Man Utd’s ‘potential relegation’ may spur sale, says analyst

LONDON: A Wall Street analyst has aired the potential of Manchester United Plc being demoted from the Premier League as among possible reasons the owners, the Glazer family, might seek to put the club up for sale.

The Glazers, who own about 75% of the business, may be “assessing their risk profile,” Gabelli & Co John Tinker said in a note Thursday.

He also cited a row between the National Basketball Association (NBA) and China which he said demonstrates the fragility of the Asian nation as a revenue source to a team which says it has about 100 million fans in the world’s most-populous country.

Under manager Ole Gunnar Solskjaer, the Red Devils have made their worst start to a season for 30 years and sit in 12th place in the 20-team Premier League, with the bottom three being relegated when the season ends in May.

“The combination of potential relegation to the lower Championship division with severe financial penalties and the possibility of a negative tweet affecting the EPL’s China relationship may open the possibility of a sale,” Gabelli wrote. Speaking by phone, Tinker said he doesn’t think the team will be demoted.

A Manchester United spokesman didn’t have an immediate comment.

Sales drop

United reported their first annual sales decline since 2015 last month, partly blamed on the team’s failure to qualify for the Champions League.

UK bookmakers quote odds as large as 100/1 on United being relegated, though that’s far less than the 275/1 some firms offer on smaller club Leicester City going down.

United in January announced plans to open interactive entertainment venues in Beijing, Shanghai and Shenyang.

Chinese companies are starting to cut ties to the NBA after Daryl Morey, general manager of the Houston Rockets, tweeted an image of a slogan supporting Hong Kong’s pro-democracy protesters.

Tinker said that while there’s currently nothing to suggest a break-down in relations between the club and China, “the risk-reward is changing” for the Glazers, who also control the Tampa Bay Buccaneers football team.

“A sale by the controlling Glazer family should generate a significant premium,” Tinker said in his note, giving the club a private market valuation (PMV) of £3.5 billion. He has a buy recommendation and a PMV per share of US$26.

The stock opened at US$15.30 in New York Trading yesterday.