Article / 08 August 2016 at 10:23 GMT

Man Utd shares rise ahead of $110m Pogba deal

Managing editor, / Saxo Bank
  • Manchester United to spend $110 million on Juventus midfielder Paul Pogba
  • Share price rising ahead of deal expected to be completed this week
  • Football finances firmly favour European elite with global fanbases
  • Rich/poor disparity threatens to undermine fundamentals of football's strength


Manchester United is buying a prodigious football talent in Paul Pogba for the
princely sum of $110 million and the hairstyle is thrown in for free! Photo: iStock

By Martin O'Rourke

Football has long been a law unto itself and at some time this week, quite possibly today, it looks almost inevitable that Manchester United will smash the world record for transfer fees when it lands the French international midfielder Paul Pogba for a sum of around $110 million.

Whatever the merits of the move in footballing terms that at least theoretically values Juventus midfielder Pogba ahead of world stars Lionel Messi and Cristian Ronaldo, there is not a lot for Manchester United Plc to lose in this deal despite this enormous outlay.

The changing nature of football over the last 30 years that has helped transform a group of clubs into a global elite — Manchester United, Barcelona, Real Madrid and Bayern Munich head a group of some 20 extraordinarily well-endowed, exclusively Europe-based clubs — that knows with each galactico-type signing, they can almost certainly guarantee the return and some in merchandise, TV rights and developing global fanbases.

It is exactly that process that has persuaded the likes of investors such as the Glaziers to invest in Manchester United and Sheikh Mansour to pour billions into turning rivals Manchester City into a global force to be reckoned with.

Not surprisingly, Manchester United's share price has begun to show signs of coming out of the doldrums with the news of Pogba's impending arrival after enduring a rough summer amid some uncertainty over player acquisition and its ability to reassert itself in the English game having failed to even come close to winning a title since it last took the honour in 2013.

It's been a rough summer for Man Utd's share price but the imminent Pogba deal has lifted shares


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The Glaziers in particular have always had their eye on sporting franchises with American football team the Tampa Bay Buccaneers an early part of their stable and, while clearly knowing next to nothing about the mechanics of running a football team or indeed the game itself, quickly grasped the money-making offering opportunity offered by the explosion of TV rights money to seize control of Manchester United in 2005.

But perhaps even they did not quite understand just how the TV money would multiply after they first showed in an interest in Manchester United in 2003.

Sky TV's first five-year deal with the newly-formed premier league in 1992 was worth £304 million. The deal in 2000 took Sky's spend to £1.1 billion for a three-year deal. And last year, the Premier League was able to sell rights for a whopping £5.136bn as BT also got in on the act to help drive the money entering the industry ever higher.

With negotiations for the next deal to begin soon — the current deal runs out in 2019 — it is hardly a surprise then that the global elite feel they can afford to splash out astronomical sums on the likes of Pogba and the attendant wages that come with such deal with little concern for the finances.

After all, there is a global fanbase willing and ready to finance the outgoing and in an ever-virtuous circle, the more a club seems to spend, the more they can guarantee the income coming in.

With China also beginning to throw serious money at football as it searches to break into the globe's number one sport in a meaningful way, you could be forgiven for thinking that all is well in the football empire.

But this is of course a model that works for the global brands, and only for the global brands. For ordinary football clubs, it's a completely different story as the divide between rich and poor has got ever wider. As the money pouring into football climbs ever higher, the very essence of football's strength — the competitiveness that has always underpinned the globe's number one sport — is being sapped by an avalanche of money.

Don't be fooled by the Leicester City precedent of winning the league title in 2016, marvellously romantic story though it was. While Leicester can not compete with the megabucks available to the elite, it too has been bankrolled to the tune of at least £100 million since Thai businessman Vichai Sribvaddhanaprabha took over in 2010.

Without money it seems, glory in football is unattainable. So while Manchester United can expect a fillip today when the New York Stock Exchange opens, the long-term ramifications of football's direction as a global industry really should be noted for anyone who has a genuine love of the game.


It's not all glory, glamour and VIP seats. Photo: iStock

Martin O'Rourke is managing editor at Saxo Bank

08 August
Martin O'Rourke Martin O'Rourke
Man Utd's share price opened at $16.05 and was at $16.25 at 1607 GMT, a rise of 1.75% on the Friday close. It has hit an intraday high so far of $16.38.


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