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Manchester United sale: Manchester United’s owners see escape closure in a football club deal boom

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Manchester United sale: A sale of Manchester United Plc could give the football club’s controlling shareholders, the Glazer family, a lucrative exit…

Manchester United Sale: A sale of Manchester United Plc could give the soccer club’s controlling shareholders, the Glazer family, a lucrative exit from an investment that has languished over the past decade and angered millions of soccer fans. European soccer club deals this year, starting with the sanctions-driven sale of Chelsea Football Club by Russian oligarch Roman Abramovich in May, have brought in top dollar. Follow FIFA World CUP LIVE & Premier League LIVE updates with Insidesport.IN

It is these rich valuations that have motivated the Glazers to formally put Manchester United up for sale, according to two people familiar with the matter.

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The family, which made its fortune in real estate, retail and healthcare and also owns the Tampa Bay Buccaneers, bought the team for 790 million pounds ($939.07 million) in 2005.

Manchester United sale: Manchester United’s owners see escape closure in a football club deal boom

Manchester United sale: Manchester United’s owners see escape closure in a football club deal boom

A sale at valuations similar to deals like Chelsea’s would generate a multibillion-dollar profit, the sources said. However, the sources warned that the Glazers, who own two-thirds of Manchester United through dual-class shares, may ultimately choose to sell only a minority stake or decide against any transaction.

A Manchester United spokesman declined to comment. Glazer’s decision to launch a formal sale process now ends years of family resistance to pressure from fans to divest.

Many of the club’s supporters have complained that the Glazers’ debt-laden takeover of the team starved it of cash and that the owners had to spend more to attract and retain talent and win trophies. Those complaints were aired again this month by superstar player Cristiano Ronaldo, who parted ways with Manchester United for a second time.

“The Glazers, they don’t care about the club or the professional sport,” Ronaldo said in an interview with Piers Morgan on TalkTV on November 14. Spokesmen for the six members of the Glazer family, who are major Manchester United shareholders, could not be reached for comment.

Before the announcement of the sale process on Tuesday, Manchester United’s shares were hovering around $13, below the team’s initial public offering price of $14 in 2012.

Meanwhile, deals for football clubs attract high ratings. In May, Chelsea was acquired by the investment group led by Todd Boehly and Clearlake Capital for a purchase price of $3.1 billion and an additional $2.6 billion in future investments. That deal valued Chelsea at 5.7 times its revenue for the last financial year, investment bankers said.

In August, investment firm RedBird Capital bought Italian soccer team AC Milan for 1.2 billion euros ($1.2 billion), a record for a European club outside the English Premier League. More deals are on the way, with Manchester United’s arch-rivals Liverpool Football Club also exploring a sale.

The value of takeovers and major equity builds in the sports industry has risen to £9.6bn this year, up from £1.8bn last year, according to a report by law firm RPC last month. At a revenue multiple of 5.7, Manchester United would fetch about $3.4 billion, a 41% premium to where the club’s shares were trading in New York on Tuesday before news of the sale process hit.

Analysts say the team is likely to fetch a higher multiple than that. Chelsea have only a fraction of Manchester United’s followers. Manchester United has a bigger stadium and is more profitable. Despite going five years without winning a trophy, it consistently produces annual cash flow of around $100 million, making it a safe investment.

“We continue to believe that Manchester United’s fundamentals justify a premium for clubs sold earlier this year,” Jefferies analysts wrote in a research note.

BUYERS LINE UP

Many well-heeled buyers are passionate about deals for football clubs. Private equity firms are attracted by the clubs’ cash flow and brand value. And sports teams are considered by many billionaires to be the ultimate status symbol. In August, Elon Musk tweeted: “I welcome Manchester United” only to then clarify that he meant it as a joke.

A spokesman for Musk did not respond to a request for comment. Even before the announcement of a sale process, Manchester United had received indications from at least one potential buyer: the British billionaire and a long-time fan of the club, Jim Ratcliffe, previously reported Reuters. A spokesman for Ratcliffe declined to comment.

Manchester United sale: Manchester United’s owners see escape closure in a football club deal boom

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