Manchester United stock nearly doubles since sales talk began

Yahoo Finance Live Anchor Josh Schafer discusses the rise in Manchester United stock due to speculation over a potential sale of the company.

Video transcript

[CLOSING BELL]

SEANA SMITH: That wraps up today's trading day and really the trading week. This market check sponsored by Tasty Trade. All three of the major averages holding onto gains. We have the Dow closing up 131 points. S&P up just about half of a percent. The NASDAQ up about 3/10 of a percent. Taking a look at some of the outperformers over the last five days-- communication services, materials, technology among the outperformers there. Utilities and real estate, the laggards of this past week. Financials, that certainly has been the big story, started the week talking about Credit Suisse and UBS ending the week.

A little bit worry out there about Deutsche Bank and exactly what the future looks like for that German bank. Shares closing off just about 3% today. And Jared mentioned the regionals. We saw some relief there. Well, one of the outperformers of this week, Manchester United is spiking again. Shares closing up nearly 10% over the last five days. Josh Schafer is here with a breakdown on what has certainly been a wild ride here for Manchester United. Josh.

JOSH SCHAFER: It has, Seana. So here's a look at Manchester United over the last five days. You can see it up about 8%. But I want to take a longer-term look here. And when you go six months, you can see when the speculation of the sale of Manchester United started. Of course, that was November 22, the Glazer family said. They were, quote, "exploring strategic alternatives."

Stock nearly doubled over three days here and really saw volume spike too, which was pretty interesting, guys. You had this stock normally trading about-- hands about 500,000 times per day. That went up to 5 million, 16 million, 35 million over that three-day period. Then you see a couple of other interesting points here over time.

December 8, that's when Manchester United had their first earnings release since the announcement of the sale. And people started taking a closer look at what this team has really been up to in the club. Shares fell about 10%. It was their third straight quarter reporting a loss per share. But then in February is when we've hit spikes again here.

So February 8, "The Daily Mail" reports there's Qatari interest. The stock surges up over 10% intraday that day. About a week later, February 16, you see another big turn. This was when "The Telegraph" reported that Saudi Arabia may be interested in getting involved in MANU. And then as recently as March 10, we saw Elliott Management was reported to be over in England talking to Manchester United potentially being willing to participate in funding, not necessarily buying the team, but maybe helping financing.

Manchester United took another big jump there. But then when you look at this week, there's been an interesting development coming out yesterday that maybe the Glazers Don't actually want to sell, Dave. And maybe they just be interested in getting a little bit of financing, a little bit of capital, but holding onto the team. And so now, you've seen a little bit of a sell off there.

So interesting to see who's involved, how much it would sell for. The market cap of Manchester United, I should mention, about $4.2 billion right now. So you can bet investors have been basically speculating, well, it sells for $6 billion like some say, maybe they can make a little bit money on that trade.

DAVE BRIGGS: Yeah, $6, maybe even $7 billion. Josh Schafer, excellent work there. The bidding war for Manchester United is heating up as potential front runners begin to emerge. British billionaires or Jim Ratcliffe, who said this week he submitted a second bid for the club. One of more than fewer rather than five reported bids said to also include a Qatari and potentially a Finnish group, as well, while as Josh Schafer mentioned, Elliott Management has reportedly made an offer to buy a minority stake in the club. Joining us now for more on MANU is Steve Olenick, Mintz Chair of Sports & Entertainment. Good to see you, sir.

STEVE OLENICK: Ah, great to be here.

DAVE BRIGGS: Been a while. So is this going to be a new record purchase price for pro franchise? Or is it going to be something else? And who gets this team?

STEVE OLENICK: This is what I think. I think the bankers are doing a great job, drive up the price, right, drive up the price, bring in the credit, pull off some chips off to the table, then reinvest into the team. So maybe not actually have a sale, but actually rebuild into the infrastructure, the stadium, the training facility. So I don't think that they're potentially going to sell this. I think they're just going to drive up--

DAVE BRIGGS: Elliott Management price.

STEVE OLENICK: Correct.

SEANA SMITH: How does, though, if they do sell this when we're talking about a sports team being sold in this type of scenario since it is a publicly traded company? How does that complicate it? Or what does Manchester United, the Glazers need to keep in mind in this type of scenario?

STEVE OLENICK: Well, great question. First and foremost, they have to buy them out, right? Is it going to be an all cash deal? Is there going to be a debt element to it? What is the actual deal dynamics look like? In terms of the UK, you need to have all that money up front, right? So you can't just say, Oh, we're going to think about getting this finance. You actually have to have the money there. So I think this is a very complicated deal using the public markets, per se, that once again, bring up a financing partner, drive up the price, try to pull some money out, recapitalize it, and redivide, and kind of restore where you're going to go with it.

DAVE BRIGGS: With the-- sorry, Josh. With the massive escalation of sports values, will we see more teams tap public markets?

STEVE OLENICK: Yeah, I mean, look at it. I mean, you see the Atlanta Braves? Look at that. Look at Juventus. I think that's going to be the ongoing theme in terms of doing this, I think what you're going to start to see is sports is an alternative asset class. So I think a lot of people are going to want to see and actually participate in these types of deals. However, as we all know, there's very few, ready, available willing buyers that can actually write that check, especially from a cash perspective.

JOSH SCHAFER: Why is it advantageous for the franchises to be public in this case? Or is it not advantageous when it comes to a sale?

STEVE OLENICK: Yeah, I don't-- I mean, there's not really so much whether it's advantageous or not. I think it's to raise the financing profile so to see like, what-- what or how they're going to actually sell off some of the actual, like, shares to raise the price, right, in terms of getting some liquidity back. So I don't necessarily know if it's a public deal per se whether that's going to drive it. It's just whether they can actually raise the money or not.

SEANA SMITH: See, we have just seen a massive explosion in the values of many of these teams. A lot of these sports investments have turned out to be a total home run for those who have bought in. Is that trend? Is that something that's going to stay intact? Or how long until we start to see maybe some of these values come back a bit?

STEVE OLENICK: Well, I mean, as long as the media deal and the media rights deals keep coming, going up further and further and further, I think what we're going to see as these asset values keep going up, right? Until there's some type of stabilization, I think the ready, available willing buyer, there's going to be always a lot of people that want to have these as a sexy asset and a vanity asset to hold if you can afford it.

SEANA SMITH: Yeah.

JOSH SCHAFER: Oh, I'm curious what you've heard demand-wise then as this has sort of picked up. I feel like we've been talking about a lot more in the last few years. Maybe Arctos has become a very public-facing part of that and some of the stories that have come out of the funding they're doing. Has it become a lot more popular just as far as calls you're getting and hearing from clients?

STEVE OLENICK: Yeah, I mean, I actually have multiple deals going right now. So, I mean, I'm seeing the demand uptick quite frequently in terms of like, people wanting to get in and then also seeing people try to like, kick the tires a little bit in terms of what they can and cannot get.

DAVE BRIGGS: Typically, a franchise is held for 30 or so years. So why would this be attractive to private equity when there's no real exit?

STEVE OLENICK: Well, there could be an exit, but you could also look at it as a potential trade. Buy it now, have the growth go up with the media, and then try to sell it off. So it all kind of depends in terms of what your risk profile is, how long you're willing to hold, and what exactly percentage you own as well.

DAVE BRIGGS: Got to wonder if we'll see a $10 billion team sold in the next 5 to 10 years. It seems--

STEVE OLENICK: It's unbelievable.

DAVE BRIGGS: Yeah, I mean--

JOSH SCHAFER: Do you think it's a bubble? Some people call it a bubble, right?

SEANA SMITH: Some--

JOSH SCHAFER: Maybe it just is getting too big. And is-- is $10 billion just too much for someone to pay, right, for a team?

STEVE OLENICK: As long as there's someone out there to write that check, there's a deal to be had.

DAVE BRIGGS: As long as Jeff Bezos wants a team, that remains a possibility. Steve Olenick, good to see you, Sir.

STEVE OLENICK: Thanks so much.