Investing.com -- Despite recent financial challenges, Manchester United (LON:0Z1Q) (NYSE:MANU)s brand remains resilient and robust. As per analysts at Jefferies, the football club's global recognition and extensive fanbase continue to be key drivers of its strength, even amid declining financial performance and increased operational costs.
Manchester United has faced financial difficulties, primarily driven by rising player costs and operational expenses.
For fiscal year 2024, the club reported revenues of £662 million, narrowly exceeding its forecast of £660 million.
The club's EBITDA for FY 2024 was £148 million, down from £155 million the previous year.
The operational restructuring and leadership changes underway are expected to drive cost savings of £40-45 million annually by fiscal years 2025 and 2026.
“MANU has >1B global fans, and we expect fan engagement initiatives to pay dividends in the long term,” the analysts said.
Jefferies flags that despite financial losses, the club reported record attendance levels and ticket sales in FY 2024.
The paid membership program, with over 438,000 members, remains the largest in global sports. Additionally, the waiting list for season tickets has grown to 171,000.
Manchester United also reported a club-record of £137 million in Matchday revenues in FY 2024, despite hosting eight fewer home matches.
This record was driven by strong ticket demand and attendance, further emphasizing the club's ability to monetize its fanbase even in challenging financial periods.
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 ad sales, and eSports opportunities, is projected to improve the club's retail, merchandising, and licensing revenues by £30 million.
Despite the club’s brand strength, Manchester United continues to face financial risks, particularly from escalating player costs. “Continued inflation in player costs could pressure expansion of profit margins,” the analysts said.
Additionally, the sponsorship business, a more reliable source of revenue, has entered a more mature phase, with fewer opportunities for new deals.
However, the club remains focused on converting higher-margin global sponsorship agreements.
Jefferies analysts maintain an optimistic long-term view of Manchester United's value creation potential.
Moreover, Manchester United's brand value and extensive fanbase ensure that it remains a dominant force in the global sports industry.
The club’s market capitalization stands at £2.1 billion, and Jefferies has a buy rating with a price target of $26, offering a 59% upside potential from its current valuation.