Man United suitors jostle for biggest sports deal ever
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[February 17, 2023]
By Andres Gonzalez and Amy-Jo Crowley
LONDON (Reuters) -Manchester United will receive multiple offers
when an initial deadline for bids expires on Friday, sources
familiar with the process said, kicking off potentially the largest
sports deal ever.
British billionaire Jim Ratcliffe, a life-long supporter and founder
of chemicals group INEOS, is one likely bidder, along with U.S.
private equity firms and possibly Qatari investors, the sources
said, speaking on condition of anonymity.
However, it is not expected that Twitter owner and Tesla boss Elon
Musk will lead any of the offers for the English soccer club, as
some media reports had speculated, one of them added.
Manchester United, INEOS, Tesla and Musk did not reply to requests
for comment.
Suitors have been asked to submit a bid amount and proof of funds by
Friday, the sources said. Raine Group, the investment bank running
the process, will then draw up a shortlist.
Raine Group did not reply to requests for comment.
A deal for the record 13-times English Premier League winners will
likely exceed the biggest sports deal so far, the $5.2 billion -
including debt and investments - paid for Chelsea, the sources said,
as Manchester United generates more revenues and has a larger fan
base that its London rival.
The northwest England club has 659 million supporters worldwide,
according to market research firm Kantar, equivalent to nearly a
tenth of the world's population.
Its current majority owner, the Glazer family, is seeking a
valuation as high as 7 billion pounds, sources said.
"For potential buyers, football clubs like Manchester United are
considered trophy assets driven by the perception of exclusivity.
The rationale is similar to justifying the price paid for a
painting," said Andy Currie, UK managing partner at financial
services firm Alantra.
Qatari state investors already have a stake in French club Paris
Saint-Germain and could face challenges structuring a takeover of
Manchester United, as the rules of European soccer governing body
UEFA forbid two clubs with the same owner both taking part in the
lucrative European Champions League.
Rival Premier League club Tottenham Hotspur is set to receive a
$3.75 billion bid from Iranian-American billionaire Jahm Najafi, a
source familiar with the matter told Reuters. Spurs' owner,
Bahamas-based billionaire Joe Lewis, is reportedly holding out for a
higher price. The size of that bid has fuelled speculation
Manchester United will attract significantly more.
Manchester United is the fourth richest soccer club in the world,
according to analysis by Deloitte. Tottenham, which has never won
the Premier League, ranks ninth.
A small portion of Manchester United shares is listed on the New
York Stock Exchange. The stock market capitalisation on Thursday
exceeded $4 billion.
The Glazers bought United for 790 million pounds ($947 million) in
2005 in a highly-leveraged deal, which critics - among them many
fans - say loaded too much debt onto the club.
The club has said it expects to generate up to 610 million pounds of
revenues in its 2023 fiscal year and adjusted earnings before
interest, tax, depreciation and amortisation (EBITDA) of up to 140
million pounds.
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Soccer Football - General view of
Manchester United's Old Trafford Stadium - Old Trafford, Manchester,
Britain - February 15, 2023 General view of Manchester United's Old
Trafford Stadium REUTERS/Molly Darlington/File Photo
OPPORTUNITIES
"I have clients who buy artwork believing it will increase in value
over time, but paying tens of millions for artwork cannot be
justified by its profit and loss alone. It's more about the brand
association and resonance," Currie said.
Appetite for Premier League clubs is growing, partly fuelled by sky
rocketing revenues from global media rights, the potential to
redevelop stadiums and sell naming rights, and the opportunities for
global sponsorship deals, experts say.
"If you look at football, there are real opportunities across Europe
and the U.S. to get a much higher level of return through
broadcasting," said Andrea Guerzoni, global vice chair, strategy and
transactions, at advisory firm EY.
The opportunity to redevelop Manchester United's Old Trafford ground
and increase matchday revenues are other attractions, along with the
strength of the club's global brand.
"The increasing commercialisation and globalisation of the sector
means that, even if UK revenues for clubs seem to be close to their
peak, the addressable market for the top clubs is genuinely global,"
said Alex Dixon, partner at law firm Travers Smith.
Further out, a revival of plans for a European Super League, which
the region's biggest clubs could play in without the threat of
relegation, is another factor interesting investors.
In 2022, the volume of transactions in the sports industry around
the globe reached $14 billion, 4.2 times the amount invested in the
previous year and almost seven times the average of the last 10
years, according to LSEG Deals Intelligence.
"Big teams will attract buyers," said Paul Harris, head of TMT
advisory at KPMG. "There are around seven or eight PE (private
equity) firms, both sports specialists and generalists, that have
raised funds recently to invest in sports."
Ratcliffe, who expressed interest in buying Manchester United last
month, is sounding out Middle Eastern and U.S. investors to help
fund his bid, said one of the sources, who is close to those
negotiations.
Through INEOS, Ratcliffe has expanded into sports, investing in
Formula 1, cycling, sailing and soccer, and acquiring French Ligue 1
soccer club Nice.
JPMorgan is advising INEOS on the process, the sources said. The
U.S. lender is also increasing its exposure to soccer, recently
offering to provide up to 1 billion euros in financing for Italy's
top league.
JP Morgan declined to comment.
($1 = 0.8340 pounds)
(Reporting by Andres Gonzalez, Amy-Jo CrowleyAdditional reporting by
Pablo Mayo Cerqueiro, Emma-Victoria Farr and Andrew MillsEditing by
Matt Scuffham and Mark Potter)
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