The Manchester United share price is on the decline after a tumultuous year. After a string of high profile transfers last summer, including superstar Christiano Ronaldo, the club was expected to qualify for the Champions League. However, the premier league giant finished two places off the qualification spots, finishing sixth this year. As a result, shares fell 23% during the course of the season and 19.4% in the last 12 months, wiping out nearly £600m from its valuation.
This is the biggest drop in valuation since its initial listing on the New York Stock Exchange in 2012. While ‘noisy neighbour’ Manchester City celebrates the league title, Manchester United is in the middle of a backroom shake-up.
And after rival Chelsea’s £4.25bn takeover deal with Todd Boehly, analysts are predicting Manchester United owners, the Glazer family, could consider selling the club for over £4bn as well.
Is a market comeback possible?
As far as ticket and merchandise sales go, Manchester United dominates the charts. In fact, the club had the highest average attendance of all top teams in Europe across all leagues in 2021. With an average attendance of 73,156 fans per game, 97.7% of total tickets were sold last year.
But the Manchester United share price is closely tied to how the team performs on the field. According to data from Saxo Markets, the last time the club finished first (in 2012) its share price grew 36%. Even in 2017-18, when it finished second, the shares jumped 20%. However, the club has failed to qualify for the Champions League five times in the last 10 seasons.
In response, the board sacked Ole Gunnar Solskjaer and appointed popular Dutch coach Erik ten Hag for the upcoming season. The club has been on the lookout for Sir Alex Ferguson’s long-term replacement for nearly a decade now. Four full-time managers and three interim managers have held the post in the last nine seasons, which tells me it’s still transitioning.
And if I had purchased Manchester United shares in 2012, my investment would be down nearly 10% today. Even the most passionate fans would agree that this is a disappointing return on investment.
Takeover target
But after the recent drop in the Manchester United share price, analysts think the business is an attractive takeover prospect. The brand is still a cash cow and a change in ownership and champions league qualification could send its shares skyrocketing.
In fact, fans have been calling for the Glazers to quit for over a decade. And there are rumours that Britain’s richest man, Sir Jim Ratcliffe, could place a bid.
Analysts say that the club is undervalued now but any takeover could take months, if not years. In the meantime, the business has debt of nearly £500m. And the new manager has demanded a transfer budget of £115m, which could make the summer a pricey affair. If results are not favourable next season, the Manchester United share price could tumble further.
There’s a lot of uncertainty around the club, keeping me from investing right now. But, the brand remains very strong and things could turn around in a short time. I’ll be watching media reactions to transfers and early performances next season before considering an investment.
