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Manchester United has cut its annual profit forecast after its early exit from Europe’s premier football tournament, underlining the challenge facing billionaire Sir Jim Ratcliffe as he tries to restore the club’s fortunes.
Ratcliffe agreed to buy up to 29 per cent of Manchester United for roughly $1.6bn on Christmas Eve, ending a more than year-long sales process that saw Qatari Sheikh Jassim Bin Hamad al-Thani bid for the whole club.
The investment by Ratcliffe gives him control of football operations while leaving the American Glazer family, the club’s longstanding owners, with a majority stake and overall control.
Following its failure to progress in this season’s Uefa Champions League, United said on Wednesday that it expected to make £125mn to £150mn of adjusted ebitda in the year to June 30, down from a previous range of 140mn to £165mn. Revenues will now be between £635mn and £665mn, lower than an earlier forecast of £650mn to £680mn.
Its early ejection from the tournament, which it has won three times, means the club, which is listed on the New York stock exchange, will earn less from broadcast rights.
The deal with Ratcliffe valued United at around $6.3bn, including debt, and marks the biggest shake-up in ownership since the Glazer family acquired the club for around £790mn in a leveraged buyout in 2005.
United continued to win trophies for much of the first decade of the Glazers’ ownership, adding several Premier League titles and one Champions League. However, the club’s fortunes turned when Sir Alex Ferguson retired in 2013.
The loss of the most successful manager in United’s history coincided with the rise of local rivals Manchester City, which took over as England’s most dominant club under the ownership of Abu Dhabi royal Sheikh Mansour bin Zayed al-Nahyan.
The Ratcliffe deal allows the Glazers to retain overall control of the club while making at least $900mn from the sale of 25 per cent of their B shares, which carry more voting rights.
Negotiations were complicated by the A shares, which are largely held by minority shareholders including UK stock picker Lindsell Train and US activist Eminence Capital.
Once Ratcliffe takes his full 29 per cent stake, the Glazers will own roughly 49 per cent but still have control given their holding of B shares. Minority shareholders will own roughly 22 per cent.
United’s shares fell by almost 4 per cent on Wednesday following the cut in profit forecasts.
The Glazers, who also owns the Tampa Bay Buccaneers NFL franchise in Florida, first said they would entertain offers to buy into the club or an outright sale in November 2022.
Ratcliffe’s tender offer to minority shareholders showed that he initially indicated interest in acquiring controlling stakes for $22 a share in February last year, according to filings published on Wednesday.
They also showed that US merchant bank Raine Group is set to earn $31.5mn from advising the Glazers on the Ratcliffe deal. In 2022, the bank also advised on the £2.5bn sale of Premier League team Chelsea.
Ratcliffe and Sheikh Jassim Bin Hamad al-Thani, the son of one of Qatar’s richest men, made rival bids but the British billionaire reformulated his bid several times to win over the Glazers.
