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Home / Business

Manchester United investors taken on wild ride

Chris Keall
By Chris Keall
Technology Editor/Senior Business Writer·NZ Herald·
5 May, 2019 10:55 PM4 mins to read

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Fraught times for Manchester United legend Ole Gunnar Solskjaer, who has returned to the club as manager. Photo / Getty.

Fraught times for Manchester United legend Ole Gunnar Solskjaer, who has returned to the club as manager. Photo / Getty.

The perils of investing in a publicly-listed sports team have been laid bare by the recent trials of Manchester United.

US owners the Glazer family listed the marquee English Premier League club on the New York stock exchange in 2012.

All was going well in August and September last year as the new EPL season ramped up, with shares hitting an all-time high of US$26.05 last year, valuing the team at around US$4b ($6b).

Sure, it was another mixed start.

But the team still had its record-setting £750 million, 10-year shirt sponsorship contract with Adidas.

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And even two side-deals announced with the new season - a US$25m sleeve sponsorship deal with Kohler and a hook up with Chivas, reportedly for a similar amount, to become the team's official scotch - smashed records.

The deals, combined with stadium receipts and fat fees for broadcasting rights, saw a strong September quarter. And for the three months to December 31, revenue rose 17 per cent to a record £208.9m, with pre-tax profit for the period steady at £37.6m for the period.

With millions of fervent Man U fans around the world, even losing tens of millions per year by missing out on the Champions League - as the club has done for four of the past six seasons in its extended post-Alex Ferguson slump - has barely dented its finances.

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But there was failure after failure as the new season progressed.

A 3-0 loss to Tottenham was followed by a 3-2 defeat at the hands of newly-promoted Brighton. Second-tier Derby County knocked them out of the EFL Cup.

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The dog days continued. In the New Year, it was no longer clear Man U would even finish in the top half of the table.

In black-and-white terms, the club's finances were still strong, but its investors' sentiment followed the fans' dark mood down into the depths as shares plunged by around 26 per cent.

The stock perked up again on Dec 2 as manager Jose Mourinho was sacked - shares rose 4 per cent in the 20 minutes after he was fired - then hit a 2019 high on March 28 as The Special One's temporary replacement, the promising Ole Gunnar Ole Solskjaer was made the permanent boss.

But a revival under Solskjar proved fleeting. After he got the role of manager full-time, Man U lost eight of its next 10 fixtures - the club's worst run of form in the 25-year Premier League era.

There has been no shortage of expenditure - £800 million has been shelled out on new players over the past couple of years. But the pundits consensus has been that it has been a mindless spend-up, resulting in an incoherent mix of players with oversize egos, many of whom are now eyeing an exit.

On Sunday, in its second to last game of the season, Man U drew 1-1 to last-placed Huddersfield, which was recently pasted 4-0 by Spurs and 5-0 by Liverpool.

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That means it's now impossible for Man U to finish in the top four, earning yet another savaging from the English press.

The Guardian called the performance "shambolic." The Independent labelled them "passive" and "ragged", while long-time Man U player turned TV commentator Gary Neville offered, "There is nothing I like about this United team at all. They are just awful. A despondent group of people."

While the NYSE opens tomorrow, investors may share the same sentiment.

The club's shares are already 26 per cent off their peak.

A comeback next year will depend, in part, on whether Solskjar can look into the eyes of star midfielder Paul Pogba, and somehow find the right words to inspire the £89.3 million French man out of his lethargy.

If that's the sort of thing you like to gamble on, then buying shares in a publicly-listed sports club should be your bag.

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