Investing.com – Despite recent financial challenges, Manchester United Liverpool Football Club (London:) (NYSE:)’s brand remains resilient and strong. According to analysts at Jefferies, the club’s global recognition and extensive fan base remain the key drivers of its strength, even amid declining financial performance and rising operating costs.
Manchester United have been facing financial difficulties, primarily due to rising player costs and operating expenses.
For the 2024 financial year, the club announced revenues of £662m, narrowly beating its forecast of £660m.
The club’s net income before interest, tax, depreciation and amortisation for the 2024 financial year was £148m, down from £155m in the previous year.
The ongoing operational restructuring and leadership changes are expected to deliver cost savings of £40-45m per annum by FY25-FY26.
“MANU has over a billion fans globally and we expect fan engagement initiatives to pay off in the long run,” the analysts said.
Jeffries noted that despite the financial losses, the club has reported record attendance levels and ticket sales in the 2024 financial year.
The paid membership programme, with more than 438,000 members, remains the largest in world sport. In addition, the waiting list for season tickets has grown to 171,000.
Manchester United also announced a club record £137m in matchday revenue in the 2024 financial year, despite hosting eight fewer home matches.
This record figure was driven by strong demand for tickets and attendance, demonstrating the club’s ability to generate income from its fan base even in difficult financial times.
Manchester United is actively exploring new revenue streams, including a recently launched e-commerce platform in partnership with SCAYLE.
The platform, which offers in-app purchases, digital advertising sales and esports opportunities, is expected to boost the club’s retail, marketing and licensing revenue by £30m.
Despite the club’s strong brand, Manchester United still faces financial risks, particularly from rising player costs. “Continued player cost inflation could put pressure on margin expansion,” the analysts said.
Moreover, the sponsorship business, a more reliable source of revenue, has entered a more mature stage, with fewer opportunities for new deals.
However, the club remains focused on converting higher margin global sponsorship agreements.
Jefferies analysts maintain a bullish long-term view on Manchester United’s value creation potential.
Furthermore, Manchester United’s brand value and vast fan base ensures that it remains a dominant force in the global sports industry.
The club has a market value of £2.1 billion and is given a buy rating by Jefferies with a target price of $26, offering upside potential of 59% from its current value.