Despite facing recent financial challenges, Manchester United’s brand remains resilient and robust. Analysts at Jefferies highlight the football club’s global recognition and extensive fanbase as key drivers of its strength, even amidst declining financial performance and increased operational costs.
The financial difficulties faced by Manchester United are primarily attributed to rising player costs and operational expenses. In fiscal year 2024, the club reported revenues of £662 million, slightly surpassing its forecast of £660 million. The EBITDA for the same period was £148 million, a decrease from £155 million in the previous year. To address these challenges, operational restructuring and leadership changes are being implemented to drive cost savings of £40-45 million annually by fiscal years 2025 and 2026.
Fan Engagement Initiatives
Manchester United boasts a global fanbase of over 1 billion, with analysts expecting fan engagement initiatives to yield long-term benefits. Despite financial losses, the club recorded record attendance levels and ticket sales in FY 2024. The club’s paid membership program, with over 438,000 members, is the largest in global sports, while the waiting list for season tickets has grown to 171,000. Additionally, Manchester United reported a club-record of £137 million in Matchday revenues in FY 2024, despite hosting eight fewer home matches. This achievement was driven by strong ticket demand and attendance, showcasing the club’s ability to monetize its fanbase even during challenging financial periods.
In an effort to explore new revenue streams, Manchester United has launched an e-commerce platform in partnership with SCAYLE. This platform offers in-app purchases, digital ad sales, and eSports opportunities, with projections to enhance the club’s retail, merchandising, and licensing revenues by £30 million. Despite the strong brand reputation, the club still faces financial risks, particularly from escalating player costs and a more mature sponsorship business. Continued inflation in player costs could impact the expansion of profit margins, while the sponsorship business has limited opportunities for new deals. However, Manchester United is focused on securing higher-margin global sponsorship agreements to mitigate these risks.
Optimistic Outlook and Market Potential
Jefferies analysts maintain an optimistic long-term view of Manchester United’s value creation potential. The club’s brand value and extensive fanbase ensure its position as a dominant force in the global sports industry. With a market capitalization of £2.1 billion, Jefferies has assigned a buy rating with a price target of $26, presenting a 59% upside potential from the current valuation. Despite the financial challenges, Manchester United’s brand strength and loyal fanbase continue to uphold its prominent position in the sports industry.