Glazer share flotation raises just £75m towards debts, while they pocket the rest
The Glazer share issue will see just £75m go towards paying off the huge debts placed on the club, with the owners pocketing £75m themselves after just £150m was raised.
These figures support the thoughts from some experts that the Glazers floated in order to get a valuation for the club to encourage a buyer to come and bail them out of the mess they have created at a once-booming club.
Articles from The Guardian and a ridiculous spin put on a similar one from the MEN here:
As debuts go Manchester United’s first day on the New York stock exchange was a disappointment. But the world’s most famous club should probably be grateful it got off at all.
United’s initial public offering (IPO) was the largest and most high profile in New York since Facebook’s ill-fated listing in May. United’s co-chairmen Avram and Joel Glazer and the chief executive David Gill applauded the start of trading from the Wall Street exchange’s balcony, which was adorned with the club’s emblem. Some traders even wore the club’s trademark red home kit. But the support did little to boost the stock price.
The already troubled sale hit another bump late Thursday as United’s bankers, who had been looking to charge between $16 and $20 for the shares, slashed the price to launch the sale at $14 (£9). The move shaved as much as $100m off the proceeds expected for the team and its owners. Even at the new low price, enthusiasm was lacking. Shares eked up just 5 cents in early trading and ended the day at $14.
While the club failed to raise the money it had been seeking, United have still officially become the most valuable sports club in the world valued at $2.3bn (£1.47bn), eclipsing the $2.15bn paid this year for the Los Angeles Dodgers or the $1.8bn value of Real Madrid, according to an annual ranking by Forbes magazine.
There is no doubting the team’s achievements, 19-times English champions and famous from Beijing to Baltimore. But for some on Wall Street, the financials just do not add up.
The club is using money to pay down part of its $683m (£437m) debt but will still be saddled with debts of $573m (£366m) after the deal is done. Last year its revenues were £331m ($516m) – at $2.3bn the club is valued at 130 times those earnings, meaning it would take 130 years for the club to make that much money. It makes the $480m the Boston Red Sox owner paid for Liverpool, United’s arch-rivals, look like a bargain.
Wall Street analysts had been dismissive of the sale well ahead of the IPO. One dismissed the club’s share sale as “merchandise” and predicted further trouble ahead. “Winning teams don’t necessarily make winning investments,” said Sam Hamadeh, founder of analyst PrivCo. Hamadeh said small investors were “tired of being burned by big brand names that turn out to be poor investments”.
“Look at Facebook, look at Groupon, both turned out to be a disaster for small investors. I think they should be applauded for avoiding this one,” he said. Hamadeh, one of the few to predict Facebook’s shares would crash and burn, said he believed United were probably worth closer to $6. “Once the fans have bought in and things have calmed down, this company will start trading on its fundamentals. And they are not great,” he said.
United have found it difficult to find a stock exchange to call home. The lower flotation price comes after the Glazer family, which bought the club in 2005 and also owns the Tampa Bay Buccaneers American football team, previously failed to garner enough support to sell shares in Hong Kong and Singapore.In part those sales foundered as investors balked at United’s share structure.
The Glazers have created two classes of shares and will control the club through their ownership of Class B shares that have 10 times the voting rights of the Class A shares they are selling to the public.
The Glazer’s ownership of United has angered some fans in the US. Manchester United Supporters Trust (MUST), a dissident fan group, said they hoped the price would fall, opening up the club to a possible takeover. With this away game off to such a disappointing start, they may just get their wish.
Manchester United raised more than £150m through its US flotation – then pledged that cash will be found to buy some of the world’s best players.
The Glazer family pocketed around £75m as a result of United’s listing on the New York Stock Exchange – with the other £75m being earmarked to lower the club’s £423m debt mountain. Chief executive David Gill vowed that money is also there for players.
But a leading fans group the Manchester United Supporters Trust (Must) called for a worldwide boycott of Glazer products in protest at the American family’s controversial ownership of the Reds.
It was a slightly disappointing first day’s trading for United’s shares, which barely rose above the $14 – £9 – price they were issued at as 16.7m shares – representing a 10 per cent stake in the club – were floated.
But despite fans’ anger at the sums being pocketed by the owners, Mr Gill said manager Sir Alex Ferguson will not be starved of transfer funds.
He said United will continue to grow as a global sports brand and pointed to the lucrative shirt sponsorship deal it has signed with Chevrolet as evidence.
Mr Gill said: “The level of debt that we’ve had at the club since they’ve taken over hasn’t impacted what we’ve done as a team.
“We’ve won four Premier Leagues, we’ve been to the Champions League final three times, we’ve had ongoing success on the pitch.
“We fully understand and the owners fully understand that what happens on the pitch is crucial to us and we will make sure there are sufficient funds to invest in the team going forward.”
He added: “Manchester United, ever since I have been involved with it, has had sufficient funds and will continues to have sufficient funds to attract and retain the best players.
“That’s a key part of our business model. What happens on the pitch is a key factor to what happens off the pitch.”
Asked what his message to investors was, Mr Gill said: “You will be investing in a growth company.”
But the Manchester United Supporters Trust (Must) called for fans to blacklist firms sponsoring the Reds in protest at the Glazers ownership. It said in a statement: “The Manchester United Supporters Trust has today called for a worldwide boycott of Manchester United sponsors’ products, with support across the UK, Europe, Asia and the US.
“The boycott strategy is intended to send a loud and clear message to the Glazer family and club sponsors that, without the support and purchasing power of the fans, the global strength of the Manchester United brand doesn’t actually exist.”