If Man United Fans Are Hurting, Think of the Investors

(Bloomberg Opinion) -- Love him or hate him, one thing is undeniable about Jose Mourinho: he was not good for Manchester United Plc’s stock price.

The shares declined 12 percent in his two-and-a-half years as manager of the English soccer club. Those of Germany's Borussia Dortmund GmbH almost doubled in the same period, while Italy's Juventus Football Club SpA jumped more than fourfold.

The decision to fire him, announced Tuesday, is more than understandable given what's at stake, namely qualification for Europe's lucrative Champions League. Only the top four teams in England's Premier League can qualify, and United is sitting in sixth place, 11 points below fourth-placed Chelsea. It's still mathematically possible for the club to secure a place, but Sunday's 3-1 defeat to Liverpool FC makes it look increasingly unlikely.

A failure to qualify would have significant implications for fiscal 2020 revenue growth. Jefferies analysts estimate United would book about 73 million pounds ($93 million) of Champions League broadcast revenue this year were it to reach the quarter finals of the European competition, as it has typically done in previous years. When it won the lesser Europa League in 2017, Deloitte estimates it received 45 million euros ($51 million).

If Man United Fans Are Hurting, Think of the Investors

The $42 million difference, which is a best-case scenario since it’s by no means easy to win the Europa League, is also the difference between revenue growing or stagnating. Analysts currently expect sales of $779 million in 2019 and $819 million in 2020. The pain of missing out becomes especially steep given that the cumulative value of Champions League broadcasting rights is set to jump by more than half for the 2019 to 2021 seasons compared with the prior period, to 5.9 billion euros.

If Man United Fans Are Hurting, Think of the Investors

Although soccer investors have to put up with some fluctuation in broadcast revenues based on their team's success, Manchester United's sporting performance is clearly regressing: the team will almost certainly finish lower than last year's second place in the Premier League.

If Man United Fans Are Hurting, Think of the Investors

Missing out on one season’s Champions League revenue is a pain for investors, but one they can tolerate. The greater risk is that persistent underperformance (it's now five years since United's last Premier League title) starts to erode the club's brand value. That could gnaw away at the underlying stable, long-term commercial revenue – which depends upon the team’s massive global fan base. United remains the world's wealthiest soccer team by annual revenue, and won't want to lose that crown.

All of that is why Mourinho had to go.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.

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