The two most famous teams in English football are suddenly on the line.
Manchester United have joined arch-rivals Liverpool in opening their doors to a potential takeover that could be the biggest in sporting history.
Following the sale of Chelsea in May, it raises the prospect of three of the Premier League’s biggest clubs changing hands in just a few months.
Newcastle was also bought last year by a consortium led by the Saudi Public Investment Fund.
So why this relative but rapid surge in the market?
The acquisition of Chelsea by Todd Boehly and Clearlake Capital was a unique case, with Russian oligarch Roman Abramovich forced to sell after being sanctioned by the UK government for his links to Vladimir Putin.
Still, that seems to be a big factor in what followed.
For any potential sellers, this has created definite interest from the world’s super rich who want a piece of the most popular football league.
Boehly and Clearlake have fended off rival offers from Chicago Cubs owners the Ricketts family, Boston Celtics owner Steve Pagliuca and British billionaire Jim Ratcliffe, among others.
A £2.5bn ($3bn) fee for a team that has a smaller stadium than any of its elite Premier League rivals set a marker for United and Liverpool, who have since long the most popular in England, with a huge global reach. .
United claim to have over a billion fans and followers worldwide.
It also boasts by far the largest stadium in the Premier League, with Old Trafford’s capacity of over 75,000, unlike Chelsea’s Stamford Bridge, which holds around 42,000.
“Using company fundamentals, any valuation doesn’t give you £2.5 billion for Chelsea,” ‘Price of Football’ author Kieran Maguire told The Associated Press. “If the UK government could get this… (award) for Chelsea, the much more conservatively run clubs could rightfully get more.
“I calculated that Chelsea were worth something like £1.5 billion under normal trading circumstances. Chelsea were a hard sell.
Based on this, it seems like everything is happening in this market.
Maguire, who is also an associate professor of football finance at the University of Liverpool, believes a figure of $4 billion to $4.5 billion would be reasonable for United. But numbers far beyond that have been widely circulated since the Glazers, who also own the NFL’s Tampa Bay Buccaneers, announced plans to explore “strategic alternatives” this week.
“I read numbers of $6 billion to $7 billion and it surprised me,” Maguire said. “The world of finance is full of very confident people who like to shout big numbers.”
Merchant bank Raine Group, which sold Chelsea, is handling the process for United, which could include a full takeover.
He will already be well-connected with the type of people who would be serious takeover candidates.
Maguire says the appeal of owning a sports team goes beyond business.
“If you are a billionaire, who are you associated with? You have as many as everyone you know,” he said. “You have the yacht, you have the helicopter. If you say you have Manchester United, you own the room. It’s like owning a Picasso or a Van Gogh. It is a rare work.
“If you really wanted the Mona Lisa, you would pay a huge price. Is Man United the Mona Lisa of football?
The Glazer family will certainly see the business case for sale. Similarly, Fenway Sports Group (FSG), owners of Liverpool, confirmed this month that they are open to selling shares in the club.
Late tycoon Malcolm Glazer bought United in 2005 for 790 million pounds (then around $1.4 billion). The family should make a huge profit on it, even by the most conservative estimates.
FSG bought Liverpool for 300 million pounds (then around $476 million) in 2010 and would probably expect to get at least the same selling price as Chelsea.
Still, both clubs would likely have known the profit potential even before Abramovich sold.
Another reason they are now open for sale could be the aborted launch of a new European Super League last year, which sparked a furious reaction from fans.
A new competition for the wealthiest teams in European football has been seen as a way to generate new broadcast revenue, without risking missing out on Champions League qualification.
But its immediate collapse ended hopes of these new revenue streams and forced the Glazers and FSG to issue a creeping apology to fans.
Although there are still attempts by Real Madrid, Barcelona and Juventus to revive a Super League in one form or another, owners of English football teams should exercise caution.
That didn’t put off potential Chelsea buyers – nor did the stipulation of a commitment to invest an additional 1.75 billion pounds ($2 billion).
A United buyer is likely to embark on a redevelopment of their aging stadium.
Supporters have criticized the Glazers for a perceived underinvestment on and off the pitch, as well as the level of debt the family accumulated during their leveraged buyout of the club.
Gross debt was £636.1million in United’s latest financial results released in September.
“Our club, at this time more than ever, needs the right owner and that should be the priority rather than just the highest bidders and the best return for you,” Manchester United Supporters’ Trust wrote in an open letter to the Glazers this the week. “Fans will want to carefully consider any potential new owners – above all we implore them not to repeat the mistakes you have made – to alienate the fans who are Manchester United’s greatest asset.”
Ratcliffe, who was a childhood United fan and owns petrochemical company INEOS, said earlier this month he had dropped his interest in buying the Glazers.
When asked again this week, INEOS offered no comment.
Saudi Sports Minister Prince Abdulaziz bin Turki Al-Faisal said this week he would welcome offers from the country for United and Liverpool.
“I hope so, if there are investors and the numbers add up, and it makes a good deal,” he told Sky News. “Then the private sector could come in, or companies could come from the kingdom.”
Given the host of Americans, who have also missed out on Chelsea and may want their own ‘Mona Lisa’, the Glazers and FSG should see plenty of interest.
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