I absolutely agree with this informed and erudite (
) piece. The Glazers also own the Tampa Bay Buccaneers, a badly run, perennially mid- to low-ranking NFL club even though the NFL is structured, by way of a salary cap and other collective bargaining agreements, to be much more equal than the PL. Despite this underwhelming on-field performance, the valuation has grown substantially - they bought it for $192 mn in 1995 and it now is worth about $1.2 bn on a revenue of $275 mn (all numbers from Forbes, cited by ESPN). The growth in valuation, therefore, appears to be a direct result of the fact that NFL clubs are a cartel where the under-performers have little risk of falling into oblivion. Therefore, under-investment is a winning strategy because the owners rely on the over-performers (New England Patriots, etc) to increase the interest in the entire league, thus improving the valuation of all the clubs.
This appears to be the strategy that the Glazers have imposed onto Manchester United. It is unlikely that we will now ever fall out of the Premier League and, with deep-pocketed, economically "irrational" investors like Roman Abramovich and sovereign wealth funds of Abu Dhabi buying competitors, the whole league is benefiting from their spending, thus pulling the valuation of Manchester United along with it. This strategy seems to be coming to fruition with Silver Lake Partners is willing to value City at 4.8 Bn. This valuation seems irrational and similar to other attempts like Etihad sponsorship to bring money into City, but even if it is 50% less it stands to reason that United's valuation is around there or even north of it. Thus, United have been under-financed since May 2005 and have under-performed since at least the past 7 years, yet spending at Chelsea and City is pulling up the valuation of Manchester United.
The question is, as the quoted post points out, is this the peak and therefore the right time to sell? At at $3.25 Bn market cap, there is still significant room for a global brand who once were measured to have nearly 1/10th of the worlds population (650 mn) under its mostly-tribal spell. One way of increasing the valuation is to invest massively now, but the Glazers simply don't have the resources to do that. The Saudis do, and will invite competitive investment from Abu Dhabi as well as other deep-pocketed players. If that happens, we will return to the top but, if the Glazers hold onto the (relative) under-investing, but economically rational, strategy riding on the coattails of the other PL owners, we will continue to be the Tampa Bay Buccaneers of Europe.
#GlazersOut #SaudisIn