Manchester United: Won at Wall Street despite struggling on the pitch

New York
CNN business

Manchester United Football Club fans are not thrilled to see their team in mid-table in the English Premier League this season, especially after a disappointing 2021.

Making things worse? At one time Man United’s last significant trophy was the UEFA Europa League win in 2017 and their last Premier League crown was back in 2013.

But despite the Red Devils’ recent lack of success on the pitch, shares in New York Stock Exchange-traded Manchester United ( MANU ) are up 3% this year – no easy feat in this tough market.

Additionally, the stock is up nearly 35% in the past three months. So why are Manchester United shares doing so well?

The reason for the pop is an August tweet from Tesla ( TSLA ) and SpaceX CEO Elon Musk joking that he was buying the team.

The world’s richest man isn’t actually adding the team to his business empire — it could eventually include Twitter ( TWTR ) if a judge forces shareholders to enter into a $44 trillion settlement. But there is legitimate speculation that the team’s current US owners could put the team — or at least their stake — up for sale.

Sir Jim Ratcliffe, chief executive of chemical giant Ineos, said last month he was interested in buying the team if the Glazer family, which owns the NFL’s Tampa Bay Buccaneers, wanted to sell.

And it would make sense that other global billionaires would be interested in owning United. The team has loyal fans and Cristiano Ronaldo is one of the most popular players in the world.

Major sports franchises such as Man United generate significant income from merchandising sales and broadcasting rights.

At a time when many consumers are cutting the cord or using DVRs to skip commercials, live sporting events from Disney’s ( DIS ) ESPN, Fox, Comcast’s ( CMCSA ) NBC, Paramount’s CBS and CNN parent Warner Bros. TNT and TBS. Tech giants Amazon ( AMZN ) and Apple ( AAPL ) have also struck big sports rights deals recently.

United will report its latest earnings on September 22. Sales are expected to rise by more than 40% on a year ago and the club’s fervent fans are unlikely to abandon the club as Premier League rivals Manchester City, Chelsea, Arsenal and Tottenham have all had it. has improved in recent years.

“If you have enough late spots, that affects ticket sales,” said Christopher Zoo, president and chief investment officer of CAZ Investments, a hedge fund that invests in sports franchises. “But the reason we were attracted to sports in the first place is because they make a lot of money.”

Zook has an investment in Fenway Sports Group, the company that owns the Boston Red Sox and Liverpool soccer club, another Premier League favorite.

Man United is a rarity in the world of sport and finance. It is one of the few major publicly traded sports franchises. But there are others.

Madison Square Garden Sports, owner of the New York Knicks and New York Rangers, is also traded on the NYSE.

The Atlanta Braves ( BATRA ) MLB team is a continuation of Liberty Media ( FWONA ), which trades on the Nasdaq. Liberty Media also owns (FWONA)-liberty-media/index.html” target=”_blank”>the popular Formula 1 racing league and has a tracking stock for that too (FWONA). (Tracking stock (FWONA), as the name suggests , tracks a business’s sales and profits, but doesn’t give shareholders voting rights like common stock (FWONA) does.)

And the shares of United’s two main rivals are publicly traded on European exchanges: Germany’s Borussia Dortmund trade in Frankfurt and Italy’s Juventus in Milan.

Zook said he wouldn’t be surprised to see more U.S. and international sports giants plan to go public. He cited their internal demand for “multigenerational fan loyalty,” noting that the rise of legal sports betting, fueled by popular apps like DraftKings and FanDuel, should also boost fan engagement and team ratings.