Dark clouds may have enveloped Old Trafford – but one group of experts is predicting a bright future for Manchester United.
Global investment bankers UBS say the arrival of Sir Jim Ratcliffe and INEOS following their 29 per cent acquisition of the beleaguered Premier League giants ‘should (eventually)’ see the fallen giants return to the top.
The Swiss-based group has carried out an in-depth, 41-page analysis of the business – seen by Mail Sport – and its findings may raise eyebrows given INEOS’s rocky start.
UBS is predicting a return to the top four and Champions League football within four seasons for United and vast revenues that could break the £1bn barrier.
Indeed, they believe the club’s share price is currently undervalued and are recommending that potential investors should buy now.
Ratcliffe’s group, which arrived around a year ago, have come under severe fire following a host of cost-reducing measures that have seen around 250 staff made redundant and a series of savage cuts across various departments.
A group experts have predicted a bright future for Manchester United despite their dire form
Sir Jim Ratcliffe and INEOS have endured a rocky start since their 29 per cent acquisition
United have made sweeping cuts, including 250 redundancies, in a cost-slashing exercise
Performance on the field is also a major cause for concern, with new manager Ruben Amorim left in no doubt at the task of the size ahead following Monday night’s 2-0 home defeat to Newcastle which left fans looking nervously over their shoulders given United sit in 14th place with Liverpool are up next.
However, the forensic report, entitled: ‘Red Devils set to rise again’, outlines a wide range of reasons for optimism.
UBS claim the cuts may well help trigger a revival on the pitch, saying that the ‘new management and focus on cost management should support investment to improve sporting performance as well as a return to net profitability’.
United’s latest figures, ahead of the controversial measures, saw them rake in record revenues of £662m but suffer a net loss of around £113m.
However, should Amorim oversee an upturn United could see revenues jump to north of £800m, UBS say.
And in further good news for a fanbase currently in desperate need, the analysts also point out that a new stadium – which is currently being explored – would send that figure soaring to more than £1bn on the back of a £200m boost from increased ticketing, hospitality and events.
The analysts are recommending that investors buy shares at their current value of around £18.32 and add that amid ‘continued interest in sports teams and leagues from private equity and wealthy individuals seeing trophy assets, we see the valuation of Manchester United as well underpinned’.
However, there is a note of caution. ‘This is by no means a foregone conclusion given the recent poor performance,’ the report adds, ‘but the new manager provides a potential turning point for change, albeit one which may take time to materialise’.
Should Ruben Amorim oversee an upturn United could see revenues jump to north of £800m
The report has outlined several reasons for investors – and supporters – to be optimistic
UBS also point out that United’s revenue base is ‘superior to most peers’ and provides ‘an ability to spend more on talent’. They add: ‘We assume performance will turn around leading to a Champions League participation from 2028.’
The group estimate that United would need to finish in the bottom five for revenues to fall below £650m and, as such, see little risk for investors at current prices. Such a league position, they say, is ‘highly unlikely’.
The document says Ratcliffe and INEOS’s involvement ‘provides a potential turning point for the fortunes of the club’.
It adds: ‘While we see no silver bullet to immediately reverse a decline in on-field performance, the shift in corporate management, coaching staff, and the greater focus on cost control, as evidenced by the rationalisation of employee numbers, are indicative of a change in mindset with a view to improving sporting and financial performance. Increased investment, a drive for redevelopment of the ageing stadium, and potential benefits from multi-club ownership could all drive upside.’
Under the heading: ‘Too much revenue generation to stay average for long’ the analysis also points out that despite an underwhelming season last year, United pulled in record revenues ‘demonstrating its loyal fan base and commercial appeal’.
It adds: ‘Indeed it is this high revenue base with no direct link to on-field performance that supports our view that the team will continue to remain competitive, especially in light of an increasing focus on financial fair play.’
UBS predict United will finish seventh this season and fail to qualify for Europe. However, they project a fifth place finish next year and the year after, before returning to the top four and lucrative Champions League football in 2027-28.
They also warn that should United not perform to the levels they are predicting on the field it would have an adverse impact on revenues and suggest proposed Premier League financial rules – which set a spending cap as a multiple of the amount the bottom club receives in broadcast and commercial fees – could limit United’s ability to pay for the best players.
This could ‘lead to a more competitive league to the potential detriment of Manchester United’s revenue’, it adds.
