A Blog by Jonathan Low


Jun 16, 2012

Home is Where the Money Is? Manchester United Said to be Moving IPO Stock Sale to the US - From Singapore

Home team?

What does that mean in the global economy? Sports teams are routinely bought and sold by foreign investors. The television rights are an internationally negotiated asset and even purchases of club paraphernalia are measured in global terms.

Manchester United, the proto-British soccer/football (depending on continental cultural inclination) team is one of the most recognized and highly valued brands in sports. It's owners are Americans though that is considered less of a humiliation now that its cross-town rivals, Manchester City, are owned by the royal family of Abu Dhabi.

There was a time when such teams were owned by 'local worthies,' prominent business people or other natives of independent means. Some teams were owned by members of the community. But when the sale of television rights drove valuations into nine figures, such quaint traditions were overtaken by the imperatives of contemporary corporate finance.

That Man U is now considering an IPO equity offering in the US is in keeping with that new reality. Those thinking that this is disrespectful on national and regional loyalties have had to be reminded that this new IPO was originally scheduled for Singapore.

The irony is that the post-Facebook IPO market in the US is not exactly robust. The current majority owners, the Glazer family of Palm Beach, Florida, have encumbered the team with considerable debt so the upside for investors, to whom this is a business transaction, not an emotional testament of faith, is constrained. They are unlikely to be moved by the team legacy unless that can be monetized as a risk-adjusted security.

Traditionalists mourn the passing of a way of life. Transcontinental Man will note, from his iPhone in an airport somewhere, that supporters watching matches in pubs from Dallas to Cape Town to Kuala Lumpur can be valuable as any in the Midlands. The fact is that it is our civilization. We can do with it what we please. But since we appear comfortable putting a price on virtually everything, including our own loyalty, to say nothing of intimate personal information, we should not be surprised when that transactional impetus affects things about which we belatedly discover we really care. JL

Mark Scott and Michael de la Merced report in DealBook:
Manchester United may have fallen short of an English soccer championship last month, but the United States stock market is emerging as a new goal.

The soccer club was considering an initial public offering in the United States instead of Singapore, according to people with direct knowledge of the matter. Several I.P.O.’s across Asia have recently been postponed or canceled.
United’s plans were at an early stage and no final decision had been made, these people said. They spoke on condition of anonymity because they were not authorized to speak publicly.

The club’s main underwriters have been Credit Suisse, JPMorgan Chase and Morgan Stanley, but that may change, these people said.

Manchester United and the banks declined to comment.

The club, whose American owner, Malcolm Glazer, also controls the Tampa Bay Buccaneers football team, sought around $1 billion in previous efforts in Asia. A move would come as a surprise because of the team’s many fans across Asia and its owner’s desire to tap into the region’s fast-expanding investor base.

Last year, Manchester United reported revenue of 367 million euros, or $462 million, according to the consulting firm Deloitte. The club, which was listed on the London Stock Exchange before Mr. Glazer’s acquisition in 2005, has $684 million of debt tied to that buyout.

Analysts say one potential reason for a move to the United States is that it would allow Mr. Glazer to keep control of the team by using a dual-class share structure with nonvoting shares. That was part of the reason Manchester United switched to Singapore from its first choice, Hong Kong. Singapore is regarded as more open to the use of two stock classes.

“A dual-share structure may fly with investors in the U.S. but could never be pulled off in London or Hong Kong,” said a senior executive at a financial advisory firm, who spoke on condition of anonymity because Manchester United is a client.

If the club drops its Singapore listing, it would be the latest in a string of planned I.P.O.’s in Asia to be aborted. Last month, Graff Diamonds, a luxury British retailer of precious gems, withdrew its $1 billion stock sale in Hong Kong because of market volatility. The open-wheel racing series Formula One has delayed its $3 billion Singapore listing.

Investor appetite for new listings has also been severely dented by concerns about the European fiscal crisis and the fallout from Facebook’s botched initial offering.

The combined dollar value of new listings in the United States has risen 2.6 percent, to $29 billion, so far this year, mostly supported by Facebook’s $16 billion I.P.O., according to the data provider Dealogic. The value of initial offerings in Hong Kong and Singapore has fallen more than 90 percent over the same period.

Over all, proceeds from I.P.O.’s worldwide for the year to date have tumbled 44 percent from the same time last year, to $53.2 billion, according to data from Thomson Reuters.


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