Over the past few weeks, the ownership situation around Manchester United has begun to make noise once more.
Ineos have fully settled into life running the sleeping giant that is Manchester United, with multiple positives now beginning to emerge after several unpopular decisions were made last year.
Ineos made hundreds of employees redundant, citing the reason as cost saving with a bloated staff at the club. In addition, Ineos raised ticket prices which far from endeared them to the fanbase.
However, Sir Jim Ratcliffe gave United a £90m influx of cash to boost PSR struggles, which has allowed the impressive summer that the club managed to complete.
Additionally, United are moving forward with new stadium plans, which is a step to move the club to the top of the sport infrastructure-wise. This is also what has happened with Ineos unveiling a new £50m Carrington renovation which saw the training ground revamped.
However, despite the work Ineos have done so far at United, they have little say right now in the future. This is because the Glazers can drag Ineos into a full sale at anytime due to ‘drag along’ rights.
Sir Jim Ratcliffe, Omar Berrada and Avram Glazer at Europa League final with Manchester United.
Photo by Alex Pantling – UEFA/UEFA via Getty Images
Manchester United branded bad value for £6bn takeover valuation
Ratcliffe’s £1.25bn part-takeover of United has been shown to be bad value with the club not seen as a commercial superpower in its current standing.
Chart depicting Manchester United's commercial revenue vs the Big Six for United in Focus
Man United commercial income vs Big Six graph Credit: Adam Williams/United in Focus/GRV Media
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United’s brand value has been slashed in the past few years, all while every other club in the big six has seen massive growth.
However, earlier this week, the Daily Mail wrote about how United could end up on the market once again, however, speaking exclusively with United in Focus, finance expert Adam Williams has explained that at £6bn, buying the club is a terrible deal.
“The strength of the relationship between the Glazers and Ratcliffe varies depending on who you ask.
“There has been some talk of strain based on things as trivial as the location of meetings, for example. Other sources say they get on famously, however. But either way, Ratcliffe didn’t get where he is by allowing his heart to rule his head. The Glazers’ wealth is inherited, but they clearly are similarly hard-nosed when they need to be. So I don’t think any decision on the future of the club are going to be made based on how much the two parties do or don’t like each other on a personal level.
“Ultimately, the future of the club depends on whether there is a market for it at the £6bn the Glazers want.
“Sheikh Jassim’s bid didn’t have adequate proof of funds – that is a matter of public record in the SEC filings. If they had been able to give the Glazers the assurances they needed, who’s to say that it wouldn’t have been a full takeover? But based on the Mail’s report, it sounds like Qatar’s interest has waned anyway.
“If they are looking at a £6bn valuation, then thy would accept and sell their shares and Ratcliffe’s if an offer came in, but it’s rarefied air in terms of who can afford that.
“Gone are the days where an individual tycoon could afford a club like Man United. Now, it’s private equity firms and state-backed projects. There are only so many of those about. There are lots of billionaires, yes, but if you’re spending £6bn on something, it’s got to be part of a diversified portfolio. There is no billionaire who is worth £7bn and who is going to put £6bn into one asset.
“My personal view is that, from a clinical business perspective, paying £6bn for Man United is terrible value as it stands. That’s more because of the system they operate in as opposed to anything to do with the club itself.
“There is a huge inflationary cycle that the regulators – be that the Premier League or UEFA – have been very ineffective at stopping. Alan Sugar once likened the money in football to ‘prune juice’: in one end, out the other. No one is making any money in the game and they never have. It all goes on wages and transfers.
“Unless something system changes, there is never going to be a market for a £6bn-valued asset that loses money most years. That’s what the Glazers were trying to do with the European Super League – they wanted to create a franchise-style system that would guarantee profit. As things stand, I just don’t see where the value is.
“Perhaps that will change one day. But there was a reason that it was such a shallow pool of investors the last time Man United were up for sale.”
Buying in at Manchester United right now may end up being smart
While United’s valuation has been plummeting after 8th and 15th place finishes in successive seasons and now no Champions League football, this summer feels like a flipping point.
Chart showing Manchester United's matchday income and planned stadium capacity at Old Trafford next to rivals
Man United stadium capacity and matchday income Credit: Adam Williams/United in Focus/GRV Media
United are on track to hit £1bn revenue in the future if Amorim is correct in his prediction that the Red Devils will be back at the pinnacle of the sport.
This will come if United have the new stadium, continue growing the US market, and finally and most importantly get their act together on the pitch.
So for prospective buyers, this summer could be the cheapest they’ll get United for, and therefore the value may skyrocket when on-field performances improve.
However, with Qatar not believed to be interested anymore, options are slim for United.