Despite the first anniversary of Manchester United’s strategic review appearing on the horizon, the potential takeover of the club drags on.
Last November, the Glazer family — United’s controversial owners — announced “a process to explore strategic alternatives for the club” which could include a full sale.
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There was a flurry of activity on the New York Stock Exchange, where United’s share price jumped from $13 (£10.56) before the announcement to a high of just over $27 (£21.93) in February.
Two leading contenders to take over emerged: the Nine Two Foundation, led by Qatari royal Sheikh Jassim, and petrochemical giants Ineos, with their local-born chief executive Sir Jim Ratcliffe.
Yet the two bids have key differences. Whereas Sheikh Jassim’s bid is for all of United’s shares — including the 31 per cent not owned by the Glazers — Ratcliffe only intends to buy the American family’s shares initially, leaving any full buy-out until a later date.
These differences are reflected in how the stock market has reacted to each of them during the bidding process, with investors encouraged by the prospect of a post-sale payday when Sheikh Jassim has looked likely to be successful but shedding stock when the Qataris appeared to be on the back foot.
United’s share price has settled at around $19 (£15.43) in recent weeks — somewhere between its pre-announcement stagnancy and its peak this year, which is a reflection of the uncertainty around the process.
So what makes the share price go up? What makes it come down? And how much should we read into its fluctuations?
Takeover developments
Some of the most significant shifts in United’s share price since the announcement last November have followed concrete milestones in the review process itself.
For example, by far the biggest spike in price was on November 23 last year, the day of the announcement. United’s stock jumped 25.8 per cent compared to the previous day’s close and was worth $18.80 (£15.27).
Interestingly, the stock had seen a 13.8 per cent rise the day before the announcement. Two days after it, when the NYSE reopened following a holiday on Thanksgiving, it saw a further 12.8 per cent rise to $21.21 (£17.23).
Given United’s share price had generally hovered around the $13 mark for much of the year — below the stock’s initial public offering of $14 (£11.37) in August 2012 — the prospect of a sale clearly excited the market and the price remained consistently above the $20 (£16.24) mark over the next few months.
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The next substantial jump came on February 16, a day before the first deadline for interested parties to submit an offer — rising 9.7 per cent to $26.84 (£21.80), an all-time high since the stock began trading.
When markets reopened on February 21 following Presidents’ Day, United’s price tumbled by 12.7 per cent to $22.99 (£18.67), still much higher than the pre-strategic review but perhaps reflecting some disappointment in the market that only two bids came forward publicly.
Another significant fall came on March 23, the day after what was supposed to be Raine’s, the banking group overseeing the sale, second bid deadline. Instead, that deadline was extended to allow the Nine Two Foundation and Ineos more time to submit improved offers.
There was a slight fall after the third bid deadline in April too, although subsequent improved offers by Sheikh Jassim were followed by modest rises.
Media reports
Since the announcement and those initial bid deadlines, the biggest fluctuations in price have generally followed media reports of potential developments in the takeover saga.
Back in February, before the first bid deadline, the Daily Mail reported that a group of Qatari investors were putting together an offer. United’s share price rose 10.5 per cent the following day, before a further 8.8 per cent rise the day after.
On August 4, a report by The Sun claimed figures at United were convinced the Qatari bid was now the frontrunner following progress in talks over the previous weeks and that a deal could be completed by November.
When markets reopened the following Monday, United’s share price had jumped from $20.48 to $21.65 (£16.63 to £17.58) during after-hours trading, then ended the day at $23.44 (£19.04) — 14.5 per cent higher than at its previous close, the price’s biggest jump since the announcement of the strategic review.
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Not every rumour-led spike in price has been traced back to the reporting of established news outlets, though.
Take an example from June, when a tweet by Qatari newspaper Al Watan declared Sheikh Jassim’s acquisition of United to be a “success” and claimed the announcement of a deal was imminent. United’s share price rose 13.8 per cent as a result, up to $22.90 (£18.60).
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Yet that development was met by surprise from figures close to Sheikh Jassim’s bid and curiously, neither Al Watan’s official website nor their Facebook account featured the story.
An investigation by The Athletic revealed the rumour had been started by a Twitter account called @2sporttv, which was based in Wales and advertised illegal football streaming to around 300 followers.
A @2sporttv tweet was retweeted by an account bearing the name of Al Watan’s editor Fahad El Amadi, after which the newspaper’s official account tweeted its own version.
El Amadi’s account later released a statement which said the Al Watan tweet was “speculating about possible movement” in the United takeover process and based on “international media reports”.
Even if the Al Watan tweet was based on dubious sourcing, the market’s reaction was consistent with a noticeable pattern.
While some of the highest price spikes have coincided with reports of Sheikh Jassim’s bid making progress, some of the biggest falls have followed suggestions that the Ineos bid is favoured or that the Glazers could stay put.
By far the biggest drop came on September 5, after the Mail on Sunday reported that the Glazer family were ready to take United off the market after failing to receive an offer close to their desired asking price.
United’s shares fell by a record amount when markets reopened the following Tuesday after the Labor Day weekend, crashing from a previous close of $23.66 to a low of $18.50 (£19.22 to £15.03) before ending at $19.35 (£15.72) — an 18.2 per cent drop overall.
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As a result, United’s market capitalisation — the total value of the club’s shares — fell by around $700million (£568million).
Other significant falls have coincided with reports of Ratcliffe emerging as the preferred bidder (The Sun, May 10) and of the Glazers being in talks over selling a minority stake (Sky News, April 15).
On-field results
Ed Woodward once infamously claimed that at United, performances on the pitch do not have “a meaningful impact on what we can do on the commercial side of the business”.
Woodward no doubt meant that as a positive, as a way to highlight the resilience of United’s business model to the slings and arrows of elite football. Instead, it was interpreted as the club’s hierarchy prioritising revenues over results.
Naturally, there is a link between success on the pitch and off it over the long term. United’s considerable financial power is built upon the years of dominance under Sir Alex Ferguson and arguably on the history and prestige established during the Sir Matt Busby era too.
Yet, when it comes to the share price, there is little evidence to suggest that good results inspire market confidence or that bad results have investors rushing to sell their shares.
In May, United secured a return to the Champions League, arguably the most important milestone in any season for every department of the club, yet that was followed by a 1.5 per cent drop in the share price the following day.
One of the biggest falls in the share price this year came immediately after the high point of United’s 2022-23 season: victory in the Carabao Cup final over Newcastle United in February.
Was the market turned off by a first trophy to celebrate in six years? Almost certainly not. Given the final was played a little more than a week after the first bid deadline, it is more likely that a lack of immediate progress in the prospective sale of the club influenced some to sell their stock.
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Other notable results do not show an especially strong correlation between winning and a boom in the share price.
Recent defeats to Brighton & Hove Albion and Galatasaray were followed by modest rises, although disappointing displays in last season’s FA Cup final and in this campaign against Bayern Munich and Crystal Palace were followed by falls.
Off-the-pitch controversies
United’s poor results on the pitch at the start of the new campaign have been compounded by controversies off it, with the club coming under scrutiny for their handling of the allegations against Mason Greenwood and Antony.
As well as those external disciplinary matters, Jadon Sancho’s exile due to a breach of internal rules has seen a £72million ($88.6million) asset consigned to training with the academy.
United’s share price fell on the day The Athletic revealed the plan to reinstate Greenwood as a first-team player and upon the announcement that he would resume his career away from the club, although only by around 2 per cent on each occasion.
Modest falls followed the announcement that Antony would delay his return to the first team to address the allegations against him and when his return to the club was confirmed at the end of last month, though by less than 1 per cent each time.
And following the announcement that Sancho would be training away from the first-team group, United’s share price rose, which illustrates the folly in trying to draw a connection between the two.
Although off-field controversy regarding high-profile individuals no doubt brings the risk of reputational damage, the effect on the share price has appeared negligible.
How much should we read into share price rises and falls?
The difficulty with this type of analysis is that correlation does not always equal causation. Many different factors can affect a share price. Separating the signal from the noise is difficult.
For example, the biggest fall in United’s shares this year — last month’s 18.2 per cent drop following suggestions the Glazers were ready to take United off the market — came after the same weekend of the 3-1 defeat to Arsenal and Sancho’s fall-out with Erik ten Hag.
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Generally, though, the major fluctuations in United’s share price over the past year have followed developments in the takeover process and reports of what might happen next, no matter what else is happening at Old Trafford.
Ultimately, the share price rises and falls based on investors’ confidence that a buy-out is around the corner. And almost a year down the line, industry experts believe the market is still waiting for clarity on whether the Glazers really want to sell.
“The big issue is that a sale or deal has not been clinched,” says Russ Mould, investment director at AJ Bell, a leading investment firm with headquarters in Manchester.
“There is now talk of Jim Ratcliffe taking a minority stake, but it is unclear whether the Glazers now wish to sell or not. This is very significant for the share price because a sale represents the possibility of a payday for those that hold the stock.”
Long-term investors in United have gotten used to being patient over the years, perhaps having come to realise that football clubs have not historically printed money for their shareholders.
“Although Manchester United’s time on the London Stock Exchange proved lucrative for investors, its spell on the NYSE had been fairly fallow, as the shares had done nothing over a period of a decade until news of the potential Glazer disposal became known,” says Mould.
But, despite the initial jump in price upon announcement of the strategic review, Mould points out that United’s stocks have lost around a sixth of their value since the turn of the year.
“Although the share price and on-field performance do not necessarily go hand in hand, it is fair to say that shareholders will have suffered the same frustration as a season-ticket holder,” he adds.
No sudden upturn in form is going to move the market, nor will it send it crashing. Only clarity on the club’s future will do that, one way or the other. As Mould notes: “What really matters is revenues and the prospect of a future sale, not the performance of the 11 men on the pitch.”
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(Top photo: Michael Regan/Getty Images)