When the final whistle blew at Old Trafford on New Year’s Day, one guru of high finance would have been cheering Tottenham Hotspur’s victory just as wildly as the travelling support.
Multi-millionaire Crispin Odey owns a hedge fund, a type of investment vehicle that seeks out opportunities to make a quick return for clients.
And in December, his firm Odey Asset Management made a £13.5million bet that Manchester United’s poor performance would prove more than just a blip.
Odey took out a ‘short position’ on Manchester United plc’s shares on the New York Stock Exchange, effectively a huge bet on the champions’ decline.
Odey, 52, and his wife Nichola Pease are sometimes referred to as the ‘Posh and Becks’ of the City of London financial district.
Like David Beckham and his wife Victoria, Odey and Pease — worth about £450m — are famed for their free-spending ways.
Yet Odey’s gamble on United is anything but frivolous. Put simply, he borrowed a chunk of United’s shares from another investor and immediately sold them. If the shares fall, he will buy the same number of shares back, pocketing the difference between the initial sale price and the lower price at which he buys them back.
The £13.5m flutter — half what the club paid Everton for Marouane Fellaini — is paying off so far.
Since his bet, United’s shares have fallen around 10 per cent.
Had he cashed out his bet Thursday night, he would have made £1.2m in less than a month.
He could win a lot more yet — United’s fourth home defeat of the season effectively ended any chance of winning the Premier League and failures on the pitch cost money.
Manchester United collected some £30.5m from last year’s Champions League alone. And winning the Premier League title netted them £15m. Had they finished in their current position of seventh, they would have been awarded just £10.5m.
Fears about the impact that poor results could have on the club’s finances were evident on the stock market Thursday, as traders sent United’s shares down more than two per cent.
Not everybody is writing them off yet though. Odey’s pessimistic gamble puts him up against George Soros, 83, the shrewd finance veteran with a net worth of around £12billion.
Soros owns 2.1million shares in United, valued at £20m on Thursday.
One of the two stands to lose a chunk of their fortunes, depending on whether Manchester United continue to flounder or stage a revival worthy of their most extraordinary comebacks.