Manchester United’s value in the stock market has dropped by as much as $1 billion, ever since Dutchman Louis van Gaal took over as the manager of the club.
The Red Devils have been in poor form lately, and it looks like they might have to go yet another season without a trophy, after being knocked out of the Europa League, the League Cup and the FA Cup. Even in the Premier League, Van Gaal’s side are struggling at a lowly sixth position.
In spite of these performances though, Manchester United are one of the richest clubs in the world, with a huge fan base around the globe. This huge fan following has helped the Red Devils have a major global influence on the sport.
However, their performances have dipped ever since the retirement of legendary manager Sir Alex Ferguson, with the club witnessing a disastrous season under former Everton coach David Moyes. While Manchester United’s performance began deteriorating from Moyes’s regime itself, their stock value began the drastic slide only after current manager Van Gaal took over.
In fact, the value of Manchester United’s shares have dropped from $19.58 in 2014 (when Val Gaal took over at the helm of the club) to $13.33 at the close of trading on March 23, 2016, in the New York Stock Exchange.
High salaries and low performance causing the slide
According to experts, poor performances on the pitch can lead to the devaluation of the shares of a football club, especially because it is directly linked to how much broadcast revenue they earn.
“Football clubs typically don’t present a particularly attractive investment proposition because their revenues are lumpy, and their employees are rather expensive,” market analyst Laith Khalaf was quoted as saying by the Daily Mirror.
“Mistakes on the pitch can be costly for shareholders too – in 2015 Manchester United’s broadcast revenues dropped by £30 million as it failed to qualify for the Champions League in that season.”
Another dip in value coming up?
In spite of this drop in the value of the club’s shares, Manchester United have announced a record revenue and enjoyed an incredible commercial growth this year. However, all that may yet again go to waste, if their performance on the pitch is not up to the mark.
As things currently stand, the Red Devils are a point behind arch rivals Manchester City in the fourth and final Champions League spot. However, with West Ham also vying for Champions League football, there is a disntict possibility that Manchester United may not end up in the top four positions by the end of the season. Failure to qualify for the Champions League next season could cause yet another drop in the club’s market value.