester United shares jumped about sixty percent on the news, adding more than a billion dollars to the club’s market capitalization. But many people are asking the same two questions: Why are they selling? And what’s the final price? So let’s dig in.

The most straightforward answer to “why” is that the Glazer family might finally bow to pressure from fans. The family added a billion dollars of debt to the club’s balance sheet when they acquired the club via leveraged buyout in 2005. They haven’t won a single Premier League title since Alex Ferguson retired in 2013 (after winning thirteen titles in the previous twenty-six years), and MANU shareholders have underperformed the S&P500 by about 200% since the club’s IPO in 2012.

Still, despite little to no success on the pitch and financial underperformance for shareholders off of it, the Glazer Family has already taken hundreds of millions of dollars off the table through dividends, management fees, and share sales.

For example, the Glazer family collected nearly $10 million in dividends last year alone and sold $686 million of Class A shares since the club’s IPO.

Combine this with management’s attempt to join the Super League, and it’s obvious why supporters of the 144-year-old iconic club are continuously protesting.

But the more interesting part of this equation is the price.

Forbes currently has the club valued at $4.6 billion. Still, Bloomberg is reporting that the Glazer family is in the market for a deal worth about $6 billion, and Rob Dawson of ESPN says they want a “record price” of $7.25 billion.

For context, a $7.25B price tag would equate to a nearly 11x revenue multiple based on United’s 2021-22 revenue of $663 million — compared to Chelsea F.C., which recently sold at a 6x revenue multiple.

But whether the final price ends up being $5 billion, $6 billion, or more than $7 billion, it will surely set a record for the highest-priced sports sale in history.

Highest Sports Team Sales In History (source)

1. Denver Broncos: $4.65 billion 

2. Brooklyn Nets: $3.3 billion 

3. Chelsea FC: $3.16 billion 

4. New York Mets: $2.42 billion 

5. Carolina Panthers: $2.28 billion

The potential buyer list reportedly includes heavy hitters like Jim Ratcliffe (UK billionaire), Prince Abdulaziz bin Turki Al-Faisal (via Saudi Arabia PIF), a consortium that includes David Beckham (played with Man Utd from 1994-2003), Amancio Ortega (Spanish businessman and founder of Zara), and even Apple.

“The California-based firm has no experience owning a football club the size of United,” reported The Daily Star last week. “But CEO Tim Cook is keen to explore the opportunities owning United could provide…Part of Cook’s plan could include Apple funding the building of a new state-of-the-art stadium that would be regarded as the best in the world.”

Manchester United’s Value As A Football Club

• 2005 purchase value: $1.2 billion (the late Malcolm Glazer completed a hostile takeover bid through a leveraged buyout with debt)

• 2022 club value: $4.6 billion (#3 most valuable football club in the world) 

• Club value growth since 2005: +283% 

• CAGR since 2005: 8.22% 

• 2021-22 revenue: $663 million (+3% YOY) 

• 2021-22 operating income: $128 million (-23% YOY) 

• 2-year value change: +10%

It’ll take some time for all of this to play out, and we probably won’t have a clear picture until 2023. But with Liverpool and Manchester United both going up for sale simultaneously, maybe Fenway Sports Group and the Glazers think their franchise valuations have peaked with a challenging economic outlook ahead.

Have a great day. We’ll talk tomorrow.

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