Sheikh Jassim bin Hamad Al Thani could be overpaying by up to £2.5billion if his proposed takeover of Manchester United is finalised.
The Qatari banker is the favourite to become the next owner of United after a rival bid from INEOS chief Sir Jim Ratcliffe stalled. Sheikh Jassim is said to be confident of being named as the preferred bidder by the Glazers, who put the club up for sale in November.
It's believed Sheikh Jassim has tabled an offer of £5.5bn for a 100 percent takeover of United. Around £1bn of that cash will be used to clear the club's significant debt accrued by the Glazers, and there will be a fund to help club and community projects.
A sale of £5.5bn would make United the most expensive sports club in history, but it's claimed the Premier League giants are actually worth between £3bn and £3.4bn. United's current custodians are thought to have added a 20 percent premium to their shares.
Chartered accountant and football finance analyst Viva Mukherjee explained the overpayment to Football Insider. He said: "There are 54,500 ordinary A shareholders and the Glazers own 110,000 of class B Shares at Manchester United.
"Today’s share price sits at around $25, but the market value has soared to over $26 when we have seen reports about Qatar winning the bid. If the Glazers sold at the same rate as the stock market, the value of the club would sit around £3bn to £3.4bn."
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Mukherjee claims there is "likely a premium for the Glazers' shares" due to them being United's controlling shareholders, which bumps the club's value up to between £3.4bn and £3.9bn. He believes Sheikh Jassim's reported bid is "well in excess of market value".
Mukherjee has taken into account the debt Sheikh Jassim is willing to wipe out. The valuation given by Forbes, which ranks United as the second most valuable football club in the world after Real Madrid (£5.6bn), is also intriguing. United are valued at £4.8bn.
Forbes' valuation is based on matchday income (£790m), broadcasting deals (1.6bn), commercial deals (£1.6bn) and brand value (£790m), among other things. United's share price has increased when rumours of a successful Sheikh Jassim bid have emerged.
Sheikh Jassim appears to be edging closer to becoming the preferred bidder due to some shareholders being against Ratcliffe's bid. Unlike Sheikh Jassim, the INEOS chief wants to buy just the Glazer family's shares and has not promised to wipe out existing debt.
It's claimed some shareholders are concerned about the value of their shares decreasing if Ratcliffe's bid is successful. That is not an issue with Sheikh Jassim's bid, as he will simply buy them out. Ratcliffe needs to find a resolution to keep his hopes alive.
United fans are desperate to see the back of the Glazers, their deeply unpopular owners. The club's manager Erik ten Hag will also be keen for a resolution to the long-running takeover saga, as the uncertainty could disrupt his summer transfer business.
