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Football clubs like Manchester United are getting more expensive

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Manchester United: the business tactics that could lead to a record multi-billion-pound sale

It seems that another item can now be added to the long list of things that are getting more expensive: football clubs. The bids coming in to buy Manchester United, reportedly in the region of £4.5bn (the owners are said to want £6bn) would make it the largest amount ever paid for a club.

Given that the current US owners, the Glazer family, bought Manchester United in 2005 for around £800 million, the current valuation makes it unsurprising that a sale may be on the cards.

But can a football club, even one as famous as Manchester United, really be worth £6bn?

For comparison, in 2021 one of its rivals, Newcastle United, sold for a fraction of that sum, at around £300 million. Yet given that Newcastle had been bought for £133 million in 2007 (about £200 million in today’s money), that controversial sale was still seen as providing a decent return.

But it was Chelsea, sold in May 2022, which started the sale bonanza among the biggest British clubs. Manchester United, Liverpool and Tottenham Hotspur have all been linked to potential sales since then.

Chelsea had been bought for £140 million by Roman Abramovich in 2003, when it was struggling financially. Two decades later, its £2.5 billion price was achieved despite the club being what is known as a “distressed asset” (something that needed to be sold because Abramovich had been sanctioned by the UK government), meaning that bids were probably lower than if the sale had been on the open market.

Crucially though, Chelsea had also become a more impressive club, winning a number of trophies (two Champions League, two Europa League, five Premier League titles and five FA Cups). (The profit from the Chelsea sale is now earmarked for humanitarian causes in Ukraine.)

Another important element behind a club’s value is, of course, how much any potential owner is willing to pay. Research suggests that owning a football club is generally something that loses money, so owners normally fit one of three categories.

First, there are those who view clubs as a trophy asset; second, fans or local benefactors who want to support their side; and third, those that think they can make money from the club by making changes.

The Glazers fall squarely into the last category, and took the opportunity to buy a club through a leveraged buyout – in essence, using comparatively little of their own money – and taking money out annually through dividends.

That leveraged buyout meant that some of the money used to buy the club was secured against the club itself, like a mortgage, so the debt was borne by the club rather than the owners.

And that debt was considerable. Over the ownership of the Glazers, £837 million has been spent on interest payments alone.

Another reason for the increase in value of clubs has been the increase in revenue they can generate. The Premier League, for example, has been significantly increasing its income from selling overseas broadcasting rights (the latest US deal is more than double its previous one), and this leads to more money for the clubs. Increasing global interest in the Premier League has also added value to the small number of clubs which feature in it.

Other things that affect the value of clubs have nothing to do with football. For example, the pandemic led to the very rich getting richer and so there is more disposable income at the billionaire potential owner level.

But ownership comes with plenty of risk too and, like winning matches, financial success is never guaranteed. Around 40% of football clubs in the top four leagues of English football have gone into administration since the Premier League began, including eight of the original 22 Premier League members.

The culture of spending above your means in English football may, in the long term, be tempered by the proposed implementation of an independent regulator. In the meantime football club ownership remains, for most, a loss-making business.

For the Glazers though, selling their club for around £5 billion would surely be seen as a big win. They put in relatively little of their own money to buy it, have taken money out in dividends, and are now expected to make a massive profit on the sale price. Divisive tactics they may have been, but very lucrative too.

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Chiefs secure back-to-back Super Bowl titles against 49ers

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Will Patrick Mahomes be hailed as one of the greatest quarterbacks in NFL history? 

The Kansas City Chiefs emerged victorious once again, defeating the San Francisco 49ers 25-22 to claim their second consecutive championship.

The high-stakes game kept fans on the edge of their seats as both teams showcased exceptional skill and determination.

The 49ers, known for their strong defence, put up a formidable fight, but the Chiefs’ offensive prowess ultimately proved too much to handle.

STAR PLAYER

Quarterback Patrick Mahomes led the Chiefs with a stellar performance, showcasing his prowess with strategic passes and crucial touchdowns.

MASTER CHIEFS

As the confetti rained down on the Chiefs, celebrations erupted both on the field and among fans worldwide, marking another historic moment in the team’s legacy.

With this victory, the Chiefs solidified their status as a dominant force in the NFL, leaving fans eagerly anticipating what the future holds for this powerhouse team.

The Chiefs join the Pittsburgh Steelers of the 1970s, the Dallas Cowboys of the 1990s and New England Patriots of the 2000s and 2010s as the only NFL teams to have won three Super Bowls in a five-year span.

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Amazon targets bankrupt Diamond Sports for streaming rights

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Amazon considers acquisition of Diamond Sports as part of its plan to expand streaming portfolio

Sources suggest that Amazon is eyeing the streaming rights for major sports leagues including MLB, NBA, and NHL, signalling the tech giant’s strategic move into the lucrative world of live sports broadcasting.

The potential deal with Diamond Sports would provide Amazon with a significant foothold in the sports streaming market, allowing the company to offer a comprehensive range of live sports content to its Prime Video subscribers.

This move aligns with Amazon’s broader strategy to diversify its entertainment offerings and attract a wider audience. The acquisition of streaming rights for popular sports leagues could make Amazon a major player in the competitive streaming landscape.

Industry experts speculate that Amazon’s interest in Diamond Sports is driven by the desire to capture the growing market for live sports streaming, a segment that has gained immense popularity in recent years.

The acquisition would not only give Amazon access to a vast library of sports content but also position the company as a formidable competitor to traditional broadcasters in the live sports broadcasting arena.

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Disney’s sport streaming goals

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Disney’s ESPN may achieve a $24 billion valuation; potential suitors could involve Apple and Verizon.

In a recent financial report, Bank of America suggests that Disney’s ESPN could be on the verge of reaching a staggering $24 billion valuation. This eye-catching figure has sparked interest from potential buyers, with technology giants Apple and telecommunication leader Verizon being touted as likely contenders.

The valuation surge is attributed to ESPN’s successful digital transition, with streaming services, exclusive sports content, and expanding international markets contributing to its growth. Disney’s acquisition of 21st Century Fox’s sports networks further boosted ESPN’s portfolio, making it an attractive asset for prospective buyers.

Apple, known for its foray into content creation with Apple TV+, could leverage ESPN’s sports content to expand its media empire. Meanwhile, Verizon, with its vast telecom infrastructure and distribution capabilities, could use ESPN to enhance its content offerings and engage a broader customer base.

This development marks a pivotal moment in ESPN’s history, and its future owner could redefine the landscape of sports broadcasting. As the valuation continues to climb, all eyes are on the potential suitors and the ensuing negotiations.

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