Even in the face of recent financial struggles, 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. Despite facing financial difficulties due to rising player costs and operational expenses, Manchester United reported revenues of £662 million for fiscal year 2024, slightly surpassing its forecast of £660 million. The club’s EBITDA for FY 2024 decreased to £148 million from £155 million the previous year. Operational restructuring and leadership changes are in progress to generate cost savings of £40-45 million annually by fiscal years 2025 and 2026.
Fan Engagement and Revenue Streams
Jefferies emphasizes that Manchester United has over 1 billion global fans, and they anticipate that fan engagement initiatives will yield long-term benefits. Despite the financial losses, the club achieved record attendance levels and ticket sales in FY 2024. The paid membership program, boasting over 438,000 members, is the largest in global sports, with a waiting list for season tickets reaching 171,000. Matchday revenues also hit a record high of £137 million in FY 2024, attributed to strong ticket demand and attendance. Furthermore, the club is exploring new revenue streams, such as an e-commerce platform launched in partnership with SCAYLE. This platform is projected to enhance retail, merchandising, and licensing revenues by £30 million.
Financial Risks and Future Outlook
Despite its brand strength, Manchester United faces financial risks, particularly from escalating player costs. The analysts warn that continued inflation in player costs could strain profit margins. Moreover, the sponsorship business, a dependable revenue source, has entered a more mature phase with limited new deal opportunities. However, the club is dedicated to securing higher-margin global sponsorship agreements. Jefferies analysts hold an optimistic long-term view of Manchester United’s value creation potential. With a market capitalization of £2.1 billion, Jefferies maintains a buy rating with a price target of $26, presenting a 59% upside potential from its current valuation.
Manchester United’s ability to leverage its brand value and extensive fanbase ensures its position as a dominant force in the global sports industry. Despite the financial challenges it faces, the club’s reputation and following provide a solid foundation for future growth and success. By strategically managing costs, exploring new revenue streams, and continuing to engage with fans, Manchester United aims to navigate through turbulent times and emerge stronger than ever.