Last Thursday Manchester United’s share price hit $17.49, an increase of 25% over the flotation price back in August. If you sold out at this price you would have made a hefty 25% over just 4 months. To compare, the FTSE 100 index of London based stocks appreciated by 7% (still a pretty good return). There were lots of naysayers at the time, saying the stock was overpriced, that the voting structure would deter investors, etc, etc. and they seemed to vindicated by early underperformance of the stock. But the Glazers claimed that fair value was in the region of $16-$20 and it now looks as if they were right. Interestingly, Facebook, whose flotation was labeled an even worse disaster and to whom many comparisons were being made in August has seen its price rise 50% since then, but is still trading below its original offer price.
So, if you bought the stock as a short term investment and sell it now you will have made a handsome profit. But should you hold on for more? There are of course all the worries about a post-Fergie world, but I think there are reasons to believe that, financially at least, the prospects are good. Financial Fair Play will restrain economic competition, and with the backing of the UK Parliament the clubs might well succeed in imposing domestic restraints which will only make the clubs more profitable. The EPL continues to extend its global reach and the problems of the Glazer debt seem with hindsight to have been overstated. Forbes affirmed this week that in their opinion Manchester United is the most valuable “sports franchise” in the world, valuing the club at $3 billion.
This must be exasperating if you LUHG – every increment in joy from the success of your club seems to be exactly offset by an increment in despair at who is profiting from this success.
As Steve_mcfc has just pointed out to me, the price was only $14.43 the weekend before the proposals to extend FFP to the Premier League became public knowledge. so as I have argued, whatever else it might be, FFP looks like surefire vehicle for increasing the profits of owners.