LONDON — Two of soccer’s biggest and most profitable teams are on the market together — and it’s no coincidence, according to analysts.
In November, the owners of Liverpool and Manchester United confirmed that they are open to new investment offers, with the potential for a full sale of the English top-flight clubs.
Liverpool’s owner, US sports conglomerate Fenway Sports Group, is believed to have invested nearly £3.3 billion ($3.97 billion) in the club, 12 years after it acquired 300 million. Goldman Sachs and Morgan Stanley prepared a structured sale for the interested parties, The Athletica first reported.
Meanwhile, New York-listed shares in British Manchester popped 18% on the news on 23 Nov. similarly opening themselves to their owners for investment opportunities. The club’s full run is expected to fetch £5 billion or more.
The majority shareholder, the American Glazer family, has had a tumultuous relationship with fans since in 2005 it won £790 million in a regulatory dispute, much of the leverage that added a solid chunk to the club’s debt pile.
In addition to the owners’ personal reasons, “certainly market factors will indicate the timing of these sales, certainly not a coincidence,” Dan Harraghy, senior sports analyst at market research firm Ampere Analysis, told CNBC.
Big money competition
One recurring complaint of Manchester United Glazer fans is the lack of investment in the club, both in terms of facilities and players.
But any future boost in funding comes amid a more competitive field from fellow Premier League clubs such as Manchester City – majority owned by Dubai’s royal Sheikh Mansour bin Zayed Al Nahyan – and Newcastle, acquired last year by a Saudi-led investment group. Arabic Fund.
“From a financial point of view, the current owners” [of Liverpool and Manchester United] to consider the level of investment that is required to compete with rival clubs that have owners with higher pockets both domestically and in Europe,” Harraghy said, also citing the Qatari-owners of Paris Saint-Germain.
“Middle East owners of public funds allow large clubs in both infrastructure and the acquisition of playing clubs to continue to improve their performance and financial performance.”
Old Trafford Stadium, home of Manchester United Football Club. In November, the club issued a statement indicating that the Glazer family, who are the majority owners of the club, “will consider all appropriate options, including new investment in the club, sale, or other matters that are of interest to the company.”
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While the Glazers have paid themselves in dividends since 2016 (although the payments have been dropped amid current ownership disputes), Manchester United reported a rise in revenue but a £115.5 million net loss for the 2022 financial year, up from a £92.2 million net loss. of the previous year.
In the most recently-published results, Liverpool reported a £4.8 million loss before tax in the year to May 2021 and a £46.3 million loss for 2020, as odd today’s revenue was hit by the pandemic.
“It may be that those in charge no longer see costs as sustainable, given the level of competition they have,” Harraghy added.
Failure of the European Super League
The imposition of a venture that was intended to create a new revenue stream for the large timbers could question the owners’ ability to improve their earnings.
The announcement of a new European Super League in the spring of 2021, which will be based automatically at 15 clubs, including Liverpool and Manchester United, was met with such widespread criticism and accusations of money laundering that the game was soon to be withdrawn.
Guaranteed income, especially from the income from castings in which participating clubs had significant control, was the key move behind the league. The Premier League has become a relatively more open competition, meaning the top teams are less certain about entering the tournament as the League champions each year, Harraghy said.
“You’re missing out on an absolutely significant hit to the club’s revenue,” he said.
At the same time, European soccer has numerous teams “that have a brand cell and a global base that makes them highly sought-after investments,” said David Bishop, partner and sports expert at LEK Consulting.
“Sports investment activity in post-Covid sports has taken a bit of a hit as many sporting bodies and teams have put the market on the market offering equity positions, often to help manage cashflow issues arising from Covid.”
This has helped broaden the flow and scope of the understanding, he said, noting recent capital plans in sports by investment firms including CVC, Silverlake, Redbird Capital and Dyal Capital. These include Spanish rugby, French and Spanish football, Indian Premier League cricket and business analytics.
“The US market, especially MLB, NBA, NFL, is now quite early and well positioned,” so investors have also begun to look harder for international sports opportunities in international markets, Bishop continued.
“In the cases of Liverpool and Manchester United Kingdom, both owners have held the clubs for a long time, and both things have greatly appreciated as leagues and brands and global fan bases have been created. Whether it is the right time to buy is enough. Special conditions, but in general these are assets that are above average to they should be pretty soft for a long time,” he told CNBC.
Media rights are increasing in importance to leagues, especially international ones, and investors have seen a significant increase in the global audience for the English Premier League, said Bishop.
There is also potential in the further foundations of international monetising through overseas experiences, businesses and games – as seen in the return to the UK, which attracts large audiences for American football and basketball games.
Angus Buchanan, managing director of Sports Management Consulting, also cited US private equity and institutional interest in soccer clubs as a major reason Glazer and Fenway Sports Group feel it’s a good time to sell.
“Both have been successful in ‘phase one’ of clubs converting brand equity and international fan bases into revenue, but growth has been flat in recent years,” he said.
LONDON, ENGLAND – OCTOBER 30: Jerry Jeudy #10 of the Denver Broncos runs for a touchdown against the Jacksonville Jaguars during the second quarter of the NFL game between the Denver Broncos and the Jacksonville Jaguars at Wembley Stadium on October 30, 2022 in London, England. (Photo Dan Mullan/Getty Images)
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Manchester United in particular has set a new paradigm in terms of selling publishing rights and making global partnerships, from Noodle manufacturer Nissin to Middle Eastern banks.
In 2022, the return on Premier League football was higher internationally than domestically.
The new owner would like to look at “phase two”, Harraghy said: taking the highly captive, busy, intergenerational fantasy and “digital and urban behavior” return strategies, using data from the database and direct to the fans with more offers.
“There would be a lot of growth figures to stand out to any potential investor,” Harraghy said.
Chelsea snap sale
The owners of Premier League clubs recently observed the rapid sale of Chelsea in May, which came amid a UK crackdown on the assets of Russian oligarchs following the Russian invasion of Ukraine in February. A consortium led by US investor Todd Boehly paid £4.25 billion for the stake (with £1.75 billion earmarked for future payments) after the government confirmed the proceeds would not go to former owner Roman Abramovich.
The amount of special interest requested, which Harraghy called unprecedented for a Premier League club, and media reports of up to 200 interested parties.
Analyst Angus Buchanan said the sale was likely to be “somewhat of a catalyst” for November’s results.
“Maybe the owners of the club have seen a little more activity in the market, and now there is a definite point in terms of valuation and interest,” he said.