This is a very erudite analysis, and highlights why the only prospect of a realistic buyer for the club, is a group whose strategic intent goes beyond a desire for ROI. United, as a brand, still provides a gateway to a number of international markets, and can make sense for a group looking to do an integrated expansion of a wider portfolio. There are multiple cross industry synergistic appeals, and from a branding perspective provides the opportunity for reputational rehabilitation. Hence the term “sports washing”.
All this said, there do remain opportunities for revenue growth through the proliferation of mobile broadcasting rights in emerging markets such as China; and the potential revenue boom from the creation of a long mooted European super league. My recollection of early analysis of the Glazer investment model, is that these were two of the four cornerstones essential to the long term growth of company value. The other two were (a) limiting expenses through the imposition of a salary cap, thus mitigating the greatest risk of accelerating costs I.e. player wages, and (b) the strict implementation of FFP regulations, thus suppressing the upward pressure on transfer fees brought about by the mega-rich state backed clubs. An assumption which was the basis for Woodward’s now infamous “We can do things in the market other clubs can only dream of. Watch this space.”
As we know, this latter aspiration became derailed, and the former looks unlikely to ever be ratified. Consequently, the Glazers are now facing a very real threat to their exit strategy as the club goes successive seasons without CL football. This will likely result in a 100m drop in revenues for the next annual financial results alone. All of their long term financial planning, investment strategy, and debt repayment strategy was predicated on the financial assumption that the club would, on average, achieve a QF finish in the CL every year. The lack of CL participation poses the biggest short term risk to their asset value, and something they likely never anticipated to be a long term concern. Sponsorship values will remain robust because the club has global appeal. It seems the most likely outcome that consistent failure to qualify for the CL, and the associated costs of building a squad capable of competing at the top table again, are the most likely drivers of a sale.
As painful as it is as fans to witness, it may be in our interests to sit out the CL for a couple more seasons and see the Glazers forced to sell before the asset depreciates significantly. There is a great deal of similarity to what happened to Liverpool under Hicks and Gillett. While United remain a far more robust economic entity, it still holds true that they are not immune to financial pressures. While these seem unlikely to ever threaten the survivability of the organization, they do nevertheless exist as significant drivers of potential change. In this case of ownership.
The bottom line is that the Glazers will never sell while returns are acceptable and asset value remains strong, unless they receive an offer which significantly exceeds market valuation. The sole domain of a handful of super rich or state entities. If value starts to significantly drop, such as through consistent failure to quality for the CL, and long term solutions such asa super league are effectively ruled out, then the club becomes a target for a wider group of investors, as there is growth potential in restoring it to previous glories.
I am fairly confident that these are the scenarios being weighed by the Glazers. And without being privy to the discussions of the larger European clubs, it is hard to say what the long term prospects and landscape looks like. From the outside, and a completely uninformed analysis, it would seem to me that in terms of the Glazer ownership model, the club has probably reached peak value and now would be the best time to sell. I just see too many sporting and financial challenges over the next 3-5 years; and there are considerable risks in tying an exit strategy to the rejuvenation of on field performances necessary to boost revenues. But I don’t have all the facts at my disposal, so I am just speculating.
