“Downgrading MANU To Hold”: On Football And The Stock Markets
I had assumed that the strange whirring noise I heard the other day was one of the mini-tornadoes that has added to Southern England’s recent weather woes. Now I wonder if it was Manchester United legend Sir Matt Busby spinning in his grave so violently as to trigger storms across what cynics might consider United’s main catchment area. There was a scene in the 2011 BBC TV film United, about Jimmy Murphy’s post-Munich spell as Old Trafford boss, where Busby made a speech to Football League secretary Alan Hardaker which poetically summarised the two men’s outlook on football, Busby waxing lyrical about “grass and boots and… beauty” while bemoaning Hardaker as a man of “tables, graphs and points.” So what would Busby (at least as portrayed in United) have made of this news-in-brief item which Guardian journalist David Conn tweeted this week?
Deutsche Bank downgrades Manchester United (MANU) to Hold: Deutsche Bank downgraded Manchester United (NYSE:MANU) from Buy to Hold with a price target of $16.00 (from $21.00). Analyst Doug Mitchelson expects greater player costs. “We now believe we were too conservative in our player cost outlook and have lowered our ests. We still see compelling growth over the next several years as MANU continues to unlock brand value, though valuation appropriately reflects this in our view,” said Mitchelson. “Positive catalysts remain, however we balance these against team performance risk, as the likelihood of achieving our forecasted finishes in the EPL/UCL is decreasing. While we do not believe a bad season changes the LT thesis of increasing brand monetization, the potential financial impact is not helpful and more importantly, we would expect MANU to further invest in players to improve performance (e.g. Juan Mata for a “club record fee”),” he added.
As if David Moyes didn’t have enough to worry about…
I’ve never been averse to ridiculing psychobabble, as regular readers will know. And I am aware how cheap the laughs are to be gained from such an exercise. But articles such as the above are in many respects rather more saddening than funny. Some of the little touches do, however, raise an unequivocal smile. The inverted commas around “club record fee”, as if such a phrase was more of a bastardisation of commonly-used English than “unlocking brand value” and the good old “LT thesis of increasing brand monetization” (LT left unexplained, as if the whole world knows what that is).Then there’s the icon inviting you to “send this to a friend.” Now the sort of people who read this stuff regularly would, if they had any friends at all, have the sort of friends who might feast on tales of “unlocking brand values.” But none of the “MANU” supporters I know would appreciate the gift.
And the streetinsider.com website from which David Conn took the article also includes “The girl who ran the Robin Hood half-marathon – by mistake” among its recommendations of other web stories that “you may like,” all of which heightens the sense that you are reading a Daily Mash news parody website article… and a good one too. I half-expected her to have been “only going out for the paper when suddenly…” But this article just dispirits, and furthermore begs the question, “how has it come to this?” The credibility of football clubs’ involvement in stock markets should have taken a terminal battering in the mid-to-late 1990s, when it was all the rage for a fortnight but ended in thousands of investors losing a small fortune. Share prospectuses were lavish ‘brochures’ as in “that wasn’t what it said in the brochure.” The “market” exposed the vast majority of football clubs as “failures” every year – ie, they didn’t win a title or a cup or qualify for a money-spinning European competition.
And the very first hint of the potential for that scenario to summarise “MANU’s” season has reduced them from “buy” to “hold”; one step up from “sell”, of course, but more honestly “don’t touch with a bargepole.” Finishing seventh, a year after winning the Premier League, is a sign of a proper competition and should not be at all remarkable – after all, within my living memory, United were actually relegated six years after winning the European Cup and the world didn’t come to an end, whilst Aston Villa bettered even this, managing relegation to the Second Division just five years after beating Bayern Muich in Rotterdam to become the champions of Europe, but somehow managed to pull through. But, on the stock market, seventh is a “bad season.” In fact, seventh in January is a “bad season,” according to Mitchelson – a Deutsche Bank Managing Director and Senior Equity Analyst, no less.
On-field and market performances don’t necessarily correlate – the Rangers have cakewalked through Scottish football’s fourth and third tiers while their share price has headed south for the winter. But their relationship is as close as that between performance and wage bill (see the Rangers again). And European club football structurally ensures that 80% to 90% of top-flight clubs will have a “bad season” each season. And even those 10% to 20% can only be guaranteed to avoid that fate in a league which guarantees that the bottom 80% to 90% of entrants have no chance whatsoever of winning it. So, a thing of “beauty” which became a thing of “tables and graphs” is now, for certain people, at the top level, a thing of “buy to hold,” “continuing to unlock brand value,” “positive catalysts” and “increasing brand monetization”. How to euphemise about screwing fans for cash. In fact, never mind about Busby. Even Hardaker, sour old bureaucrat and functionary that he was, would have been spinning in his grave at all of that.
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