Chelsea sale to galvanise Manchester United stock, Crimson says

[TORONTO] The impending sale of Chelsea Football Club will prompt investors to reassess the value of Manchester United after a sharp decline in the English Premier League rival's shares, according to Canadian fund manager Crimson Asset Management.

As many as 30 bidders could place indicative offers for Chelsea, a person familiar with the situation has told Bloomberg News. The club, owned by sanctioned Russian billionaire Roman Abramovich, is looking for a minimum of £3 billion (US$3.9 billion).

That's nearly double the US$2.1 billion market value of Manchester United, which is trading near a record low after dropping 29 per cent over the past 6 months.

The lower value isn't justified, given the shifts in demand for sports broadcasting rights as technology giants bid to add live events to their streaming services, said Crimson founder Ken Jesudian. His Toronto-based firm bought in a position in Manchester United last year.

"I think it will surprise people, even though it's forced, what they'll get for it," Jesudian said of the Chelsea sale. "Here's a business that's changed immensely and there's very few opportunities to actually go to the source and own a part of an iconic sports franchise."

Abramovich has no choice but to sell Chelsea after the UK government sanctioned him following Russia's invasion of Ukraine.

Raine, a New York-based investment bank, is collecting the first round of offers on Friday (Mar 18).

Jesudian described Manchester United as a unique asset and said the revenue growth potential is driven largely by vast changes in the media landscape - as seen in Apple's deal this month to stream Major League Baseball games, the iPhone manufacturer's first major foray into live sports broadcasting.

"It's Manchester United. It's beachfront property," said Jesudian, whose small-cap-focused Crimson Capital Growth Fund has returned an annualized 15.2 per cent since inception, as of Dec 31.

That compares with an 8.2 per cent return for the Russell 2000 Index in Canadian dollar terms over that time. BLOOMBERG