Selling The Cash Cow - Sellers Having Second Thoughts?

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Whoever is the owner of Manchester United they need to factor in a new stadium over the next 5 years and why I do think the Glazier family will sell the club. This could require a £2 billion investment which is not what the Glaziers are known for as they prefer to milk and not invest their own funds.

This week we saw the latest news with the 2 bidders moving into round 2 for the purchase of Manchester United. The top 10 clubs in the world don't come up for sale very often as the profit is normally made on the purchase price when it comes to selling. This is a business deal after all and if the deal is not right for one party then it won't happen.

Manchester United have had a terrible last 10 years by what may see as under performing. Lately the results suggest things are improving on the field which should mean more revenue and possibly why it is a good time to sell the club.

Having only "paid" £790 million 17 years ago of which £640 million was leveraged saying the Glazier family has done rather well is an understatement. They are in the profit no matter what price they sell for as they have already taken out more than they paid for the club in yearly dividends.

The asking price is £6 Billion with the two bidders reportedly in the £4.5 Billion range. The second round is to see how high these bids can be increased as the brothers are reportedly split on selling the club. This could be the Glaziers playing good cop bad cop with the threat that they will only sell as percentage and not the entire club.

Manchester United is not worth the £6 Billion price tag and possibly will be in 10 years from now. Like with any investment the profit is made on the purchase price and buying an over valued asset is bad business. A good deal is normally when both parties are not really happy so possibly the £5 Billion is a more realistic selling price.

We all know there has to be sweet spot on what you would sell your investments for but there is no rush if you are all in profit and making more while negotiating a higher price. The deal may or may not happen this year as it is more on the buyers part to come up to the price as the owners are under no pressure to sell. I know if it was me in the Glazier family shoes I would hold onto it as there is no need to even negotiate.

Manchester United has reportedly paid out over £1 Billion in interest payments since the glaziers took over and the debt has risen since the covid lockdowns and is sitting at over £500 million again. The Glaziers sold a 10% share back in 2012 and there are 6 Glaziers listed as shareholders. This by far is going to be their biggest payout as the entire family net worth is under £4 Billion so this is their nest egg.

If a deal is going to happen one of the two parties bidding has to increase their offer quite substantially otherwise the family is going to be split on who sells and who keeps their shares. A new owner would like full control without shareholders interfering in decisions so this could either happen very quickly as in before June or not at all this year. There are only so many buyers in this price category so the Glaziers have to be very careful in what they decide as they have to be unanimous in their decision or it will impact the selling price.

Whatever happens this is quite interesting to follow the process and the tactics being used by both sides as personally I think the £4.6 Billion is a fair price if you want to sell and the £6 Billion is more like I don't want to sell price. The owners don't really care about what the fans think as this is purely a business deal with no love for the club.