A Qatari Bid for Manchester United Would Be a Mismatch

(Bloomberg Opinion) — For football fans worried by the increasing inequality and concentration of economic power at the top of the game, the message to take from an impending Qatari bid for Manchester United Plc is clear: It’s only going to get worse. A third major Premier League club passing into the hands of an oil-rich Middle Eastern investment group would also reinforce elite soccer’s status as a source of trophy assets for the super-rich and a vehicle for a nation’s ambitions.

A consortium of Qatari investors is preparing to submit an initial proposal at the end of the week, Bloomberg News reported Monday, citing people familiar with the matter. Officials at the Qatar Investment Authority, or QIA, the emirate’s sovereign wealth fund, are helping with preparations alongside local family offices, according to one of the people. Manchester United shares rose in New York trading Monday, giving the company a market value of $3.9 billion.

If the Qatari state is backing the bid, then it seems highly unlikely to fail, at least on monetary grounds. The only party to have declared an interest so far is British billionaire Jim Ratcliffe, who is working with Goldman Sachs Group Inc. and JPMorgan Chase & Co. on a potential offer.  Ratcliffe is the founder and majority shareholder of closely held chemicals manufacturer Ineos Group Holdings Plc, and ranks as the country’s second-richest man with a fortune of $13.4 billion, according to the Bloomberg Billionaires Index. That’s more than three times Manchester United’s market value, though it can hardly compare with the $450 billion QIA. Qatar’s ruling emir, Sheikh Tamim bin Hamad Al Thani, is a Manchester United fan.

The threat to any takeover may be regulatory. Teams with the same majority owner can’t both compete in major European tournaments, according to the rules of UEFA, football’s governing body for the region. Qatar Sports Investments, or QSI, already owns French Ligue 1 club Paris Saint-Germain. The idea of clubs of such size and importance being potentially shut out of Europe’s premier competitions would be a deal breaker for both sets of fans as well as soccer’s hierarchy, one can imagine. So whether a purchase could go ahead would depend on whether the Qatari entities are deemed by UEFA to be independent of each other. QSI Chairman Nasser Al-Khelaifi is a member of UEFA’s rule-setting executive committee. 

There is a precedent. In 2018, RB Leipzig of Germany and Red Bull Salzburg of Austria played each other in the Champions League despite both being part of the Red Bull GmbH group. UEFA determined that no single person or entity controlled both clubs.

Even if QSI and QIA are determined to be separate, the acquisition would still leave the world’s fourth- and fifth-biggest clubs by revenue in the hands of Qatar state-linked investors. That would raise hackles across Europe, where football officials are already chafing at the effect that the Premier League’s outsize spending power is having on the regional game’s financial sustainability. Under Qatari ownership, PSG has been responsible for the two most expensive transfers of all time: buying Brazil’s Neymar for 222 million euros ($238 million) in 2017, and France’s Kylian Mbappe, the following year, for 180 million euros.

Such lavish spending might be harder to undertake for a Qatari-owned Manchester United, after the Premier League last week charged its cross-town rival, Abu Dhabi-owned Manchester City, with more than 100 violations of “financial fair play” rules. Meanwhile, Newcastle United, which was bought by Saudi Arabia’s sovereign wealth fund in 2021, has been more restrained in its spending than either Manchester City or Chelsea, which US investor Todd Boehly bought from sanctioned Russian oligarch Roman Abramovich last year.

The hardest part of any deal may be making a return, though that hardly seems to be the priority for most mega-rich football club acquirers. Manchester United has posted three consecutive years of pretax losses and trades at a multiple of 45 times enterprise value to earnings before interest, tax, depreciation and amortization. Value comparisons are difficult, due to a lack of publicly traded peers, but it’s safe to say that it is expensive. Germany’s Borussia Dortmund GmbH trades at 4.2 times, and Scotland’s Celtic Plc at 1.8 times.

The Glazer family that owns the club is looking for a valuation of $6 billion, Bloomberg News reported last year. That would raise the EV/ebitda ratio to more than 60 times. Manchester United has a storied history and the largest global following among Premier League clubs, though has lacked success in the past decade. Fans, who blame the US owners for excessive debt and inadequate investment, will be happy if the Qatari group puts their club on to the same financial footing as their Abu Dhabi-owned rival. The rest of European football is likely to be more ambivalent.

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Matthew Brooker is a Bloomberg Opinion columnist covering finance and politics in Asia. A former editor and bureau chief for Bloomberg News and deputy business editor for the South China Morning Post, he is a CFA charterholder.