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Why two iconic soccer clubs are up for sale at the same time

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Scales 'always been tipped in favor' of bigger soccer clubs, says sports finance lecturer

LONDON — Two of the world’s biggest and most profitable soccer teams are on the market at the same time — and that’s no coincidence, according to analysts.

In November, the owners of first Liverpool and then Manchester United confirmed they were open to new investment offers, with the potential for full sales of the top flight English clubs.

Liverpool’s owner, U.S. sporting conglomerate Fenway Sports Group, is thought to have put a roughly £3.3 billion ($3.97 billion) total value on the club, 12 years after acquiring it for £300 million. Goldman Sachs and Morgan Stanley have prepared a sales deck for interested parties, The Athletic first reported.

Meanwhile New York-listed shares in Manchester United popped 18% on the news on Nov. 23 that its owners were similarly opening themselves up to investment opportunities. A full takeover of the club is expected to fetch £5 billion or more.

The club’s majority owner, the American Glazer family, has had a tumultuous relationship with fans since gaining a controlling stake in 2005 for £790 million in a controversial, highly leveraged deal which added a substantial debt pile to the club.

Beyond any personal motivations of the owners, “certain market factors will mean the timing of these sales is certainly not a coincidence,” Dan Harraghy, senior sports analyst at market research firm Ampere Analysis, told CNBC. 

Big money competition

One recurring complaint Manchester United fans have had of the Glazers is a lack of investment in the club, across both facilities and players.

But any future boost in funding comes among an ever-more competitive field from fellow Premier League clubs such as Manchester City — majority owned by Dubai royal Sheikh Mansour bin Zayed Al Nahyan — and Newcastle, acquired last year by an investment group led by the Saudi Arabian Public Investment Fund.

“From a financial viewpoint, the current owners [of Liverpool and Manchester United] will be considering the level of investment that’s required to keep up with rival clubs who have owners with deeper pockets, both domestically and in Europe,” said Harraghy, also citing Qatari-owned Paris Saint Germain.

“State-funded Middle Eastern owners allow the clubs to spend big on both the club’s infrastructure and acquisition of players to continue to improve their footballing and financial performance.”

Old Trafford Stadium, the home of Manchester United Football Club. In November the club released a statement indicating that the Glazer family, who are majority owners of the club, will “consider all strategic alternatives, including new investment into the club, a sale, or other transactions involving the company”.

Christopher Furlong | Getty Images News | Getty Images

While the Glazers have paid themselves through dividends since 2016 (though have dropped the payments amid the current ownership discussions), Manchester United reported a rise in revenue but £115.5 million net loss for the 2022 fiscal year, from a £92.2 million net loss the previous year.

In its 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 in 2020, with the pandemic pummelling match day revenue.

“It is possible that those in charge no longer see the expenditure as sustainable, given the level of competition they face,” Harraghy added.

European Super League failure

The implosion of one venture that was intended to create a new revenue stream for big clubs could have added to owners questioning their ability to improve profitability.

The announcement of a new European Super League in spring 2021 that would give automatic entry to 15 founding clubs, including Liverpool and Manchester United, was met with such widespread criticism and accusations of money-grabbing at the expense of the game, that it was soon called off.

Scales 'always been tipped in favor' of bigger soccer clubs, says sports finance lecturer

The guaranteed income, particularly from broadcast income over which the participating clubs would have had significant control, was a key motivation behind the league. The Premier League has become a relatively more open competition, meaning top teams are less assured of entry into tournaments like the Champions League each year, said Harraghy.

“Missing out on qualification can be a notable hit to a club’s income,” he said.

Investor interest

At the same time, European soccer has numerous teams “who have a brand cache and global fan base which makes them very sought after investments,” said David Bishop, partner and sports specialist at L.E.K. Consulting.

“Investment activity in sports has also received a bit of a jolt post-Covid because many sporting bodies and teams have come to market offering equity positions, often to help manage cashflow issues arising from Covid.”

This has helped expand the deal flow and understanding of the space, he said, noting recent capital deployments in sports by investment firms including CVC, Silverlake, Redbird Capital and Dyal Capital. These span rugby, French and Spanish soccer leagues, Indian Premier League cricket and in sports analytics businesses.

Walter Isaacson reacts to Elon Musk's Manchester United tweet

“The U.S. market, particularly MLB, NBA, NFL, is now pretty mature and well invested, so investors have also begun looking harder for US-type sporting opportunities in international markets,” Bishop continued.

“In the cases of Liverpool and Manchester United, both owners have held the clubs for a long time, and both assets have appreciated a lot as their leagues and brands and global fan bases have developed. Whether it is a good time to buy is quite situation-specific, but in general these are assets that should be quite resilient over the medium to long-term,” he told CNBC.

Revenue opportunities

Media rights are of growing importance to leagues, particularly internationally, and investors will have noted the significant growth of the global audience for the English Premier League, said Bishop.

There is also potential in further monetising international fan bases through experiences, merchandising and overseas games — as is being seen in reverse in the U.K., which is attracting big audiences for American football and basketball games.

Angus Buchanan, managing director of The Sports Consultancy, also cited U.S. private equity and institutional interest in soccer clubs as a major reason the Glazers and Fenway Sports Group may feel it is a good time to sell.

“They have both been successful at a ‘phase one’ of converting clubs’ brand equity and international fan bases into revenue but have seen flattening growth in recent years,” he said.

LONDON, ENGLAND – OCTOBER 30: Jerry Jeudy #10 of the Denver Broncos runs for the touchdown against Jacksonville Jaguars during second quarter in the NFL match between Denver Broncos and Jacksonville Jaguars at Wembley Stadium on October 30, 2022 in London, England. (Photo by Dan Mullan/Getty Images)

Dan Mullan | Getty Images Sport | Getty Images

Manchester United in particular set a new paradigm in terms of selling broadcasting rights and doing global partnerships, from Japanese noodle-maker Nissin to Middle Eastern banks.

In 2022, broadcast revenue for the Premier League was higher internationally than domestically for the first time.

A new owner would look to develop ‘phase two’, Harraghy said: taking highly captivated, engaged, intergenerational fanbases and developing “more digital and sophisticated” revenue strategies, utilizing database information and going straight to the fans with more offers.

“They would be projecting some aggressive growth numbers to any potential investor,” Harraghy said.

Chelsea snap sale

Owners of Premier League clubs will have closely watched the fast-paced sale of Chelsea in May, which was rushed through amid a U.K. crackdown on the assets of Russian oligarchs following the Russian invasion of Ukraine in February. A consortium led by U.S. investor Todd Boehly paid £4.25 billion for the club (with £1.75 billion earmarked for future investment) after the government confirmed the proceeds would not go to previous owner Roman Abramovich.

Of particular interest will have been the amount fetched, which Harraghy called unprecedented for a Premier League club, and the media reports of up to 200 interested parties.

Analyst Angus Buchanan said the sale was likely “somewhat of a catalyst” for November’s action.

“Perhaps the club owners have seen a bit more activity in market, and now there’s a fixed reference point in terms of valuation and the level of interest,” he said.


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