Manchester United’s Premier League season got off to a disastrous start on Sunday with a home loss to Brighton & Hove Albion. It was Brighton’s first-ever victory at Old Trafford.
But United shareholders posted a rare win on Wednesday, as the stock jumped 11.94%. It matched the biggest gain since the Glazer family sold shares in the iconic soccer club via a 2012 initial public offering on the New York Stock Exchange—shares also rose 11.94% on March 24, 2020. Before the move, shares were down 43% from their September 2021 high. The stock was priced at $14 in the 2012 IPO. On Wednesday, it closed at $12.75.
Trading volume hit 1.8 million shares, four times the average over the last 10 days. No doubt some buyers were drawn in by an interview with Michael Knighton released Tuesday where the English businessman says he has a consortium “ready and waiting” with a “hostile bid” for the Red Devils. Knighton is a former United board member who tried to buy the team in 1989 for what was then a British football record of £20 million ($44 million at 1989 exchange rates). The bid collapsed when Knighton’s financial backers dropped out.
The company offered a no comment regarding the stock price move.
Knighton’s “bid” is highly unlikely to move the Glazer family to sell, but the interview might have spurred some investors to take a fresh look at the stock, which is undervalued on several metrics. The current $2.5 billion enterprise value is 21% below the $3.16 billion price Chelsea sold for this spring. The new ownership group also pledged an additional $2 billion to replace Chelsea’s Stamford Bridge stadium. Sportico valued Manchester United at $4.65 billion in its 2021 Premier League valuations, 47% ahead of Chelsea.
United posted revenue of $603 million for the 2020-21 season, but that season had almost no fans at Old Trafford, due to COVID. Matchday revenue was a mere $9 million, compared to $135 million for 2018-19. The current United enterprise value is less than four times revenue for the past season. For comparison, the Denver Broncos just sold for nine times revenue or $4.65 billion. The Broncos have roughly 10 million social media followers. United has more than 200 million.
Part of the allure of sports franchises is their scarcity value, which also props up valuations. There is little scarcity value in being a public company. The NYSE has 2,500 listings, while the NASDAQ has 3,800. The earnings of sports teams can also be unpredictable, which is a red flag for investors. Lastly, teams can be a tough sell for institutional investors, as they lack the explosive growth of a tech firm and aren’t a safe, income-producing stock, either.
Manchester United is coming off its lowest season point total since the launch of the Premier League in 1992, and protests continue over the Glazers’ ownership, with more fuel added by the family’s role in the aborted 2021 launch of the Super League. Yet, season ticket and executive club sales for the 2022-23 season wrapped up in May, and the club achieved record sales and its quickest sell-out, according to the company’s third-quarter earnings announcement.
With assistance from Brendan Coffey.