Manchester United Is Valued At $4.65B: Is The Stock Undervalued?

Calculating valuations for sports franchises can be difficult. Several media publications provide annual estimates for valuations of sports franchises based on media rights, revenue and operating income.

The latest English Premier League valuations from Sportico show a publicly traded team might offer shareholders a low-risk, high-reward investment.

What Happened: Sportico assigns a valuation of $4.65 billion to Manchester United MANU, an EPL team that trades publicly on the NYSE.

The team ranks first in the EPL for valuation from the new Sportico estimates.

One of the keys from the Sportico piece is the valuation premium given to the big six clubs in the EPL. Manchester City is the only one of the big six teams to be relegated in the last 30 years.

Teams that face the risk of relegation face uncertain financial projections, which leads to a lower multiple.

In the Sportico valuations, Tottenham ranks sixth with a valuation of $2.85 billion. Everton comes in at seventh with a huge drop off to $525 million.

The last soccer club annual rankings from Forbes gave Manchester United a value of $4.2 billion, ranking its first for EPL teams and fourth in the world for soccer teams.

Related Link: Manchester United Valuation On Watch After AS Roma Sale

Why It’s Important: The top six teams have a lower risk of relegation due to their dominant play over the last 30 years, which provides a higher multiple of five to six times sales by Sportico compared to one to two times sales for the lower teams.

This could make Manchester United a low-risk play as the lowest value given to a top-six team is $2.85 billion, in line with the market cap of $2.5 billion and an enterprise value of $3.1 billion that Manchester United has.

The upside is the potential of a sale by the Glazer family, which estimates say could bring in over $5 billion for the team. Sales of other teams like Arsenal receiving bids from Spotify Technology SPOT Founder Daniel Ek could also lead to a rise in the value of Manchester United.

Minority stakes sold in Manchester City and Liverpool parent RedBird Capital in the last two years have shown the demand for ownership in EPL teams.

MANU Price Action: Shares of Manchester United trade around $15.55. The stock has traded between $13.21 and $20.22 over the last 52 weeks.