(Bloomberg Opinion) -- The yearlong Manchester United takeover saga echoes the team's pursuit of revival on the pitch: plenty of sound and fury, a periodic surge of hope that something spectacular might happen, and then the inevitable letdown with an underwhelming result.
Shares of Manchester United Plc fell as much as 13% in early US trading on Monday on news that a Qatari group led by Sheikh Jassim Bin Hamad J.J. Al Thani had withdrawn its bid to buy the club. The Qatari exit means British billionaire Jim Ratcliffe, the founder of chemicals company Ineos Group Holdings SA and a lifelong United fan, is poised to buy a minority stake from the controlling American Glazer family.
The outcome may satisfy the deal's principals, though it's unlikely to please many others. The stock's drop reflects disappointment among minority shareholders at the loss of the hefty takeover premium they could have expected in selling off the whole club. Manchester United supporters are no more enthused. While they may welcome Ratcliffe's arrival, the continued presence of the Glazers will frustrate a fan base that for years has blamed the US owners for starving the club of investment and loading it with debt.
At this point, it's fair to question whether the Glazers ever genuinely intended to fully exit. The Qatari group offered more than £5 billion ($6.1 billion) for Manchester United. That compares with an enterprise value of barely £3 billion in November 2022, immediately before the family said it would consider strategic options for the club. Was a premium in excess of 60% to the market and a more than sixfold return on the £790 million that the Glazers paid for the club in 2005 not enough? Apparently not.
Parse what has been said carefully, and there was never any basis for concluding that a full sale was inevitable. In August 2022, three months before the club statement that sent its shares up 70%, David Hellier and Ruth David of Bloomberg News reported that the family would consider selling a minority stake. The Glazers weren't yet ready to cede control of Manchester United, they cited people familiar with matter as saying. Expectations that an outright sale was the likeliest outcome seem to have grown from a combination of wishful thinking and media buzz generated by the Qatari interest.
It appears that the Glazers, who are best known in the US as the owners of the National Football League's Tampa Bay Buccaneers, were willing to part with the asset only if they were offered silly money — which in their case equated to a price somewhere north of £6 billion. Sheikh Jassim's group could surely have afforded this, so it may be surprising that the emirate balked. The timing of its withdrawal may owe something to the Middle East crisis; right now, Qatar could probably do without the level of public scrutiny that buying a Premier League club would bring. With Ratcliffe offering a similar valuation in a revised bid, a minority stake sale was preferred.
The Glazers' stubborn confidence in the value of their faded franchise also takes some explaining. Manchester United is the most successful English football team with a record 13 Premier League titles, but the last of these came more than a decade ago. It has reported net losses for the past three years and is in need of investment, particularly in its stadium. Some football finance analysts have struggled to justify a figure anywhere near its current valuation, let alone the markup sought by the Glazers.
On the other hand, English football has been attracting some frothy interest from new investors, particularly from the US. Billionaire Todd Boehly and Clearlake Capital paid £2.5 billion last year for Chelsea Football Club and agreed to invest a further £1.75 billion. The bet is that soccer will become a far more lucrative business as broadcast and streaming technologies augment the ability to extract revenue from fans. The same goes for sports more broadly, as my Bloomberg Opinion colleague Adam Minter noted yesterday.
There are parallels with the economics and valuations of internet companies. Those who build the market share and attract the eyeballs will inherit the future, in theory at least. And Manchester United, even in its diminished current state, claims 1.1 billion “fans and followers” around the world — the biggest global support base. In that light, the takeover saga — with its constant will-they-won't-they speculation and meaningless (though headline-generating) bidding “deadlines” — might be viewed as a brilliant piece of free marketing that has kept the club's brand in the public eye during a period of on-field mediocrity.
Eventually, though, a sports franchise of such rich expectations has to give people something worth watching on the pitch as well as in the business pages. The question now is whether Ratcliffe, from a minority position, is the man to deliver that.
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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Matthew Brooker is a Bloomberg Opinion columnist covering business and infrastructure. Formerly, he was an editor for Bloomberg News and the South China Morning Post.
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