Man United betting on van Gaal ‘shake up’ to rescue club


Manchester United has appointed Dutchman Louis van Gaal as its new manager on Monday to restore the U.K. soccer club to its former glory a move analysts said could bring stability back to the team and its share price.

Van Gaal replaces David Moyes, the man who took over from Alex Ferguson at the helm of the club when the latter retired.

Moyes was axed after just 10 months in the job after the world's fourth richest club had one of their worst seasons, finishing seventh in the English Premier League, and failing to qualify for the lucrative Champions League tournament. Manchester United expects to take a £35 million ($59 million) hit on its revenues because of this.

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United's New York-listed share price has been as volatile as the team's performance, hitting lows of around $14.20 in February and closing at $16.67 after van Gaal's appointment. But analysts said van Gaal, who is currently managing the Dutch national team, could be the big personality needed to whip the club back in to shape.

"He will bring foundation and stability to the club. He will bring some attractive names and attractive football," chief strategist at H2O Markets and an avid Manchester United fan, told CNBC in a phone interview.

"I think Louis van Gaal's probably the right profile, he has a larger-than-life character, very sure of himself, very confident, and won't get swayed by the media. Man United needs a big personality to shake things up."

'Big ambitions'

Van Gaal, 62, has had a long and illustrious career, managing the likes of soccer powerhouses Barcelona and Bayern Munich, and winning major European and club championships.

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He was a player for Dutch team Ajax in 1972 and ended his playing career in 1987 at a club called AZ. Van Gaal took up his first major managerial post at Ajax in 1991.

"This Club has big ambitions; I too have big ambitions. Together I'm sure we will make history," Van Gaal said on his appointment at Manchester United.

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United were criticized last season for not buying the right big-ticket players they needed to compete in the U.K. Premier League against the likes of Manchester City or Liverpool. But the club's executive vice chairman Ed Woodward has signalled he is ready to loosen the purse strings when the player transfer window comes around in the summer.

As part of van Gaal's appointment, Ryan Giggs, a Manchester United legend who has played at the club since 1990, has taken on the role of assistant manager. He was in charge for four games while the club searched for a new boss. The much-adored player will help keep fans on the side of the management team as well as give Giggs the experience to take over the reins at a later stage, according to analysts.

'Fierce' competition

Manchester United reported a 26 percent rise in revenues at £115.5 million last week for the three months ending March 31. This was driven by a 64 percent rise in broadcast revenues and increased earnings from sponsorship deals.

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Staff costs however increased by 18.9 percent to £53.4 million due to player signings and renewed contracts. This takes up almost half of the club's revenues for the quarter and is only likely to increase as new players are signed.

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While the club's financials appear solid, another season of weak performance on the pitch could put pressure on revenues.

"At the end of the day when you invest in a football club, you are investing on their performance on the field," Richard Hunter, head of equities at Hargreaves Lansdown, told CNBC in a phone interview.

"Man United have got a slightly different model, they have the momentum of the brand, they can afford to have a second poor season, but anything after that and things would start to creak. It's going to be tough next year when competition will be fiercer than ever."