Subscribe Us

Header Ads

The Glazers and Ed Woodward Watch in Pains as Share Price Value of United Drops by $1billion

How Manchester United's $1billion share price value drop will affect them

Joel Glazer, Avram Glazer and Ed Woodward prepare to ring the Opening Bell at the NY Stock Exchange.

Manchester United have seen their value fall by more than $1billion as a result of the United States stock market crash in the wake of the COVID-19 pandemic.

Manchester United shares were individually valued at around $20 earlier this year, but are now down to $14 as the stock exchange struggles in the wake of the huge economic impact bought by the coronavirus crisis around the world.

But the drop in value of Manchester United’s share price will have little to no impact on the club on a day-to-day level, according to football finance expert Kieran Maguire, unless the club was to try and raise short-term cash for an expenditure project such as rebuilding work at Old Trafford.

Kieran, a University of Liverpool lecturer and author of The Price of Football: The Finance and Economics of the Beautiful Game, said the fall in value of Manchester United showed “there’s bad things and good things about having your shares listed in New York Stock Exchange.”

But for now the drop in share price shouldn’t have any impact on the club for the main time and the day-to-day business at Old Trafford.

“These are shares already owned by random shareholders, by hedge funds and private individuals, so it has no impact on Manchester United until the club wants to raise more money,” said Kieran

“Let’s say it wants to do some redevelopment at Old Trafford or extend the training ground and if it wants cash it’s going to make it that tougher, because instead of getting $19 or $20 a share, it’s now $13 or $14 a share.

“Until there is a big capital expenditure project at Old Trafford I don’t see any problems for the club at all. I think it was noticeable last Thursday that the Glazers filed that the club itself would try and support the share price, they were trying to set aside up to $36m to buy back shares from the market to prop up the share price.”

The drop in value of Manchester United will be seen as a blow to some, but The reds should be well prepared to cope with any loss of income while football remains on a standstill as part of the fight against the coronavirus outbreak.

“Manchester United is a very successful business historically and you would expect that to continue once matches resume,” said Kieran.

“They’re very popular with broadcasters and sponsorship, every match will be sold out, none of that is going to change even with the outbreak of Coronavirus. There’s going to be a little problem in terms of cash flow until matches resume but United are probably better insulated than most.

“There was a big kerfuffle when you announced their most recent results because they burned their way through a lot of cash in the second half of the year 2019, they still had £100m in cash sitting in a bank account somewhere, that’s a lot more protection than Rochdale, Morecambe and Macclesfield have.”

The stock market crash and the impacts of the COVID-19 pandemic on businesses could have further implications on football clubs around the world, specifically in sponsorship deals, with firms reluctant to commit large funds to such areas if they are being forced to lay staff off.

“I think it will impact on all clubs if there is a significant economic contraction,” added Kieran.

“Let's say Chevrolet decide to renew their Manchester United sponsorship deal at £53million a year and then are also laying off jobs at the same time because of a reduction in demand goods and services, then from a public relations perspective that is going to look absolutely terrible.

“I think sponsors will be very cautious about committing themselves to large sums of money that is ultimately very frivolous, when there are bigger decisions impacting people's day-to-day lives"