Analysis: Man United suitors jostle for biggest sports deal ever
17/02/2023 09:18
(Repeats FEB 16 story, no change to text)
By Andres Gonzalez and Amy-Jo Crowley
LONDON, Feb 16 (Reuters) - Manchester United MANU.N
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
TSLA.O 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.
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 Crowley
Additional reporting by Pablo Mayo Cerqueiro, Emma-Victoria Farr
and Andrew Mills
Editing by Matt Scuffham and Mark Potter)
((andres.gonzalez@thomsonreuters.com; 0034 647 69 49 89;
Reuters Messaging:
andres.gonzalez.thomsonreuters.com@reuters.net))