By Senad Karaahmetovic
Manchester United (NYSE:MANU) confirmed yesterday that its Board of Directors has authorized a process to "explore strategic alternatives for the club."
This way, the Glazer family, which owns this historic English club, confirmed heavy speculation that they are open to selling the club for the first time since becoming owners in 2005.
"The process is designed to enhance the club's future growth, with the ultimate goal of positioning the club to capitalize on opportunities both on the pitch and commercially. As part of this process, the Board will consider all strategic alternatives, including new investment into the club, a sale, or other transactions involving the Company," Manchester United said in a statement.
The club hired the Raine Group, which handled the sale of rival Chelsea to the consortium led by U.S. billionaire Todd Boehly earlier this year, as its exclusive financial advisor.
"We will evaluate all options to ensure that we best serve our fans and that Manchester United maximizes the significant growth opportunities available to the Club today and in the future. Throughout this process, we will remain fully focused on serving the best interests of our fans, shareholders, and various stakeholders," Executive Co-Chairmen and Directors, Avram Glazer and Joel Glazer said in a statement.
Manchester United will easily attract buyers, according to Jefferies analysts. The analysts believe MANU is "a truly unique asset with significant global reach (>1B fans/followers) and plays in the strongest realm within the current media landscape -- live sports."
"Recent comp transactions (e.g. sale of Chelsea) have highlighted MANU's valuation gap to peers, which we believe is partially reflective of a discount given significant insider ownership/limited float," the analysts added.
Konik adds that Manchester United has a bigger stadium, a vast global reach over Chelsea, and generates more revenue and EBITDA. As a result, its fundamentals "justify a premium" to Chelsea, which was sold for $3.1 billion, in addition to $2.2B committed to investments in the stadium, team, etc.
The news of Manchester United being up for sale came after the club and international football star Cristiano Ronaldo agreed to a deal to mutually terminate his contract. Ronaldo recently gave an unauthorized interview in which he harshly criticized the club, its manager, and owners. It is estimated that MANU saved about $20M in annual costs by letting Ronaldo go about 7 months before his contract ends.
Manchester United stock trades about 10% higher in pre-market Wednesday after closing nearly 15% in the green yesterday.