For all you soccer lovers, this one’s for you.

Forbes magazine’s March 29, 2007 Special Report on Soccer highlights the world’s most valuable clubs. To nobody’s surprise Manchester United topped the list at $1.453 billion. I’m not even a soccer fan and I knew the answer to that question. Their marketing and brand strength is widely known across the sports world. It’s the main reason Malcolm Glazer bought the team in the first place back in 2005. He owned a team in the greatest league of all (NFL) and now he would own one in the world’s second greatest league as well. What more could a billionaire ask for?

Hey, it’s his money. The man can do whatever he likes. In fact, if I was going to spend over a billion dollars on an investment and I had a pile of cash already, something fun like a world class sports team wouldn’t be such a bad idea but that’s not what this blog entry is about. I’m interested in examining some of the other clubs on the list and their relative value in comparison to the big red machine. Try to keep in mind that all the figures in the Forbes article are best guess estimates and are for the 2005-2006 season.

In terms of club revenue, three teams had sales that were higher than Man U: Real Madrid, Barcelona and Juventus. Of those, only Real Madrid has operating margins anywhere close to Manchester United’s 29.6, with a respectable 22.2. The best club in terms of operating margins was AS Roma at 32.7 percent. However, Roma’s estimated value is only $224 million or 4.2 times operating income; compared to 15.8 times operating earnings for Man U and 12.5 times for Real Madrid.

Value investors often mention the term margin of safety. In this particular case the lower the level of debt the club maintains, the greater the margin of safety. Of the 25 teams on the list, only five are completely debt-free. One of those is AS Roma. The others really don’t contend for best soccer team purchase.

AS Roma would be my pick by a country mile, were all 25 teams on the list publicly traded; it provides the greatest value, bar none. Roma has a price to sales ratio of 1.4, in comparison to the heady 4.7 times Manchester United commands. While the Italian club has zero debt, the renovation of Old Trafford has increased the club’s debt level to approximately 84 percent of its market value.

If the two clubs were both available on the public markets, there would be no argument which stock is the better buy. Manchester United might be the best brand but AS Roma is clearly the best stock.