Putting a Price Tag on Manchester United

Earlier this week, the Glazer family turned down an offer worth £1 billion cash to sell Manchester United. The offer came from the “Red Knights,”  a group of high-profile financial figures from the City of London. In the wake of this news has come reports that the Florida-based billionaires also rejected mammoth bids from China and the Middle East.

The Glazer family’s ownership has been under siege since the day they bought the club in 2005. We often wonder if the movement is purely rooted in anti-American sentiment. After all, the club has since won three straight league titles and the Champions League. Nevertheless, anti-Glazer fervour persists. So just how much would it take to wrestle Manchester United from the “evil” grip of its current owners?

The easy answer is, it’s impossible to say. Big sports franchises don’t swap hands that frequently. Last year, the Chicago Cubs baseball team sold for about $900 (or £600 million.)  One of the last big football clubs to be sold was Liverpool, which was acquired by Tom Hicks and George Gillett in 2007 for a sum in the region of £200 million. That, of course, was before the global economic downturn. But European football teams by and large have been able to sidestep the recession with the help of long-term broadcasting and sponsorship deals and a passionate fan base that would rather starve themselves before giving up their season tickets.

Manchester United itself is also privy to other advantages. A star-studded history, iconic players and the most successful manager around give it the strongest brand in sports – stronger even than Real Madrid or the New York Yankees. And even with huge player salaries on the club’s books, revenues flow in from all directions – including corporate suites, television rights, shirt sales, and an unparalleled foothold in the Asian market. According to Forbes, the club’s valuation grew 4% to $1.87 billion between April 2008 and April 2009 on a 9% increase in revenue. Then again, some fear that the club, saddled by the Glazer family with hundreds of millions of pounds in debt, is actually inching towards bankruptcy.

Many people are beginning to believe that a £1.5 billion offer will be enough to secure the club. That sounds like an awful lot – although not when you compare it to, say, the £11.9 billion sale of Cadbury. The reason is that owning a football club is not good business. It never has been. Even though Manchester United is one of the few clubs in the world that actually makes an annual profit – it derives its true value from its potential to be a status symbol for some billionaire. And depending on how much the Glazer family regards those sorts of things, Manchester United ultimately might be priceless.

Will the Glazer family ever let go of Manchester United?