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Van Gaal Has Cost Glazers More Than £650m

old-trafford2The Louis van Gaal era at Manchester United has cost the Glazers around £650m, that is almost $iB. Yes that is a B as in one billion dollars.

When van Gaal was appointed United manager on 22 July 2015, United had a market capitalization of £2.23bn. On Monday night it was down £650m to £1.58bn.

The majority of that loss has came this season where United’s poor performances on the pitch have been reflected by falls in the share price and the value of the club.

United’s poor performance in this season’s Champions League and problems qualifying for the next season’s competition are having a significant impact on the share price.

Dropping out of the Champions League after losing to Wolfsburg in December caused the share price to fall by five per cent to $17.82 (£12.45). It has continued to fall as United have struggled to secure a top-four finish in the Premier League.

In February, the share price fell below the 2012 $14 (£9.78) flotation level for the first time. In the same month United announced a record quarterly profit of £18.6m.

United’s shareholders are showing their lack of faith in van Gaal as missing out on the Champions League for the second time in three seasons will cost the club at least £50m next season.

The uncertainty of the future of van Gaal is casting a pale over the share price because off the pitch, business is booming and United are on course to overtake Real Madrid as the world’s richest club.

Commercial revenues have been rising thanks to a record £750m Adidas kit deal and new partnerships with companies such as Gulf Oil and 20th Century Fox. The lucrative new Premier League broadcasting deal that starts next season will add more money to United’s coffers.

It is clear from the actions of investors that ultimately the value of Manchester United is determined by what happens on the pitch, something that United’s executive vice-chairman Ed Woodward and the Glazer family seem to have forgotten.