Manchester United (NYSE:MANU) shares have bounced up and down in recent months amid the club’s proposed takeover. Here, I explore whether an investment five years ago would have been fruitful, and whether I may have missed the boat following the recent rally.
Five-year performance
If I had invested in the Premiership football club five years ago, today I’d be up 6%. But that belies the depressed nature of the stock for the large part of that half decade. And, although the club is listed on the US stock exchange, and is denominated in dollars, it doesn’t actually make a difference as the pound is flat against the dollar over five years.
So if I had invested £1,000 five years ago, today my stock would be worth £1,060. This represents £12 a year annualised. Obviously, it’s better than seeing the value of my investment go down, but it’s clearly disappointing. The club doesn’t pay a dividend either.
Investing in football
Investing in publicly traded football clubs offers the opportunity to gain exposure to the sports and entertainment industry while potentially benefiting from the financial performance and growth of the club.
While that might sound interesting, they’re not you’re everyday investment. The profitability of football clubs can vary depending on various factors, including the club’s financial management, success on the field, revenue streams from broadcasting rights, sponsorship deals, ticket sales, merchandise, and player transfers.
However, it’s important to note that not all football clubs are consistently profitable, and some clubs may face financial difficulties due to factors like high player wages, heavy debt burdens, or limited revenue sources.
Of course, Manchester United isn’t an average club. It’s a huge brand with a huge global following. But its revenues can be impacted by missing out on Champions League qualification and missed Premier League television rights.
Has the boat already sailed?
The current Manchester United share price indicates a market value of $3.74bn (£2.9bn). Qatar’s Sheikh Jassim Bin Hamad Al Thani’s bid is reported worth £5.5bn and will see him take control of the current owning Glazer family stake and all the traded shares. As such, Sheikh Jassim’s bid values the 163,062,000 shares at $44 each, almost double the current share price, $22.62.
However, Sheikh Jassim isn’t the only bidder and Sir Jim Ratcliffe’s offer would not see him take control over the publicly traded shares. Having said that, Ratcliffe’s bid values the Glazer shares higher than the current share price of the listed shares. If successful, his bid may not positively influence the listed share price.
So certainly, if I believed Sheikh Jassim would be the winning bidder, I’d buy shares today! However, there’s plenty of risk here amid concerns he may be willing to walk away from the deal.
