Market Overview

Manchester United Valuation On Watch After AS Roma Sale

Manchester United Valuation On Watch After AS Roma Sale

Manchester United Ltd (NYSE: MANU) is one of the few football teams that investors have easy access to, with its shares trading on the New York Stock Exchange.

The stock is down 24% in 2020, as most sports teams have seen valuations fall. A recent sale of a large Italian club could hlep boost the valuation of Manchester shares. 

What to Know: Italian football club AS Roma was sold Monday to American billionaire Dan Friedkin, who owns many Toyota Motor Corp (NYSE: TM) dealerships in the Southern states. The Friedkin Group paid $700 million to acquire AS Roma.

The Italian club has struggled in recent years, missing the Champions League in each of the last two seasons and finishing fifth in the country's Serie A this season.

Why It's Important: The sale of AS Roma values the club higher than Forbes did in its annual valuation rankings for soccer teams.

AS Roma was valued by Forbes at $622 million. Forbes listed $298 million in revenue and $25 million in operating income for AS Roma, which was listed as the 16th most valuable club in the world.

Manchester United was ranked third on Forbes' rankings of clubs, with a valuation of $3.81 billion. Manchester United trailed only Real Madrid ($4.24 billion) and Barcelona ($4.02 billion) in terms of valuation.

Forbes listed revenue of $795 million and operating income of $238 million for Manchester United. 

Manchester United has a market capitalization of $2.5 billion and enterprise value of $3 billion.

If one takes the sale multiple AS Roma received on its Forbes valaution, Manchester United would be valued at $4.29 billion.

That would add $1.25 billion to the enterprise value for Manchester United.

Split that among 164.5 million shares, and the new valuation would add $7.60 per share, for a share price of $22.86.

A Manchester Rival's Valuation: Also of note is rival Manchester City's recent partial sale. In late 2019, the ownership of Manchester City sold a $500-million stake in the team to private equity group Silver Lake.  

This valued the team at $4.8 billion and highlighted the growth Manchester City has seen: 11 straight years of revenue growth.

The sale also broke the valuation record for a sports team.

What's Next: The Glazer family that owns the majority of Manchester United has been pushed for a sale by fans for years.

The family seems content with holding the team or selling only a small stake. The lofty valuations given to AS Roma and Manchster United could make the owners think twice.

Aside from a sale, a third-place finish in the English Premier League gets Manchester United back into the Champions League next year.

This means the team will be competing for a split of $2.3 billion from UEFA for the teams that compete in the prestigious European competition. This should help boost overall revenue and operating income for Manchester United. 

Photo by HonorTheKing via Wikimedia


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