Manchester United is one of the biggest names in sports history. There are very few clubs with as much of a global presence. If you’re one of the most historic and famous franchises in the biggest sport worldwide, that should be worth a lot, right?

Forbes estimates this at around $6.5 billion, while the stock market values it at $2.7 billion. I want to find out who is correct, given the potentially attractive implications for our Intrinsic Value Portfolio of stocks.

If you’re as much of a football fan as I am, I know you’ll enjoy this newsletter. If you think football is called “soccer” and have never watched a Manchester United game, well, you might still be interested in my comparison of European and U.S. football, as well as why NFL teams tend to dominate the Forbes list in terms of valuation.

The reason goes far beyond simply having more ad breaks, which the NFL is famous for comparatively. I hope you’ll enjoy this deep dive as much as I did.

Let’s dive in!

— Daniel

Manchester United: The Fallen Angel

A Brief History of Manchester United

What makes a club truly historic? I would argue that there are two key factors: a long history and sustained success. Manchester United has both — even if fans will remind you that the success hasn’t been recent. United was founded as Newton Heath LYR Football Club in 1878. But it wasn’t yet the Manchester United we know today.

Back then, the team was funded by the Lancashire and Yorkshire Railway Company. When that company experienced financial trouble, the club had to be saved from a drowning debt load of £2,670 by four local businessmen who invested £500 each. If anyone knows a football club I can buy with that kind of down payment today, please let me know.

After acquiring the club, they renamed it Manchester United. The central figure at this point was John Henry Davies, a wealthy brewery owner, who not only provided financial backing but also set higher ambitions for the club. Under his patronage, United won its first league title in 1908 and an FA Cup in 1909, giving a taste of what was to come.

The decades that followed weren’t without struggle, though, including financial crises, relegations, and even the devastation of World War II, but United always bounced back. The post-war years under Sir Matt Busby marked the club’s true coming of age, leading to five league titles and a European Cup victory in 1968. That win was even more special than the other, as it came just ten years after the Munich air disaster of 1958, in which Manchester United’s plane crashed during takeoff and eight players from Busby’s team lost their lives.

These moments of triumph and tragedy shaped Manchester United into more than just a football club. By the time the legendary manager Sir Alex Ferguson arrived in 1986, the foundation had been laid for a football dynasty. Under Ferguson, United dominated English football, winning 13 Premier League titles, two Champions League trophies, and countless domestic cups. This period cemented United’s place as a global sporting institution.

Today, despite United fans not having seen any silverware in many years, the legacy of that history sustains Manchester United’s reputation. As you can imagine, a global brand needs great storytelling. Manchester United can offer that to an extent that very few brands can match, not only in football.

U.S. Leagues vs. European Leagues

I just told you about League titles, FA cups, and Champions League. I know that might have been confusing to many, so let me shed some light on how European football works, and at the same time, use the chance to compare their league and competition structure to the major U.S. leagues.

Trust me, that difference is crucial. In the U.S., the major sports leagues —the NFL, NBA, MLB, and NHL — are closed leagues. There are a fixed number of franchises, and no matter how badly a team performs, it will still be in the league next season, collecting its share of central media revenues. In fact, if you finish last in the NFL, you actually get rewarded with the first draft pick the following year, which is designed to promote parity. The worst team today could, in theory, become the best team in a few years.

As I know from Shawn, whose favorite team he tells me is chronically unsuccessful, that kind of extended underperformance doesn’t happen with most NFL franchises, but it’s definitely more likely than in European football, which works in a completely different way.

European football leagues are open systems. In England, for example, the Premier League is the top division with 20 clubs. At the end of every season, the three teams with the lowest standings are relegated to the second tier, aka the Championship, and then three new teams are promoted. This creates a constant risk-reward dynamic: even historic clubs can be relegated if they have a bad season, and smaller clubs can rise up if they perform well enough.

Then there’s the absence of a salary cap in European football. In the NFL, every team operates under the same payroll ceiling, which keeps competition balanced. In the Premier League, by contrast, Manchester City (not the same club as Manchester United) can spend over £600 million a year on wages, while smaller clubs operate at a fraction of that. That’s why you usually see the same handful of clubs winning the title.

On top of the domestic leagues, European clubs also compete in knockout tournaments. In England, those are the FA Cup and the League Cup, both open to clubs from multiple divisions. And the crown jewel is the UEFA Champions League, where the top teams from each country compete for Europe’s most prestigious trophy. Qualifying for the Champions League is a huge deal. Depending on how far a club progresses, it can generate an additional $25 million (for qualifying) to $175 million (for the winner) in revenue through broadcasting and prize money.

For fans, open leagues, promotion and relegation, and multiple overlapping competitions can make every game interesting, even if most teams outside the Top 5 have no realistic title chances each season. For investors, though, this structure makes the business riskier. A bad season doesn’t just hurt pride; it can seriously impact the club’s finances.

That structural difference is one of the reasons why NFL teams dominate the Forbes list of the world’s most valuable sports franchises, while even the most famous football clubs trade at much lower multiples.

Let’s zoom in on this a bit.

The Role of On-Pitch Performance

Every finishing position in the Premier League table carries a financial consequence. For starters, the league distributes broadcasting money using a mix of fixed payments and “merit” payments. In practice, that means a team that finishes 1st earns tens of millions more than a team finishing 15th. To be precise, Liverpool, last year’s Premier League champion, made £175 million, while United, the League’s 15th, got £135 million.

Again, this is based solely on the league’s placement. Then there’s the matter of European qualification. The Premier League’s top four clubs qualify for the UEFA Champions League. The following two or three clubs can qualify for the Europa League. And while the gap in earnings potential is massive, with the Champions League’s €2.5 billion prize pool dwarfing the Europa League’s €565 million, even Europa League participation is still far more lucrative than missing out on European competition altogether.

This year, Manchester United missed all European competitions. Last year, despite playing a terrible Premier League season, they made it into the Europa League final, resulting in overall Europa League earnings of £27 million.

On-pitch success also directly impacts sponsorship contracts. Many of United’s deals have performance-related clauses — bonuses for Champions League participation, or reductions if the team fails to qualify. Companies like Adidas or Snapdragon (Qualcomm) want visibility on the world’s biggest stage, and when the club isn’t there, the deals can be worth less than the headline figures suggest.

Adidas, for example, just signed a new, record-breaking kit supplier deal with Manchester United. That contract has an annual value of $120 million. However, there’s a $13 million penalty each season United fails to qualify for the Champions League.

Matchday revenue is another angle. A successful season brings more fixtures, especially in Europe and domestic cup competitions. More games mean more ticket sales, more hospitality packages, and more merchandise sold at United’s legendary stadium, Old Trafford. Conversely, an early cup exit or absence from Europe means fewer home dates and a lighter matchday income.

I’ve bombarded you with football lingo by now, so how about we look at the business from a bit more of an investor perspective, rather than the perspective of a football nerd.

Manchester United: Business Breakdown

United is a business with three big revenue pillars, like most sports franchises: Commercial, Broadcasting, and Matchday. Together, they generated about £666 million in FY2025. Depending on the exchange rate, that’s somewhere between $850-$900 million, which makes United one of the highest-revenue sports franchises on the planet. Only a few reach higher revenue. Among them are Real Madrid and the Dallas Cowboys, each with over $1 billion in revenue.

Commercial is the dominating sales driver. In FY2025, it hit £342 million. That’s a jump of nearly £40 million year-on-year, thanks to the new Snapdragon front-of-shirt deal (~£60m annually) and the extended Adidas kit deal worth £900m over ten years.

Broadcasting, on the other hand, fell sharply to £181 million, a drop of over £40 million from last year. This is the direct result of not playing in the Champions League. But the fact that Commercial sales were able to balance this out, despite United’s very unsuccessful season, is a strong sign of the club’s brand strength. There are not many teams that can play a historically bad season and end it with the highest-paid jersey deal in Premier League history.

Matchday revenue is equally impressive. With £135 million, it’s essentially flat compared to last year, which means nothing other than that Old Trafford has seen another year of running at full capacity. It still fills its 74,000 seats every week. Speaking of Matchday revenues and Old Trafford… the stadium is showing its age. For years, there have been leaks in the roof, and the club is planning to build a huge, new, 100,000-seat stadium, the “New Trafford.” That plan could materially impact United’s financials.

For context, Old Trafford already generates over £135 million in matchday revenue each year with 74,000 seats. Scale that up to 100,000 seats with more corporate boxes, premium hospitality, modern amenities, and hosting concerts and other outside events, and annual matchday income could realistically climb toward £200–250 million.

Real Madrid had recently built a new stadium for almost $2 billion. Before the new stadium, Real Madrid’s matchday revenue was about the same as Manchester United’s. Now, they make almost $150 million more per year.

Forbes Valuation, Financials, and Catalysts

A new stadium and a return to Champions League football — could those be enough to make Manchester United an attractive investment? To answer that, it’s worth asking why the club might be undervalued in the first place.

At today’s share price, United’s market capitalization sits at around $2.7 billion. Forbes, however, puts the figure at $6.6 billion, which would make United the second-most valuable football club in the world and one of the Top 15 sports franchises globally.

Forbes’ estimates have been fairly accurate historically. They draw on historical transactions, revenue multiples, and the prices that strategic buyers have been willing to pay. Chelsea’s sale in 2022 for $5.3 billion showed that ultra-wealthy investors will stretch for Premier League assets with global reach, even if the financials leave something to be desired. And in U.S. sports, teams have frequently changed hands at premiums to Forbes’ numbers, suggesting that the methodology is, if anything, conservative rather than optimistic.

It should be clear that simply qualifying for the Champions League or lifting a trophy won’t be enough to close such a massive value gap. In recent years, Manchester United has operated at a loss, and with player wages and the amortization of transfer fees accounting for the bulk of expenses, the club is unlikely to transform into a consistently high-margin, highly profitable business anytime soon.

Clubs like United are considered trophy assets for the ultra-wealthy. If Manchester United were ever sold outright, it would almost certainly be at or near Forbes’ valuation range. At least, if they don’t get relegated in the meantime…The real question is not the price, then, but the timing.

The club remains under the control of the Glazer family, the American owners who engineered a controversial leveraged buyout in 2005. That deal saddled United with hundreds of millions in debt and triggered nearly two decades of fan protests. Since then, the Glazers have maintained majority voting power through a dual-class share structure, even after floating part of the club on the New York Stock Exchange in 2012.

In late 2023, they sold a 25% minority stake to Sir Jim Ratcliffe, the British billionaire and founder of INEOS. Alongside his investment, Ratcliffe assumed responsibility for football operations, creating a new balance of power. The Glazers continue to hold the keys to overall ownership, but Ratcliffe now wields significant influence over the sporting side, a dynamic that could eventually evolve into a full takeover.

The big question is whether the Glazers will eventually sell outright. On the one hand, Forbes values the club at $6.6 billion, far above the current market capitalization of $2.7 billion and the Glazer family’s purchase price of $1.5 billion, suggesting that a sale could unlock substantial gains.

On the other hand, the Glazers have shown little urgency to walk away from what remains a trophy asset, almost unrivaled by anything else in global sports. Despite persistent fan protests, a decade of underperformance on the pitch, and reported offers approaching the Forbes valuation, they have so far resisted pulling the trigger on a final sale.

That leaves three plausible paths forward. The first is a continuation of the status quo, with the Glazers retaining control while Ratcliffe manages football operations and absorbs much of the public scrutiny. The second is a phased exit, with Ratcliffe gradually increasing his stake until he assumes full control. And the third, less predictable but always looming in the background, is an outright sale to a sovereign wealth fund or strategic buyer willing to pay in line with Forbes’ estimate, which would instantly deliver a premium to shareholders.

While the first two scenarios seem more plausible today, regulation could ultimately tilt the balance. In 2023, the Premier League tightened its Owners’ and Directors’ Test by adding explicit human rights and sanctions clauses. It also introduced an Acquisition Leverage Test, meant to prevent the kind of debt-fueled buyout the Glazers used in 2005. I’m speculating here, but if the regulatory bar continues to rise, the Glazer family may decide to exit rather than risk being boxed in by stricter ownership rules down the line.

There is also another angle that, while equally speculative, is hard to ignore: the accelerating interest from Middle Eastern investors. Saudi Arabia will host the 2034 World Cup and has already poured billions into football, from signing high-profile players to bankrolling entire clubs. The scale of that spending spree is striking. In 2022, Saudi clubs spent just $50 million on transfers. By 2023, that figure had exploded to $1 billion, second only to the Premier League itself. With that kind of capital flowing into the game, it’s not hard to imagine Manchester United being one of the next great prizes on the shopping list.

No other football club would generate as many headlines upon acquisition as Manchester United. Over the past few years, Saudi Crown Prince Mohammed bin Salman has expressed interest more than once, while Qatari investors also entered the bidding with a $6.1 billion offer in late 2023. Rather than accept a full takeover at that price, the Glazers opted to sell a 25% stake to Sir Jim Ratcliffe on similar terms, a deal that allowed them to unlock some value while still retaining overall control of the club.

Investment Decision

Manchester United is not a great business in the traditional sense, and it certainly won’t become a high-quality compounder. Margins are thin, operating profits are inconsistent, and the cost base — driven by player wages and transfer amortization — is high and volatile. Yet, despite all of this, Manchester United remains one of the most coveted assets in global sport. For investors who care about scarcity and trophy value, it is arguably one of the highest-quality properties you can own.

We’ve made a similar argument before on this show when we discussed Smith & Wesson. That company is not a long-term compounding machine either. However, it has catalysts, such as political events, public debates, or crises, that cause demand spikes and drive the stock rally. With Manchester United, the equivalent catalyst would be a sale of the club. Unlike Smith & Wesson, however, you don’t get paid to wait. Back then, Smith & Wesson came with a dividend yield of around 5 percent, offering investors some return while they waited for the next event-driven move.

United doesn’t offer that luxury. There is no dividend, no buyback program, and no built-in shareholder return to compensate for patience. That means opportunity cost can quietly erode your returns. And it’s not just that you go unpaid while waiting, you also carry the risk that declining on-pitch performance chips away at the club’s prestige, making the investment case weaker over time.

As much as I’d love the idea of owning a football club, I can’t in good conscience recommend to Shawn adding Manchester United to our Intrinsic Value Portfolio.

For more on Manchester United, you can listen to our podcast here. And if you like learning about seemingly undervalued publicly traded sports franchises, check out our first-ever edition of this newsletter from earlier this year, written by Shawn, pitching Madison Square Garden Sports Co.

More updates on our Intrinsic Value Portfolio below 👇

Weekly Update: The Intrinsic Value Portfolio

Notes

• Over the last two weeks, we’ve allocated 15% of our Portfolio from cash to stakes in Berkshire Hathaway and Universal Music Group. With more than a third of the Portfolio left in cash, though (it’s been a slow process allocating it after starting with 100% cash in January 2025), we felt that there was an opportunity to add more to one of our other recent bets that has been a bit beaten down since first adding it: Lululemon.

  • From an initial at-cost weighting of 5% of our Portfolio, Lulu stock has declined by about 13% in the last few weeks, bringing its weighting in our Portfolio to roughly 4.35%.
    

  • We still very much believe in the Lulu brand, its industry-leading margins, pricing power, customer loyalty, and fabric quality, and while we may not want to own a retail brand as a compounder over longer time periods, we think the stock is still too beaten down, and we think normalization in the business could drive significant mean-reversion. As such, our timeframe for the position is closer to 18-24 months at this point in time.
    

  • Anyways, we used this price weakness as a chance to rebalance the position to 5% of the market value of our Portfolio, considering this to be a chance to buy a great company at a wonderful price for the purposes of our Intrinsic Value Portfolio, which you’ll see reflected in a declining cash balance from last week.

• Nike reported earnings this week, and while there’s still plenty of work ahead, it finally looks like a turnaround is underway. After five straight quarters of negative revenue growth, Q1 FY2026 marked the first quarter back in positive territory.

  • Wholesale and North America led the recovery, beating estimates by a wide margin. Digital and China also came in ahead of expectations, though both remain in the midst of their own turnarounds. Management had previously said last quarter would be the low point and that stronger quarters would follow, and this was the first real evidence of that.

  • The stock jumped 6% on the news, though it gave back part of those gains later in trading. Even so, Nike absorbed the tariff costs, expanded its margins, and is regaining momentum in North America. That’s what we like to see for Nike’s long-term outlook.

Quote of the Day

"One of the things I always thought about as a young coach was finding solutions to things that happened, but the most important thing I always referred to was never giving in.”

— Sir Alex Ferguson

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