Football clubs like Manchester United are getting more expensive
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.
Rafa Nadal pulls out of French Open
The Spaniard has failed to regain full fitness from a hip injury sustained earlier this year
Rafa Nadal has delivered news that no tennis fan wanted to hear.
The King of Clay will miss the French Open after failing to regain full fitness from a hip injury suffered at the Australian Open back in January.
The 14-time Roland Garros winner says he expects to retire following the 2024 season.
Nadal has dominated the clay court season for close to two decades.
The 22-time Grand Slam champion fronted a widely anticipated press conference at his tennis academy in Mallorca to drop the bombshell, saying its the right thing to do for his body and personal happiness.
“I’ll look to be 100% ready for next year, which I believe will be the last year of my professional career,” Nadal told a news conference at his tennis academy in Mallorca, Spain.
“The evolution of the injury I sustained in Australia has not gone as I would have liked. I have lost goals along the way, and Roland Garros becomes impossible.”
“I’ll not establish a date for my return. I’ll see how my body responds and take it from there,” said the 36-year-old. “If I keep playing at this moment, I don’t think I can be there next year.
“I don’t know if I’ll be able to come back in the highest level and compete for Grand Slams. What I will try to do is to give myself the opportunity to go back to what could be my final year competing at the highest level.”
China expresses concerns about ‘politicisation of sports’
The East Asian nation raised the issue when Premier Li met with the head of the IOC, Thomas Bach
China has expressed concerns to the International Olympic Committee (IOC) about the politicisation of sporting events.
The issue was raised when Chinese Premier Li Qiang met Thomas Bach, the head of the IOC, in Beijing over the weekend.
“China’s efforts to promote the Olympic spirit will never cease, and [China is] ready to work with IOC to oppose the politicisation of sports, and make further contributions to the Olympic movement,” Li said.
It is rare for China to raise such concerns with the IOC in public, and it was the first time it had made such comments since the Winter Olympics in Beijing early last year.
The United States and several of its allies took part in a diplomatic boycott of the Games, citing alleged human rights abuse in China’s far west region of Xinjiang.
Beijing has repeatedly denied the accusation and said it opposes any attempts to politicise sporting events.
Tasmanian AFL team becomes reality
Tasmania will have a team in the AFL after all 18 current teams agreed to the motion
An exciting day for residents of the Australian state of Tasmania today.
Outgoing AFL chief executive Gillon McLachlan confirming Tasmania has been granted the league’s 19th licence.
It follows the nation’s federal government confirming it will cover the $240 million shortfall to fund a new multi-purpose stadium at Macquarie Point.
This has long been viewed as Tasmania’s most significant hurdle for entry into the league.
All 18 clubs supported the state’s bid, before the AFL Commission agreed to a formal ratification.
McLachlan fronted a press conference at North Hobart Oval, alongside Premier Jeremy Rockliff, Acting Prime Minister Richard Marles and a whole host of players.
The CEO says the decision “will finally make [the] competitions truly national”. #trending #featured
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