Font Size

- Aa +

Sun 3 Jun 2007 12:00 AM

Font Size

- Aa +

The Middle East’s Mancunian candidates

Last week investors in London awoke to a flurry of activity amid speculation that Manchester United - the most famous football brand on the planet - was up for grabs.

Last week investors in London awoke to a flurry of activity amid speculation that Manchester United - the most famous football brand on the planet - was up for grabs.

UK newspaper, The Daily Mirror, claimed the Glazer family, who controversially took over the club three years ago, were willing to listen to offers for the Premier League champions. The tabloid also claimed that investment group Delta Two, working on behalf of the Qatari government and the UAE's Dubai International Capital (DIC), were both in the race to buy the sporting superbrand.

So, if the family that also owns US NFL team the Tampa Bay Buccaneers, does decide to sell up, is it likely that we'll see the two Gulf-based investment giants emerge as interested parties? And, perhaps more importantly, is Manchester United likely to be a worthwhile investment to either business should they decide to take the plunge? In my opinion the answer to both questions is a resounding ‘yes'.

With DIC's attempted takeover of Liverpool FC and Qatar Investment Company's recent interest in a 9.9% stake in Arsenal FC, there's no doubt that both governments have football on their investment radars. And I wouldn't be surprised to see either party emerge as favourite to land the club should it become available - certainly the estimated US$1.6bn asking price would not rule out either of the financial powerhouses.

While some analysts suggest that football clubs are a notoriously risky investment, there are obvious benefits of buying into the English Premier League (EPL) at the moment. The EPL's television contract between 2007 and 2010 is worth US$5.5bn. The recently agreed TV rights deal could see the league's 20 clubs receive an average of US$88.6m each over the next three seasons. Add to that the EPL's prize fund, gate receipts and lucrative merchandise opportunities, and there is certainly no shortage of revenue streams. Then there is the obvious draw of the truly global brands that are Manchester United and the EPL.

As Doha, and its rapidly growing airline Qatar Airways, gears up to become an international centre for business and tourism it is increasingly focused on building its global brand - look at the huge investment made by the Qatari government into hosting the Doha Asian Games, for example. Meanwhile the branding strategy of Dubai needs no introduction. Driven by its booming real estate and hospitality sectors and the phenomenal success of Emirates Airline, the city has become one of the most talked-about places on earth. Being part of the EPL, which attracts around 160 million viewers in over 200 countries, could open the door to untold branding opportunities with the possibility of shirt sponsorship, stadium branding or retail merchandise.

Compared to other EPL members recently available on the market, Manchester United has a number of superior factors. Had DIC invested in Liverpool FC, they would no doubt have had to fund the development of a new stadium to house its huge fan base. American billionaires George Gillett and Thomas Hicks - Liverpool's new owners - will now foot the bill for a 61,000-seater stadium that could cost up to US$400m to develop. Manchester United currently has its own 75,000-seater stadium which is packed to the rafters throughout the football season, bringing in huge annual ticket sales revenue.

Citing huge player wage bills and annual expenditure on player transfers, analysts often use Leeds United as an example of why not to invest in football. The club that just a few years ago was riding high in the European Champions League has now gone into administration having incurred huge debts. For my money however, the Dubai and Qatari investment houses would be too shrewd to let this happen. And, the branding opportunity offered by MUFC could be too tempting to pass up.

For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.