Which Is the Better Buy? The Washington Commanders or Manchester United?
Washington’s football team hasn’t won a championship in three decades, struggles to sell out its stadium and was recently ranked the least desirable team in the league by players. Manchester United is a perennial contender in the Premier League and is one of the most sought-after sports brands with about a billion fans around the globe.
The owners of both teams are exploring selling their clubs. The Washington Commanders are considering bids likely to exceed $6 billion, while Manchester United appears so far to have failed to secure bids for a similar amount.
On the surface, it defies logic that the Commanders are worth anything close to what Manchester United is. They have languished in a sport that is barely played outside North America, while Manchester United is one of the top teams in soccer, a global game with considerable potential for growth.
But the potential sale price of the two teams speaks volumes about the economics and the financial fortunes of the N.F.L., by far America’s most dominant league, and the Premier League, the world’s top-grossing domestic soccer competition.
Here is a primer on the disparity between the values of the clubs:
What are some of the differences in the economics of the two leagues?
“It’s simple, the economic structure of the N.F.L. is far superior to the economic structure of the E.P.L.,” said Sal Galatioto, a longtime sports banker who teaches the business of sports at Columbia University. “If you lose every game in the N.F.L., you still make money.”
The reason: The N.F.L. evenly divides all of its national revenue — from broadcast contracts, merchandise sales, sponsorships and so on — among its 32 teams, regardless of their performance. That money makes up about 75 percent of each team’s revenue, creating financial parity. (The rest comes from local revenue like ticket sales, parking and stadium naming rights.)
In the Premier League, some media revenue is distributed based on merit, so better teams earn more. And, each year, the three worst-performing teams are relegated to the Championship, where the media money is less lucrative.
What are the media deals worth?
In 2021, the N.F.L. renewed most of its broadcast contracts. They are worth more than $110 billion, nearly double the last deal. N.F.L. players receive a maximum of 48.8 percent of those media contracts, as well as merchandise sales, sponsorships and other national sources. The owners get the rest.
Critically, those broadcast contracts run into the next decade. That means even the Commanders, who have not won a playoff game since the second Bush administration, received roughly $350 million in national revenue, according to financials published by the Green Bay Packers, the only publicly owned team.
The Premier League media deals are typically smaller and shorter, though clubs that qualify for other tournaments like the Champions League can earn additional revenue. (Increased competition has made it harder than ever to finish in the top four and qualify for the Champions League.) The last time the Premier League’s television rights were renewed in England, they grew only slightly, though international rights deals continue to rise in value. The league will earn a little less than $5 billion in media rights fees this year in total, less than half of what the N.F.L. will earn.
How do labor costs factor in?
N.F.L. players belong to the N.F.L. Players Association, which negotiated a new, 10-year collective bargaining agreement in 2020. The N.F.L. also has a salary cap — $208 million last year, rising to $225 million this year. That means every club’s biggest expense — player payroll — is fixed.
This stability is lacking in the Premier League, which has fewer limits on payroll, which can lead to expensive and even crippling bidding wars for players. Failing to qualify for tournaments can prevent teams from keeping pace financially with their biggest rivals.
“Their player wages are so high that when they don’t make the Champions League, it can be punitive,” said Rob Tilliss, the founder of Inner Circle Sports, which has brokered team purchases in numerous sports.
What about supply and demand?
There are only 32 N.F.L. teams, with little chance of expansion — and that lack of supply keeps prices high. Teams also change hands infrequently, and when they do, their sale prices grow, which in turn enhances the value of the other 31 teams. The Buffalo Bills were sold for $1.4 billion in 2014. Four years later, the Carolina Panthers were purchased for $2.2 billion. Last year, the Denver Broncos were bought for $4.65 billion.
And if a potential Premier League franchise owner finds the price of a team too high, they can buy a team in a lower division, or hop across the English Channel to buy a team in France, Spain or elsewhere.
What prompted these owners to consider selling?
The Glazer family hired bankers to explore a potential sale of Manchester United in November, six months after Chelsea F.C., another top Premier League team, was sold for $3.1 billion, far more than expected for a club that was under extreme duress because of government sanctions related to its Russian owner.
For all of its tradition and success, Manchester United — which has won the Premier League 13 times since its formation in 1992 — lost more than $100 million in each of the last two years, and has more than $600 million in debt, according to its most recent financial statement. The amount it spends on player wages skyrocketed in the last decade and the team lost out on revenue by often failing to qualify for the Champions League.
Before reports of a possible sale in November, Manchester United’s stock price was below $14, where it traded when it was first listed in 2012. Fans have frequently demonstrated against the Glazers, viewing them as absentee owners interested in money, not sport.
The Commanders have plenty of problems, too. They were 30th in the league in attendance last season, despite playing in the sixth-largest market in the country. Their stadium is unappealing and difficult to reach, and their owner, Dan Snyder, has been unable to secure public money to help build a new one.
Snyder was also in a bitter fight with three of his former limited partners, and he and some of his top executives have been accused of sexual harassment and creating a toxic workplace, which prompted a congressional committee to hold hearings last year. The attorneys general in the District of Columbia, Virginia and Maryland are looking into various allegations against the team, including a possible ticket-skimming scheme.
Who are the potential buyers for these teams?
There have been at least two bids for Manchester United. Jim Ratcliffe, a British billionaire who made his fortune from the chemical company Ineos, and Jassim bin Hamad Al Thani, the son of a former prime minister of Qatar, announced that they had submitted bids.
The value of their bids are not known, but they do not seem to have lived up to the Glazer family’s hopes. English news media outlets have reported that the Glazers are asking for revised bids, and have pushed back their targeted sale deadline to the summer from this spring. The Glazers may not sell the team at all: They have said they are exploring new investments or “other transactions” in addition to a possible sale.
While a sale price of $6 billion or more might seem excessive for the Commanders, groups led by Josh Harris, a founder of the private equity firm Apollo Global Management who also owns the Philadelphia 76ers and the New Jersey Devils, and Tilman Fertitta, a casino and restaurant magnate who owns the Houston Rockets, are considering serious bids for the club. Jeff Bezos, the founder of Amazon and the third-wealthiest person in the world, has also hired bankers to explore a potential bid.