The New Premier League TV Deal: Why you should buy shares in Manchester United

Upon discovering the TV rights are due for renewal, I began to wonder the implications this may have on Premier League clubs. My attention was drawn to Manchester United, as they’re publicly listed on the New York Stock Exchange. After investigating the new TV packages, as well as analysing Manchester United’s financial statements, I believe their $18.80 share value will rise significantly over the coming weeks.

Firstly, the new TV rights package will introduce a Saturday 7:45pm slot. This is perfectly timed for American audiences, taking place at 3pm New York time and at noon in L.A. It is likely Manchester United will receive priority for this slot, as they’re the Premier League’s leading global brand. The club’s 2017 annual report credited the growth of the club in international markets as the key driver of its revenue increase in recent years, which will only be accelerated through the 7:45 slot. Increased exposure to the Transatlantic market will increase Manchester United’s strength as a global brand, not only increasing their shirt sales, but the amount they can attract in sponsorship and commercial deals.

Secondly, despite the triennial upon triennial increase in Premier League rights deals since their inception, they remain significantly undervalued at £1.7bn per year compared to the £3.24bn per year generated by the NFL. The Saturday night slot, an increase in global popularity, and the total games offered rising from 168 to 200 will all help the Premier League fulfil it's financial potential. Moreover, I expect the value to further increase disproportionately for one key reason, Amazon. Not only can Amazon financially outmuscle Sky or BT in the bidding process, they’d be right to do so. The TV rights are simply far more valuable in their hands. Imagine coverage where half time adverts are personalised like YouTube advertisements, and tailored links are shown for products you can instantly buy at half-time. This would attract far bigger bids for advertising slots than the advertisements shown on terrestrial television. This is all before we begin to consider the value of the Premier League as a loss leader for services such as Amazon Prime or Amazon Music. A similar argument can be made for tech giants such as Facebook, YouTube, or Netflix entering the bidding war.

On the other hand, the battle for TV rights is do or die for Sky or BT, with many users entering their multimedia packages due to the access they grant one to the Premier League. The ultimatum the bidding brings for Sky and BT could force them into competing with Amazon or Facebook’s mammoth bids. The increase in the value of TV rights will increase Manchester United’s revenue, and by extension increase the value of their shares.

Furthermore, a January break is being considered as part of the new package. I believe this will be put in place. Firstly, the FA will support this as it increases England’s chance at international tournaments. Secondly, the clubs will be in favour of a break, as it will reduce injuries and increase their chances in the European knock-out stages. By extension, improved performance in Europe solidifies the prestige of the domestic competition and attracts world class players, thus persuading the Premier League and Broadcasting companies to agree to the break.

An increased chance of progression in the Champions League would bring huge value to Manchester United. Each additional knockout stage is worth £6mil in prize money alone, as well as the increased commercial revenue one can attract from appearing in the latter stages.  The club could also arrange lucrative friendlies during the break. Manchester United’s summer appearances in the International Champions Cup reportedly earned them £15 million, which could be replicated for friendlies during the mid-season break.

To conclude, Manchester United’s revenue is currently £673 million, which I project to increase dramatically over the coming years. In the run up to the previous TV deal, Manchester United shares increased in value by 10%, which I believe we could see happen again.

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