Manchester United brand remains strong despite recent financial losses: Jefferies By Investing.com

Investing.com — Despite recent financial challenges, Manchester United (LON:) (NYSE:) brand remains resilient and robust. According to analysts at Jefferies, the football club’s global recognition and expanded fan base continue to be key drivers of its strength, even amid declining financial performance and increased operating costs.

Manchester United faced financial difficulties, primarily caused by rising player costs and operational expenses.

For the 2024 financial year, the club reported revenues of £662m, well above the forecast of £660m.

The club’s EBITDA for the 2024 financial year was £148m, down from £155m the previous year.

The ongoing operational restructuring and management changes are expected to deliver cost savings of £40-45m annually by the 2025 and 2026 financial years.

“MANU has more than 1 billion fans globally and we expect fan engagement initiatives to pay long-term dividends,” the analysts said.

Jefferies reports that despite financial losses, the club reported record levels of attendance and ticket sales in the 2024 financial year.

The paid membership program, with more than 438,000 members, remains the largest in global sports. Additionally, the membership waiting list has grown to 171,000.

Manchester United also reported a club record £137m in matchday revenue in the 2024 financial year, despite hosting eight fewer home games.

This record was driven by strong demand for tickets and attendances, further underscoring the club’s ability to monetize 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.

This platform, which offers in-app purchases, digital advertising sales and eSports opportunities, is estimated to improve the club’s retail, merchandising and licensing income by £30m.

Despite the strength of the club brand, Manchester United continue to face financial risks, particularly due to rising player costs. “Continued cost inflation for players could put pressure on expanding profit margins,” analysts said.

In addition, the sponsorship business, a more reliable source of income, has entered a more mature phase with fewer opportunities for new deals.

However, the club remains focused on converting higher margin global sponsorship deals.

Jefferies analysts maintain an optimistic long-term view of Manchester United’s value creation potential.

In addition, Manchester United’s brand value and extensive fan base ensure that it remains a dominant force in the global sports industry.

The club’s market capitalization is £2.1 billion and Jefferies has a buy rating with a price target of $26, offering a potential upside of 59% from its current valuation.