English football’s two most storied teams are suddenly in play.
Manchester United has joined great rival Liverpool in opening its doors to a potential buyout that could be the biggest in sporting history.
Following the sale of Chelsea in May, it sets up the prospect of three of the biggest Premier League clubs changing ownership in just a few months.
Newcastle was also bought by a consortium led by Saudi Arabia’s Public Investment Fund last year.
So why this relative, but rapid, flood on to 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, it feels like a significant factor in what has followed.
For any would-be sellers out there, it established a definite interest from the world’s super rich wanting a piece of football’s most popular league.
Boehly and Clearlake fought off rival bids from Chicago Cubs owners the Ricketts family, Boston Celtics owner Steve Pagliuca and UK billionaire Jim Ratcliffe among many others.
A fee of 2.5 billion pounds ($3 billion) for a team that has a smaller stadium than any of its elite Premier League rivals has set a marker for United and Liverpool, who have long-been the most popular in England, with enormous global reach.
United claims to have more than one billion worldwide fans and followers.
It also has by far the biggest stadium in the Premier League, with Old Trafford’s capacity at more than 75,000 in contrast to Chelsea’s Stamford Bridge, which holds around 42,000.
“Using business fundamentals, any valuation doesn’t give you 2.5 billion pounds for Chelsea,” Kieran Maguire, author of “Price of Football”, told The Associated Press.
“If the UK government could get that... (price) for Chelsea, clubs run far more prudently could legitimately get more. I worked out Chelsea to be worth something like 1.5 billion pounds in normal business circumstances. Chelsea was a forced sale.”
On that basis it appears anything goes in this market.
Maguire, who is also associate professor of football finance at Liverpool University, believes a figure of $4-4.5 billion would be reasonable for United. But numbers well in excess of that have been widely circulating since the Glazers, who also own the NFL’s Tampa Bay Buccaneers, announced plans to explore “strategic alternatives” this week.
“I’m reading figures of $6-7 billion and that’s taken me aback,” said Maguire. “The world of finance is full of very confident people who like shouting out big numbers.”
Merchant bank Raine Group, which conducted the sale of Chelsea, is handling the process for United, which could include a full buyout.
It will already be well-connected with the type of people who would be serious candidates to launch takeover bids.
Sports team ownership more than just business
Maguire says the lure of owning a sports team is about more than just business.
“If you are a billionaire, who are the people you associate with? You’ve got as much as everyone you know,” he said. “You’ve got the yacht, you’ve got the helicopter. If you say you’ve got Manchester United, you own the room. It’s like owning a Picasso or a Van Gogh. It’s a scarce piece of 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 to sell. Likewise, the Fenway Sports Group (FSG), which owns Liverpool and this month confirmed it was open to selling shares in the club.
The late tycoon Malcolm Glazer bought United in 2005 for 790 million pounds (then about $1.4 billion). The family stands to make a huge profit on that even by the most conservative valuations.
FSG bought Liverpool for 300 million pounds (then about $476 million) in 2010 and would likely expect to command at least the same sale price as Chelsea.
Still, both clubs would likely have known the potential for profit even before Abramovich sold up.
Another reason why they are now open to selling could be because of the aborted launch of a new European Super League last year, which sparked a furious backlash from supporters.
A new competition for European football’s wealthiest teams was seen as a way to bring in fresh broadcast revenues, without the jeopardy of missing out on Champions League qualification.
But its immediate collapse ended hopes of those new sources of income and forced the Glazers and FSG to make grovelling apologies to fans.
While there are still attempts from Real Madrid, Barcelona and Juventus to revive a Super League in some guise, owners of English football teams would have to tread cautiously.
That didn’t put off would-be buyers of Chelsea – nor did the stipulation of a commitment to invest a further 1.75 billion pounds ($2 billion).
A buyer of United would likely have to embark on a redevelopment of its ageing stadium.
Right ownership the priority
Supporters have criticised the Glazers for a perceived under-investment on and off the field, as well as the level of debt the family accrued during its leveraged buyout of the club.
Gross debt was 636.1 million pounds in United’s latest financial results published in September.
“Our club, at this moment in time more than ever, needs the right ownership and that should be the priority rather than simply the highest bidders and highest return for you,” Manchester United Supporters’ Trust wrote in an open letter to the Glazers this week.
“Fans will want to carefully scrutinise any new prospective owner - most of all we implore them not to repeat the mistakes you did - of alienating the fans that represent the greatest asset of Manchester United.”
Ratcliffe, who was a boyhood United fan and owns petrochemicals firm INEOS, said earlier this month that he had dropped his previously held interest in buying out the Glazers.
When asked again this week, INEOS provided no comment.
Saudi Arabia Sports minister Prince Abdulaziz bin Turki Al-Faisal said this week that he would welcome bids from the country for United and Liverpool.
“I hope so, if there are investors and the numbers add up, and it makes a good business,” he told Sky News. “Then the private sector could come in, or companies could come in, from the kingdom.”
Given the host of Americans, who also missed out on Chelsea and might want their own “Mona Lisa”, the Glazers and FSG should see plenty of interest.