Manchester United’s Financial Stability, Prowess On the Pitch Make its Stock a Winner
Have you ever wanted to be an owner of a sports team, but couldn’t scrape up the millions or billions of dollars it takes to purchase one? Well, for less than $20, you can be a part-owner in Manchester United, and Jefferies analyst Randy Konik recommends purchasing MANU stock.
“With global sport continuing its rise, team performance likely to improve, and fundamentals solid and predictable, we'd buy MANU.”
“When the EPL came back, management noted the audience close to record levels. MANU expects the surge in media consumption to remain high and management looks to take advantage of the opportunity while properly leveraging its digital platform.”
COVID-19 impact: Investors willing to stomach any near-term pain related to the virus will likely benefit in the long-term, according to Konik, who says the firm remains bullish on MANU’s future success on the pitch, and the popularity of soccer and live sports in general.
Less dependent on fan attendance: MANU has about 20% of its total revenue coming from the Matchday segment, a relatively low proportion compared to that of other clubs. This suggests that MANU can absorb the financial shock of fanless games longer than other clubs can.
Social distancing: MANU's stadium can fit about 75,000 fans, putting it in a better position than smaller clubs to accommodate social distancing requirements once fans are allowed to attend matches.
Sorry state of Premier League finances: In 2018-2019, only 9 of 20 clubs saw a pre-tax profit, according to analysis from The Athletic. Manchester United was one of them, with a £28.4 million profit.
Buy-low transfer market: Jefferies says management believes it can capitalize on the upcoming summer transfer market as financial priorities of many clubs shift.
“The summer transfer market could present an opportunity to obtain high-quality players at lower valuations, as other clubs look to prioritize cash flow, given some clubs have higher Matchday sales as a proportion of overall revenue (and without ticket sales these clubs could financially suffer more in a COVID world).”
