There was plenty of excitement surrounding Manchester United shares earlier this month as rumours swirled that Saudi crown prince Mohamed bin Salman was shopping for the Premiership football club. Middle Eastern investors have always liked marquee names when it comes to acquisitions, and there are few more prominent global brands than Manchester United, which was listed on the New York Stock Exchange in 2012.
The story goes that bin Salman was keen to buy a big stake, if not a controlling stake in the club, mirroring the acquisition of Manchester City by Mansour bin Zayed al Nahyan of Abu Dhabi, who scooped the team for just over £200 million right before the financial crisis hit in 2008, and who has lost an estimated £500m plus on his investment since then.
Manchester United is currently owned by the Glazer family having been acquired in 2005 (when they took control of 57% of the club). While the Glazers listed some Manchester United shares in New York in 2012, the vast bulk of Manchester United equity is closely held by the family and it is this that bin Salman would need to buy.
The Manchester United share price is used as a benchmark for the valuation of the overall club, hence commentators were able to come up with a £3.5 billion figure earlier this month, although it is understood that the Saudis would have to be prepared to write a cheque for more than £4 billion to buy Manchester United now, making it one of the more expensive sports teams on the planet.
This is really a prestige acquisition: if bin Salman really wanted a Premiership football team, there are many cheaper ones out there. Nor is the fleet float of Manchester United stock a real factor in all this, as it is unlikely that a strategic acquisition of this nature is going to need to go to the market to buy up the free float. Would you?
Added to the mix now are the reputational issues that Saudi Arabia is currently facing, having seemingly sanctioned the murder of Saudi dissident journalist Jamal Khashoggi in Istanbul in October. This is making them persona non grata in many quarters, and a high profile acquisition like Manchester United is likely to be dogged by public outrage, not least from the Manchester United fan base.
Manchester United shares have been in something of a slump since they hit their 52 week high at 27.70 back in August, since dropping to 21.43. The Saudi rumours have provided the shares with some short-term energy, but the enthusiasm wears off fairly quickly.
We’d be surprised if the Saudi deal goes through now – bin Salman probably has a lot of other issues to worry about, and the Glazers have their own position to consider. Unless you are a die hard Manchester United fan who simply has to own a share in the club, I’d leave Manchester United shares well alone.
