Manchester United slash share
price before debut on New York Exchange
• Price cut to $14 after negative
comments from analysts
• United still the world's most
valuable club at $2.3bn
10 August 2012
Manchester United have slashed
the price of their shares ahead of their debut on the New York Stock Exchange
on Friday.
The club had been set to sell
their shares for between $16-$20 (£10.20-£12.80) a share but cut them to $14
late on Thursday following negative comments from Wall Street analysts and
Facebook's disappointing stock market debut in May.
Even after the cut United will be
valued at $2.3bn (£1.5bn) making them the most valuable football club in the
world. Real Madrid, their closest rivals in financial terms, are valued at
$1.88bn, according to an annual ranking by Forbes magazine.
The shares are being sold by the
Glazer family, a US-family who made their fortune with shopping malls and
trailer parks and also own the Tampa Bay Buccaneers.
The Glazers bought United in 2005
for about £800m. They are selling 16.7m shares, equal to a 10% stake, and will
raise about $330m. The family will net about about £90m from the flotation.
The club claim a global fan base
of about 660m and have won a record 19 league titles. Their share sale will be
the largest sports listing on record, surpassing World Wrestling Federation's
$190m IPO in 1999, according to Thomson Reuters.
It will also be the most
high-profile since Facebook's ill-fated debut on the Nasdaq stock exchange in
May. The social network's much hyped share sale proved a bust and shares
initially sold at $38 are now worth $20.
Wall Street analysts have warned
they believe United's sale too could be a disappointment. "I'm calling
this son of Facebook," said David Menlow, president of the research firm
IPOfinancial.com.
He said too little of the money
being raised looked like it was going to be invested in the club, the club had
too many debts and it was not clear how they intended to grow as a business.
"Sports franchises have this
emotional flourish, then everybody wakes up and wonders, 'Do I really want to
own this?'" he said.
Sam Hamadeh, founder New
York-based analyst PrivCo, called United "a collectible not an
investment". "This is one for the rabid fan," he said.
This is the Glazer family's third
attempt at a share sale having previously scrapped efforts to sell shares on
exchanges in Hong Kong and Singapore.
Those sales failed as investors
balked at United's proposed dual class share structure. Under the US listing
the family will retain control of the club through class B shares that have 10
times more voting power than the publicly traded class A shares.
The company is also taking
advantage of recently introduced US laws that limit the financial disclosures
it must make. United is raising capital as an "emerging growth"
company under president Barack Obama's recently passed Jumpstart Our Business
Startups, or Jobs Act.
The move means United will not be
required to file quarterly reports or be subject to the same level of financial
scrutiny as other US-listed firms for five years.
Some of the proceeds from the
sale are expected to be used to pay down some of the 134-year-old club's debt,
which was last reported to be around £423m. But the Glazer family had
originally claimed all the proceeds would go towards United's debt, angering
some fans.
A leading fans group has called
for a boycott of the club's sponsors in protest at the terms of the share sale.
A statement from the Manchester
United Supporters Trust (Must) read: "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."
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