Wednesday, April 17, 2013

Manchester United create history with $3 billion valuation

Premier League giants Manchester United have created history by becoming the first sports team in the world with a $3 billion valuation.

The shares of the club offered to the public last August at $14 did poorly in the beginning but the price has soared up in the last few days touching at $17.

Only in November of last year, the club's gargantuan debts have fallen below £400 million for the first time since the Glazers took over at the club in May 2005.

The Florida based owners, borrowed £515 million in completing the takeover of the club at £790 million seven years ago and have been re-financing the debts since through public offerings or IPO and bonds in New York.

Now, according to Forbes, Manchester United's stock has outperformed the S&P 500, which is basically a stock market index based on the market capitalizations of 500 leading publicly traded companies in the U.S. stock market, as a result of which it has pushed up the club's enterprise value to $3.3 billion (debts included), which is the highest value for any team in the world. NFL's Dallas Cowboys are second most valuable team in the world, worth $2.1 billion.

Manchester United however, remained third in the Deloitte Money League table for 2012/13 behind La Liga giants Real Madrid and Barcelona.

The revenue had declined by at least 3% but a culmination of Premier League (leading the current league table) and Champions League pay outs and some outstanding commercial deals have improved their earnings.

The commercial revenue has increased by 14% taking the total income in that sector to £117.6 million that amounts to 37% of their total income.

The new sponsorship deals with Japanese paint manufacturer Kansai, and China Construction Bank, world-record £357 million deal with General Motors for Chervolet that will become their exclusive shirt sponsor from 2014/15, improved deals (almost double) with AON, lucrative deals with DHL (training kit deal) etc. have put them in a great position financially.

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