Why are Man United and Liverpool suddenly on the market?

Manchester United, along with rivals Liverpool, have opened the doors to a potential buyout that could be the biggest in sporting history.

Following the sale of Chelsea in May, this offers the prospect of three of the biggest Premier League clubs changing hands within months. Newcastle was also bought last year by a consortium led by Saudi Arabia’s Public Investment Fund.

So why this relative, but rapid, flooding to the market?

The takeover of Chelsea by Todd Boehly and Clearlake Capital was a unique case, with Russian oligarch Roman Abramovich forced to sell after being cleared by the British government over his ties to Vladimir Putin. Still, it feels like an important factor in what followed.

For all the potential sellers out there, it sparked a clear interest from the world’s super-rich who wanted a piece of the hottest soccer league. Boehly and Clearlake battled competing bids from Chicago Cubs owners, the Ricketts family, Boston Celtics owner Steve Pagliuca and British billionaire Jim Ratcliffe, among many others.

A £2.5 billion ($3 billion) fee for a team that has a smaller stadium than any of its elite Premier League rivals has set a milestone for United and Liverpool, who have long been the most popular in England, with a huge global reach. United claims to have over a billion fans and followers worldwide.

It also has by far the largest stadium in the Premier League, with a capacity of over 75,000 at Old Trafford, as opposed to Chelsea’s Stamford Bridge, which can hold around 42,000.

“If you look at the fundamentals of the company, any valuation will not give you £2.5bn for Chelsea,” Kieran Maguire, author of “Price of Football,” told The Associated Press. “If the UK government could get that… (award) for Chelsea, clubs that are much more cautious could legitimately get more.

“I calculated Chelsea to be around £1.5 billion in normal business conditions. Chelsea was a forced sale.”

Based on that, anything seems possible in this market.

Maguire, who is also an associate professor of football finance at the University of Liverpool, believes a figure of $4 to $4.5 billion would be reasonable for United. But there’s a lot more numbers in circulation since the Glazers, who also own the NFL’s Tampa Bay Buccaneers, announced plans this week to explore “strategic alternatives.”

“I’m reading $6 to $7 billion and I’m surprised,” Maguire said. “The financial world is full of very confident people who like to shout big numbers.”

Handelsbank Raine Group, which handled the sale of Chelsea, is handling the process for United, which could include a full buyout. It will already be well connected to the type of people who would be serious candidates to make takeover bids. Maguire says the appeal of owning a sports team is more than just business.

“If you are a billionaire, who do you hang out with? You have as much as anyone you know,’ he said. ‘You have the yacht, you have the helicopter. If you say you have Manchester United, you own the room. It’s like owning a Picasso or a Van Gogh. It’s a scarce job.

“If you really wanted the Mona Lisa, you would pay a huge price. Is Man United the Mona Lisa of football?”

The Glazer family will certainly see the business case to sell. Similarly, the Fenway Sports Group (FSG), which owns Liverpool, confirmed this month that it is open to selling shares in the club.

The late magnate Malcolm Glazer bought United in 2005 for £790 million (about $1.4 billion at the time). Even at the most conservative valuations, the family will make a huge profit on that.

FSG bought Liverpool in 2010 for £300m ($476m at the time) and is likely to expect at least the same sale price as Chelsea. Still, both clubs would likely have been aware of the profit potential before Abramovich sold.

Another reason why they are now open for sale could be because of last year’s aborted launch of a new European Super League, which sparked outrage from supporters. A new competition for the richest teams in European football was seen as a way to bring in new broadcasting revenue, without the risk of missing out on Champions League qualification.

But the immediate collapse ended hopes for those new sources of revenue and forced the Glazers and FSG to apologize to the fans.

While there are still attempts by Real Madrid, Barcelona and Juventus to revive a Super League, owners of English football teams should exercise caution. That didn’t deter potential Chelsea buyers – nor the stipulation of a commitment to invest a further £1.75 billion ($2 billion).

A United buyer would likely have to embark on a redevelopment of its aging stadium. Supporters have criticized the Glazers for alleged under-investment on and off the field, as well as the debts the family has accumulated during the leveraged takeover of the club. Gross debt was £636.1 million in United’s latest financial results, which were released in September.

“Our club needs the right property more than ever at the moment and that should be the priority rather than simply the highest bidders and the highest returns for you,” Manchester United Supporters’ Trust wrote in an open letter to the Glazers. week.

“Fans will want to carefully scrutinize any new future owner – we especially beg them not to repeat the mistakes you made – in order to alienate the fans who represent Manchester United’s greatest asset.”

Ratcliffe, who was a United fan in his youth and owns the petrochemical company INEOS, said earlier this month that he had dropped his previous interest in buying out the Glazers. When asked again this week, INEOS declined to comment. Saudi Arabia’s Sports Minister Prince Abdulaziz bin Turki Al-Faisal said this week he would welcome bids from the country for United and Liverpool.

“I hope so, if there are investors and the numbers are right, and it will produce a good business,” he told Sky News. “Then the private sector could come in, or companies could come in from the kingdom.”

Given the many Americans, who have also missed Chelsea and may want their own ‘Mona Lisa’, the Glazers and FSG should see a lot of interest.

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